A new cotton ginnery bringing 20 000 jobs

By Phephile Motau

The impending implementation of the Mkhondvo-Ngwavuma Water Augmentation Project (MNWAP) Phase 1 will give birth to an establishment of a cotton ginnery which at full operation, is projected to create at least 20 000 permanent jobs.

The Eswatini Financial Times has reliably learnt that the envisioned cotton ginnery project will comprise the development of 4 600 hectares of cotton that would be processed for a vertically integrated textile industry (raw cotton to garments and oil).

This is according to the Mkhondvo-Ngwavuma Water Augmentation Project-Phase 1B (MNWAP-1B) Appraisal Report released by the African Development Bank. The AfDB said the MNWAP-1B preparation process involved extensive consultations with both traditional and private farmers in the project area.

Phase 1 of the MNWAP encompasses the construction of the Mpakeni Dam on the Ngwavuma River (sub-phase 1A) and associated downstream conveyance to irrigate approximately 5 000 hectares at Sigwe, Maloma, Mconcwane/Mcathuvane, and St Philip’s (sub-phase 1B).

Direct job opportunities will be created along the cotton value chain and household income will increase reducing the unemployment rate. The bank said over time, poverty will be reduced in the program area, there will be more private sector development and there will be better socio-economic outcomes due to access to clean, safe water and sanitation.

The report states that the expected outcomes assume that the government will enter into an agreement/commitment with the private sector company to set up the cotton ginnery.
The outcomes also assume the cotton value chain will continue to be more profitable than alternative crops, and ESWADE and the cotton ginner will provide extension services.

In general, the report states that the MNWAP project will complement and benefit from the efforts of other Development Partners (DPs) supporting agriculture in Eswatini including EU, IFAD, WFP, FAO, UNDP and others. FAO is assisting the government with inputs into the Eswatini National Agriculture Investment Plan (ENAIP) by funding the value chain planning to facilitate sector development plans that will inform areas of intervention by the Government and the private sector to improve competitiveness.

“The cotton value chain plans for the country have been completed and the Bank has benefited from the use of these plans in assessing MNWAP-1B. FAO is also facilitating the establishment of the Agriculture Development Fund (ADF) to improve access to finance for the sector, “the report states, It further states that the government has allocated about E51 million (US$3 million) from the Bank-funded Emergency Food Production Programme loan facility to capitalise on the ADF whose objective is to improve access to finance for the sector.

The WFP and FAO on the other hand are assisting Eswatini with the Agriculture Integrated Information System which will build on the Agriculture Market Information System (AMIS). IFAD is supporting the Smallholder Market-led Project (SMLP) in thirty-seven (37) chiefdoms including the MNWAP project areas (Shiselweni and Mahamba regions).

The project will benefit from these plans as four out of the eight chiefdoms in the project area already have development plans and ESWADE is the executing agency for the SMLP to ensure adequate quality and quantities to supply the cotton ginnery.

According to the report, the objective of the MNWAP is to increase agricultural production by providing a reliable supply of water for irrigation, contributing to increased income-generating opportunities among target beneficiaries. Additionally, the project lays the ground for agro-industrial development through sustainable cotton production for garment and oil production.

The integrated development will be cut across several sectors but centred around agricultural and agro-industrial development. The report states that Phase 1 (Part A & B) of the project entails the construction of the Mpakeni Dam (approved by the bank in 2021) and the downstream development of 4 600 hectares of cotton that will be processed for a vertically integrated textile industry (raw cotton to garments and oil).

It was stated that upon consultation with the AfDB, Eswatini adopted the vision of MNWAP as a holistic development approach that cuts across several sectors but centred around agricultural and agro-industrial development.

“In addition to agriculture, a special agro-processing zone (SAPZ) for oil and textile production will be set up in the program area. MNWAP will also cover aspects of transportation, energy, urban development, education, health, eco-tourism, and other necessary services for the evolving population centres in the program area using the PPP approach,” the report states.

The bank said the project was transformative in nature and would elevate an entire region to commercial agribusiness for the benefit not only to Eswatini, but also spill over to South Africa, Mozambique, and the rest of the Southern African Development Community (SADC) region.
At the full implementation of MNWAP-HAD (including phases 2 and 3), 30 000 hectares of industrial crops will be established, with a special agro-processing zone and parallel development in transport, energy, and urban development.

MNWAP-HAD targets employment of about 100 000 direct jobs (out of which 30 000 are smallholder families) and many more indirect work opportunities -alleviating poverty by supporting the participation of the rural communities in sustainable agricultural production.
The report states that irrigated farming and farmers with higher skills will increase productivity in the areas under production, enabling sufficient output for agro-processing, attracting private sector investment and the establishment of the cotton ginnery for the vertically integrated processing of cotton to garments and oil.

Phase 1B will cost E3.95bn

Phase 1B of the Mkhondvo-Ngwavuma Water Augmentation Project will cost taxpayers about E3.95 billion.

According to the AfDB, the cost estimates were revised in August 2022 and the planned costs include a provision of about five per cent of total costs, for physical and price contingency and 15 per cent for price contingency.

The report states that AfDB will provide a loan of about E2.08 billion and will partially fund the main conveyance system. The balance of the project cost, E1.87 billion will be funded from government resources. The bank said, however, several donors including DBSA, EIB/EU and BADEA expressed interest to finance the project.

“The government is currently analysing the comparative advantage of different sources of funding to invite for financing,” the AfDB said.

(MNWAP-1B) contains four components including Infrastructure Development, Potable Water Supply Development, Farm Development and E&S Management and Project Management. In the appraisal, it was recommended that the Board of Directors approve the proposed loan of E2.084 billion to the Kingdom of Eswatini for the purposes and subject to the conditions stipulated in the report.