The MCB organized a trade week in St. Jean last June. One of the highlights was a panel discussion titled ‘Exploring African Trade Prospects and Challenges’, where local conglomerate leaders shared their insights and experiences regarding investments in Africa. Eric Dorchies, a stalwart at CIEL Textile for over two decades, featured prominently. His noteworthy tenure includes a stint as the CEO of the woven cluster (Aquarelle Group) from 2008 to 2019, during which he made substantial contributions to the cluster’s expansion, responsible for 60% of CIEL Textile’s annual revenue. Additionally, he assumed the position of COO at CIEL Textile in 2017 before taking the helm as CEO in July 2020.
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The CEO of Ciel Textile, Eric Dorchies, discusses the experience of the Mauritius Ciel Textile group in Africa. The group invested in Madagascar approximately 30 years ago, during the late 80s, establishing factories and a manufacturing base. Currently, they employ nearly 10,000 workers in Madagascar, which generates about 40% of their total turnover. Two years ago, they formed a Joint Venture with a significant local partner, the Socota group.
The second aspect of Ciel Textile involvement in Africa is as a market. Around 20 years ago, the group obtained duty-free access to several African countries through the Southern African Development Community (SADC). As a result, they supply their garments to South African retailers from their operations in Mauritius and Madagascar. To facilitate this, they have made investments to maintain a marketing force base in Cape Town, South Africa. Currently, their business with the Rainbow Nation contributes approximately 10% of their total turnover, amounting to about $40 million. They supply prominent names like Woolworths, as well as other companies expanding their presence in Africa.
Eric Dorchies perceives significant opportunities in Ciel Textile’s African operations, stating, “Firstly, we have access to a young labor force in Madagascar, which is crucial to our industry.” He further highlights the advantageous position created by Africa’s duty-free trade agreements with Europe and the US, presenting a favorable opportunity. “South Africa is the only proximity market, as we face geographical isolation from the US and Europe. At a time when nearshoring is gaining traction in the global supply chain, and Africa is next door.” Despite these promising prospects, Dorchies acknowledges, “However, along with these opportunities, there are various challenges to navigate.”
Dorchies underscores the advantages of having India as a secondary manufacturing base for Ciel Textile, enabling them to cater to diverse countries. He explains, “Utilizing different manufacturing bases to serve different countries has proven successful thus far.”
When comparing Africa to Asia, Dorchies highlights that India provides enticing short-term investment returns due to its rapid pace of development and robust regulatory framework. Consequently, he believes that Asia as a whole presents a more appealing prospect in the immediate future. However, Dorchies recognizes that Africa is in the early stages of its development journey, but progress is being made steadily.
However, Ciel Textile CEO envisions Africa as a region with long-term prospects for industrialization. He expresses, “In the long term, Africa’s labor intensity is a crucial factor. It has been instrumental in the development of numerous countries, including China. As these countries gradually move away from our industry, we recognize Africa, with its demographic advantage, as holding significant long-term potential. It could emerge as a new hub for our industry. Nevertheless, realizing this potential requires addressing various challenges in Africa incrementally. Only then can it become an attractive destination for investment. We need people like us to be frontrunners and to move the boundaries, but we have to move cautiously. There are many many risks”, he adds.
Reflecting on Ciel Textile’s journey in Madagascar, the company’s survival depended on the support of MCB Bank. This partnership helped them overcome challenges and maintain their presence in an uncertain political landscape. It highlights the importance of collaborative alliances in complex territories.
He highlights the challenges and obstacles they faced, emphasizing the need for more financial support and better political stability and governance. “As much as you see many changes in Kenya, I went to Madagascar for the first time 35 years ago. It’s still the same by large except for Tana where there is more traffic but otherwise, it’s exactly the same”, he explains. Dorchies attributes this lack of progress to political forces that prefer the status quo. “South Africa, in contrast, is an incredible place, particularly Cape Town. We could invest in South Africa. It was a point for us as we already supply the markets. Why not invest in manufacturing in South Africa supplying South Africa, that would be overcoming other logistic challenges. But energy Supply is a problem, security is a problem. So there are many obstacles”, he says.