Covid-19 and the Governance of Regional Apparel Value Chains: Implication for suppliers and workers in Eswatini

There is a growing literature on the impact of Covid-19 on commercial and labour conditions at suppliers in apparel global value chains (GVCs). Yet, much less is known about the implications for suppliers operating in regional value chains (RVCs) in the global South. In this working paper we focus on Eswatini, which has grown to become the largest African manufacturer and exporter of apparel to the region. We draw on a combination of firm-level export data and interviews with stakeholders before and after the Covid-19 lockdown to shed light on the influence of private and public governance on suppliers’ economic and social up- and downgrading before and during the Covid-19 lockdown. In terms of private governance, we point to the co-existence of two separate structures: one characterised by direct contracts between South African retailers and large manufacturers (ie direct suppliers); and the second operating through indirect purchasing via intermediaries from relatively smaller producers (ie indirect suppliers). Whilst direct suppliers enjoyed higher levels of economic and social upgrading than indirect suppliers before Covid-19, the pandemic reinforced this division with severe price cuts for indirect suppliers. Further, whilst retailers provided some direct suppliers with support throughout the crisis, this was not the case for indirect suppliers which remain comparatively more vulnerable. In terms of public governance, the negative consequences of the lockdown on firms’ income and workers’ livelihoods have been compounded by the state’s ineffective response. Our paper contributes to the research on the impact of external shocks on firms in developing countries and provides evidence that suppliers and workers in RVCs with end-markets in the global South do not necessarily face greater challenges than those in GVCs.