Entrepreneurs • Africa

How Can African Governments and Private Sector Stakeholders Work Together to Build a Stronger African Fashion Industry?

08 Oct, 2019 • by Fashionomics Africa
How Can African Governments and Private Sector Stakeholders Work Together to Build a Stronger African Fashion Industry?
Fashionomics Africa

Article A by Sibusisiwe Muperere

The fashion industry has traditionally been regarded as a vehicle for creative expression and cultural independence across the African continent, but in recent years it has taken center stage as a potential driver for economic growth. According to the AfDB (2016), Africa’s fashion industry is projected to be worth 15.5 billion in the coming 5 years. Despite promising prospects, the industry is threatened by several challenges ranging from production constrains, to market access. In a search for innovative and sustainable solutions development of the fashion industry and tackling of such challenges, multi-stakeholder partnerships, particularly with government and the private sector, remain key.

1. Overview of the African Fashion Industry

The fashion industry is an emerging economic powerhouse commonly associated with African inspired prints with a modern twist, as well as urban contemporary and high-end fashion. Estimated by Euromonitor International to be worth 31 billion in both apparel and footwear, the Sub-Saharan industry remains an infancy industry, contributing less than 5%of the global fashion industry. Regardless of its small size, the African fashion industry has had its share of success stories with Mauritius exporting around US$761.3 million in apparel exports, Lesotho’s apparel sector employing 80% of the total labor force, and Ethiopia a low income country that has managed to create 40 000 jobs (AfDB 2016). Despite being the promise of industrialization, the industry is still plagued by a number of challenges ranging from poor infrastructure, lack of skilled labor, limited market access, and poor value chain development. Nonetheless, there are a number of ways in which private sector and government can collaborate to overcome these hurdles

2. Proffered Solutions Stakeholder: Government

Growth oriented policy prescriptions As the body that crafts and ensures implements policy, government has a role to play n coming up with the appropriate policy mix that creates an enabling environment for business operates especially for the fashion industry which is still in infancy stages, it is imperative for government to undertake protectionist policies such as import substitution and export promotion initiatives to facilitate development of the growth of industry. Policies such as these become even more relevant as Africa battles the threats of second hand clothing and cheaper Chinese imports (Kenya Textile and Industry Fashion Report 2015). Government can further enhance growth of the fashion industry through favorable tax policy for upcoming business, given that 90% of businesses in Africa’s fashion industry are MSME’s.

Infrastructure development - Government has the advantage of command over a wider, state resource base, which it can use to pursue development objectives like infrastructure development. Infrastructure challenges impose a heavy burden in terms of doing business and in Sub-Sahara, cuts productivity by 40% annually (Deloitte 2013) Fashion as an industry is not exempted from this predicament and consequently suffers through power cuts, unavailability of water and logistical challenges that build into production costs. By channeling resources to infrastructure development through construction of roads, improving power and water supply, construction of apparel hubs, to repurposing dilapidated buildings for provision of workspace for young businesses, the government would have contributed significantly to growth of the fashion industry.

Value Chain Development - Across various studies, a lack or low investment in value chain development has been cited as a key constrain to profitability of fashion enterprises (Jauch and Merz 2006; Musso 2012). Challenges cited include difficulty in securing affordable modern equipment, standardized textiles, which in turn affect business processes yielding non-competitive products. Having realized the importance of fashion as a key economic driver, governments can facilitate affordable purchases of equipment, offer tax breaks to manufacturing plants and invest in textile production facilities to aid competitiveness.

Establishment of Training Centers for Fashion - Technical expertise is the backbone upon which the fashion industry is hinged, but evidence across Africa reveals a severe shortage of skilled workers in the sector, pointing out to shortage of institutions offering fashion studies in Africa as a major cause (Afrikea 2018). Government can therefore contribute by establishing of institutions that offer technical support to fashion entrepreneurs, as an investment in competences that will enhance product quality of Africa’s fashion industry.

3. Stakeholder: Private Sector

Adoption of inclusive business models Literature on fashion reveals that the African fashion is highly fragmented, and characterized by numerous players operating at small scale and battling with profitability, as they cannot benefit from economies of scale (Lengavan 2016) A solution to this predicament can be forged through inclusive business models, where established firms partner with smaller upcoming businesses. In this arrangement, the established firms can offer work space, and equipment sharing as they sub-contact smaller firms for production. In so doing, the smaller businesses benefit from a guaranteed market, mentorship, network and marketing opportunities, as well as spillover effects of modern technology.

Incubation and Business Training A major challenge in the fashion sector is poor business acumen which often manifests in poor record keeping and poor business decisions, and resulting inability to have bankable business models (Gries and Naude 2010). Partnership between banks and business development specialists can solve this problem by having bank contract business development specialists, to incubate and train emerging fashion entrepreneurs, help in brand building, provide networking opportunities and access to information. This capacity building investment will reduce bank’s risk of providing finance to the small firms, whilst increasing firm’s growth capacity through acquisition of business and finance management knowledge.

