"Looking for promising growth havens, companies are exploring newer markets having immense potential. One of the emerging markets is Africa. Big brands are investing and those that have already invested are looking at expanding. At the first edition of the Destination Africa sourcing show held recently in Cairo, 85 exhibitors from around the continent got together to display their products and offerings with major brands from the US and Europe."
Looking for promising growth havens, companies are exploring newer markets having immense potential. One of the emerging markets is Africa. Big brands are investing and those that have already invested are looking at expanding. At the first edition of the Destination Africa sourcing show held recently in Cairo, 85 exhibitors from around the continent got together to display their products and offerings with major brands from the US and Europe.
Dina Abdel Aziz, project director for Destination Africa points out when they thought about ‘Destination Africa’, the aim was to attract the attention of buyers of Africa as a region, not only Egypt. Especially now that prices are increasing in China, an awareness needs to be crated among buyers on emerging regions in Africa.
Egypt, the new frontier
Egypt doesn’t benefit from duty free access to the US market under the Africa Growth and Opportunity Act (AGOA) but it does enjoy the same duty free trade privileges under the Qualifying Industrial Zone (QIZ) programme. Alex Apparels, the manufacturing arm of Alpine Creations in Egypt, has been making product for Walmart for 22 years and the retailer is confident in the company’s abilities, it taps into its design and technology expertise to guide the product it puts in its stores.
Walmart makes up half of Alex Apparel’s customer base, but the company also supplies to Under Armour, Hanes and Carters/Oshkosh, with 80 per cent of its business in knits and the other 20 per cent in wovens. The products are manufactured in five factories in the Alexandria City region of Egypt. The company has also started building its own mill in Egypt to be less reliant on fabric sourcing from Asia, and is aiming for eventual vertical integration. This will eventually shorten supply time and increase flexibility.
Kenya, an upcoming destination
When one is looking at Africa, Kenya comes into immediate limelight. The country is primed for taking on more manufacturing—not to mention its duty-free benefits under AGOA. Stability and guaranteed quality are among the two main aspects that are offering growth avenues towards Kenya. There is an easy availability of manpower and training the manpower is equally easy. The country’s ranking of ease of doing business has been improving steadily since the past few years. The minimum wage for workers in Kenya is roughly $100 per month, and though it’s a little higher than some of its neighbouring nations, manufacturers there are not in the business of giving buyers goods that are low quality and over-priced.
Lesotho, a promising destination
Lesotho is another other promising countries to do business with as it enjoys access to the US and EU markets duty free, a reasonably low cost of doing business and the potential to fulfill demands of customers. The manufacturing sector is the second biggest employer after the government, according to Puseletso Makhakhe, investment services manager for the Lesotho National Development Corporation (LNDC). The country has stable political and social environment. No labour unrest has been reported so far by companies operating out of Lesotho. The current minimum wage for unskilled workers is around $80 a month, and for skilled workers, the rate jumps to $100 a month.