"Other than the increasing labour costs in Asia, international textile firms are looking at Africa to take advantage of the growing African consumer market. This is an opportunity for African countries to find their place in these value chains, from the producers of raw materials on up."
Other than the increasing labour costs in Asia, international textile firms are looking at Africa to take advantage of the growing African consumer market. This is an opportunity for African countries to find their place in these value chains, from the producers of raw materials on up.
Africa-inspired designs are now regularly shown on catwalks in Paris, London and Milan. Michelle Obama, the First Lady of the US, wears African-influenced clothing from Nigerian designer Duro Olowu. According to Data from Euromonitor International, fashion is big business: the combined apparel and footwear market in Sub-Saharan Africa is estimated to be worth $31 billion.
Africa’s role in fashion industry
The textile industry value chain begins with the production of cotton, spinning and twisting of the fiber into yarn, the weaving and knitting of the yearn into fabric, and the bleaching, dying and printing of the fabric to obtain the fashionable garments that we all wear today.
Targeting the fashion industry means targeting the whole value chain, from the smallholder farmers to the fashion designers. The fashion industry in particular holds considerable potential to motivate and bring change to some of the most disadvantaged people, especially women and youth, while advancing structural transformation.
Recently, the African Development Bank looked at these global value chains to see how each country can join in at a particular stage based on its comparative advantage. Today, international textile firms are looking at Africa not only for the purpose of production in view of increasing labour costs in Asia. They are also looking at Africa to take advantage of the growing African consumer market. This presents an opportunity for African countries to find their place in these value chains, from the producers of raw materials on up.
The government of Rwanda is a good example for creating the right policy environment for businesses to thrive and attract investments. It is one of Africa’s most competitive economies and a top reformer in improving the business environment. It has created the foundation to attract foreign investors to work with local designers, establish garment factories and boost the textile and fashion industries. H&M is building a factory in Ethiopia and PVH is looking at Kenya for the production of its brands, including Calvin Klein and Tommy Hilfiger.
Challenges in Africa
But the cost of doing business is still too high. Energy shortages, high costs and poor access to energy, combined with high costs incurred by transport, logistics and custom facilities, can erode the advantages of lower labour costs and impede a country’s ambitions to industrialise. Sub-Saharan Africa consumes a mere 181 kWh in power. Compare this with 13,000 kWh in the US and 6,500 kWh in Europe and it is obvious how little this is – 1.4 per cent of what the US consumes and 2.8 per cent of what Europe consumes. About half of all firms across Africa have their own generator to complement or replace electricity supplies as needed. This represents a big disadvantage for firms trying to grow their business.
As governments become increasingly aware that apparel production offers large-scale employment opportunities, they need translate this awareness into investments in their people. Lesotho, Ethiopia and Kenya, for instance, have recognised this and are establishing training centres and tertiary institutions to promote the technical qualifications for people in the textile and apparel industries.
Africa currently accounts for just 1.9 per cent of global manufacturing. There is an urgent need for Africa to rapidly industrialise and add value to everything that it produces, instead of exporting raw materials that make it susceptible to global price volatilities. The fashion industry is a case in point. Instead of exporting raw cotton, Africa needs to move to the top of the global value chain and produce garments targeted at the growing African and global consumer class.