Access to finance - Accessing finance is a challenge for firms within the fashion industry, particularly because they are not viewed as bankable businesses (Bateman and Chang 2012) Resultantly, banks have more stringent collateral demands for firms within this sector. However, the potential gains of the industry present banks an opportunity to fund fashion firms, alongside in-house business development specialist who incubate entrepreneurs, reducing default risk. Banks in turn can then reduce collateral demands and ease their access to finance.

Despite the many obstacles facing the fashion industry multi-stakeholder partnerships remain key in drawing innovative solutions to Africa’s fashion industry as shown.

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Article B by Diaw Audrey

Selon la Banque Africaine de Développement, L’industrie de la mode est estimée à plus de 31 milliards de dollars $ et pourrait générer 15,5 millions de dollars $ d’ici à cinq ans, en Afrique Subsaharienne. En plus de peser des milliards de dollars, ce secteur d’activité emploi en majorité des femmes et des jeunes. Or, l’Afrique compte une main-d'œuvre jeune et en pleine croissance qui passera d'environ 617 millions aujourd'hui à 1,6 milliard en 2060. Selon le rapport sur les Perspectives économiques en Afrique en 2019 : « Avec l’arrivée de millions de jeunes sur le marché du travail, la pression pour fournir des emplois décents va s’intensifier. Au rythme actuel de la croissance de la main-d’œuvre, l’Afrique doit créer chaque année environ 12 millions de nouveaux emplois pour contenir l’augmentation du chômage ». L’industrie de la mode pourrait donc constituer une solution viable à la réduction de la pauvreté et à l’atteinte d’une croissance inclusive en Afrique.

Cette opportunité ne se réalisera pas sans l’implication des gouvernements africains. De nombreuses initiatives privées ont certes vu le jour. Néanmoins, il appartient aux Etats de mettre en place des mécanismes et des mesures d’accompagnements, afin de favoriser les investissements privés. Le rôle des gouvernements africains se situent à trois niveaux : i) au niveau réglementaire, ii) au niveau de la mise en place des infrastructures, iii) au niveau du secteur financier.

Au niveau réglementaire, les Etats devraient agir sur deux axes : i) la limitation des vêtements d’occasion communément appelé « friperie », et ii) par la mise en place de politique de défiscalisation pour les acteurs privés. La zone de libre-échange continentale africaine est certes une opportunité commerciale exceptionnelle pour le continent, cependant les Etats africains devraient s’en servir pour encourager la production intra-africaine, et contrôler les importations de « friperie » à titre d’exemple.

Au niveau des infrastructures, il existe un déficit criant (usine de transformation, routes) . Ce pilier constitue l’un des plus grands défis pour la transformation structurelle de l’industrie de la mode africaine. Les États devraient encourager et encadrer le développement des productions locales (ex : pagnes Lepi en Guinée, pagnes Kita en Côte d’Ivoire) qui disposent de peu de moyens de transformation, en permettant ainsi aux artisans locaux d’accroître leurs capacités et de devenir compétitifs. De plus, la matière première reste un élément encore dispendieux pour la production à grande échelle. En effet la majorité des productions demeurent artisanales. Par exemple, le tissage demeure encore un art se transmettant de génération en génération, cependant cette méthode de fabrication ne peut pas permettre une production à grande échelle d’où la cherté des pièces produites. En facilitant la mise en place de chaînes de valeurs et de circuits de production, les états devraient parvenir à transformer ces productions locales en productions industrielles permettant ainsi de créer des emplois durables, d’accroître les revenus et de stimuler la résilience des femmes. Les coopératives locales devraient être intégrer dans des chaînes de valeur afin de professionnaliser le secteur.

La plateforme Fashionomics de la Banque Africaine de Développement de par sa mission permet une meilleure visibilité de l’écosystème. Cependant elle doit renforcer ses capacités afin d’étendre son réseau. Aujourd’hui, 1,1 milliards de femmes ont accès à un téléphone portables. Ce canal pourrait intégrer des APIs, afin de permettre à tous les acteurs de l’écosystème d’avoir accès de manière intuitives à la plateforme.

De plus cela permettra de développer les transactions via la monnaie électronique pour les acteurs ne disposant pas de comptes dans une institution financière.

Au niveau du secteur financier, l’accès des PMEs ou des MPMEs a des crédits est capital pour le développement du secteur de la mode. Plus de 200 millions de petites et moyennes entreprises sont incapables d’accéder au financement dont elles ont besoin, dont de nombreuses sont issues du secteur de la mode. Les Etats pourraient travailler à la mise en place de fonds de garantie facilitant le financement des PMEs. Ces financements devraient être joints à des assistances techniques et des programmes d’éducation financière.

En mettant en place ces trois piliers, les Etats renforceront les synergies avec les acteurs du secteur privé afin de bâtir un écosystème de la mode africaine plus fort et plus compétitif.

