Moroccan Textile Industry Faces Crisis as Global Demand Plummets Amid Pandemic

The situation is not rosy for the textile sector. A recent survey conducted by the Moroccan Association of Textile and Clothing Industries (Amith) among its members revealed that orders have plummeted and are in sharp decline due to the Coronavirus pandemic, reports La Vie éco.

Indeed, according to Fatima Zahra Alaoui, general manager of the association, "the main foreign customers have greatly reduced, or even suspended, their orders due to the lack of sales of clothing in stores." She states that "with the evolution of the pandemic in Morocco and in our main target markets, the situation for textile and clothing industrialists in particular is becoming critical." And to conclude that "if the health situation does not improve, the majority of the still active companies in the sector will be at a standstill at the latest by the end of November with no visibility on a possible resumption date".

Already used to a cyclical drop in orders at this time of year, known as the inter-season, the textile and clothing market is this year experiencing an even more difficult situation with a rather aggravated downward trend due to the pandemic crisis, with incalculable damage. In the opinion of professionals, the recovery will probably not take place before the second quarter of 2021. It should be noted that for the time being, all indicators are in the red. At the end of September, the sector recorded a cumulative decline, over the first nine months of the year, of 22%. Whereas at the end of June, export turnover had fallen by 36%, the same source points out. "Given the evolution of the pandemic in recent weeks, both in Morocco and abroad, we estimate that the overall impact of the health crisis will be a drop of around 35% in exports and around 60% in the local market," says Fatima Zahra Alaoui.

Faced with this critical situation, Amith is talking about the implementation of emergency measures to avoid waves of layoffs. According to professionals, these measures include "the restoration of the Covid allowance for a period of 3 to 6 months, the exemption from the employer’s CNSS contribution for a period of two years and the immediate reimbursement of VAT credits" to relieve the cash flow of companies currently under pressure due to the health crisis. But also, professionals are demanding a program contract that would make it possible to overcome the crisis, in order to be able to restart under good conditions in the coming months.

In addition to the stimulus measures, "the association is working on several projects aimed at redefining the positioning of the sector and strengthening its competitiveness and resilience to exogenous shocks," says the director of Amith.