Des pistes d’actions…

A la lumière des éléments ci-dessus nous devons retenir les principales actions suivantes :

  1. L’Interdiction des friperies à travers un cadre règlementaire afin de réguler la distribution de ces articles et favoriser les créations locales.
  2. Le développement d’infrastructures afin de stimuler les économies d’échelle.
  3. La mise en place de fonds de garantie.

Le continent africain regorge de potentiels, cultures, richesses et d’opportunités réelles. Les Etats doivent protéger les créations en encourageant plus efficacement le système de la propriété intellectuelle.

Ils doivent également être les vecteurs du rayonnement de l’industrie de la mode africaine sur la scène internationale. A l’instar du pays des mille collines et de sa campagne « Made in Rwanda » qui favorise son industrie du textile et sa culture.

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Article C by Moyin Johnson

African Fashion is on the International Map. Over the past decade, African prints and designers have gradually taken the stage at various fashion shows on the continent and around the globe. In the recently concluded New York Fashion Week which highlighted the Spring-Summer 2020 Collections, two African fashion designers - Laduma Ngxokolo from South Africa and Eliana Murargy from Mozambique - showcased their brands as part of the ‘Made in Africa’ banner show. African fashion is fast becoming established as ON-TREND globally which is further amplified as a result of pop culture and the wide-spread use of social media platforms such as Instagram. African fashion and designers are finally starting to get the attention and respect they deserve. In addition, African countries such as Ethiopia and Kenya have increasingly become more attractive to US and EU apparel companies and retailers as destinations for apparel sourcing and manufacturing due to the rise in the costs of production (i.e. wages) in China and Bangladesh.

The African textile and fashion industry has never been better placed to increase its market share (valued at about $31 billion according to Euromonitor) of the $2.5 trillion global fashion industry, which is expected to double in the next 10 years. However, challenges such as a weak supply value chain, poor transport and logistics infrastructure and limited intra-Africa trade, prevent African fashion designers from achieving and benefiting from economies of scale. These challenges are in fact linked and impact each other. This article seeks to highlight ways that African governments and private stakeholders can build a stronger African Fashion Industry which will aid economic growth and the creation of jobs, especially for youth and women on the continent.

The signing of the African Continental Free Trade Agreement (AfCFTA) by 54 countries and ratification by 27 of those countries, including garment-producing countries such as Egypt, Ethiopia, Kenya and South Africa, is a huge step in the right direction towards building a stronger African fashion industry. This agreement which requires member countries to eliminate tariffs from 90% of goods including agricultural products, clothing and textile, will positively impact trade flows.

Although reduced tariffs play a role in the reduction of barriers to cross-border trade, there are non-tariff factors such as poor trade logistics and infrastructure which significantly limits its effectiveness. A recent study conducted by the IMF found that “elimination of tariffs on intra regional trade is estimated to increase trade in the region by about 15–25% over the medium term, whereas reducing nontariff barriers would more than double such effects.” In addition, a reduction in non-tariff barriers was found to have much more significant beneficial effects on countries welfare and GDP than tariff reductions. As such, it is important for governments in the member countries to prioritise the reduction of these non-tariff restrictions in order to successfully and effectively improve intra-African trade relations.

To develop transport and trade logistics infrastructure, it may be important for governments to leverage public-private partnerships (PPP). Implemented under the right conditions, PPP’s can maximize the intra-African trade flow of raw materials (i.e. cotton), textile and clothing. More efficient transport and trade logistics infrastructure will play a crucial role in reducing costs, increasing productivity and improving intra-African trade. This will better position member countries to improve access to markets, benefit from the global demand of African fashion, better serve regional and domestic markets, and create more jobs.

It is also important for member countries to have in place the right policies and regulatory environment to improve the ease of doing business, attract investments and further drive intra-african trade. Initiatives such as the Afro Champions initiative which seek to drive advocacy on PPP’s, investments and advise governments on policy innovations are key. As expressed by Akinwunmi Adesina, the President of the African Development Bank, “Africa has to have its own industrial capacity to be able to take advantage of a $3.3 trillion market with the African Continental Free Trade Area, so Africa has to industrialize. Industrialization is critical. It is not just about moving raw materials. It is value-added products." Therefore, it is imperative for value to be added across the supply value chain and for countries to export African fashion finished products.

The potential for value added benefits cannot be overstated. In addition to improved intra-african trade flows, strengthening the supply value chain requires strategic partnerships and increased investment across each stage of the process - from agricultural products/raw materials, to textile companies, to garment manufacturers, to branded apparel and trading companies and finally to retailers. Governments are more likely to successfully achieve this by partnering with relevant stakeholders to build the capacity and technical skills of policy makers and fashion entrepreneurs. For example, earlier this year the United Nations Conference on Trade and Development (UNCTAD) supported the Angolan government by providing capacity building sessions to key governmental agencies on ways to leverage PPP’s to develop transport and logistics infrastructure. Other member countries could benefit from such partnerships.

In conclusion, promoting and educating this generation and future generations on the business of fashion from an African perspective will prove invaluable to building a stronger and sustainable African Fashion Industry. Many more schools and universities across the continent, should offer fashion courses and degrees.

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