Fashion and textile industries can grow African economies

Malawian fashion designer Lilly Alfonso at Africa Fashion Week London 2012.

Malawian fashion designer Lilly Alfonso at Africa Fashion Week London 2012.

African culture is on the rise, not just on the continent but across the globe. The life and music of Fela Kuti attracted thousands to the Broadway musical in New York and elsewhere. Nollywood produces more than 1,800 movies per year and has turned into a US$3.3bn industry, according to the 2015 article by Jake Bright in Fortune Magazine entitled “Meet ‘Nollywood’: The cecond largest movie industry in the world”. African movies and music can now be accessed through online platforms across the world. 

Africa-inspired designs are now regularly shown on the catwalks in fashion shows in Paris, London and Milan. Michelle Obama, the first lady of the US, wears African-influenced clothing from Nigerian designer Duro Olowu. Fashion is big business: the combined apparel and footwear market in sub-Saharan Africa is estimated to be worth $31bn according to data from Euromonitor International.

This shows that African culture is an asset. Yet we are only starting to recognise its potential to support development, create jobs, integrate countries, connect societies and strengthen identities. These so-called “creative industries”, i.e. African music, dance, clothing, TV and cuisine, can earn billions of dollars for African countries and create jobs for our growing workforce.

It is important to look at these industries through a value-chain approach to see the contribution that a “made-in-Africa” brand can make to African economies. Creative industries can diversify the economic base of our countries and attract tourism. Technological changes in manufacturing, distribution and marketing are driving the growth of these industries in which many young men and women would like to work.

The fashion industry is expected to double in the next 10 years, generating up to $5tr annually. In the US alone, every year $284bn are spent on fashion retail, through the purchase of 19 billion garments. This presents a tremendous opportunity for Africa at various levels of the value chain: from design to production to marketing, the fashion industry is a profitable business.

What does Africa need to do to build its fashion industry?

The good news is that the fashion industry is already developing. But it is still in its infancy. The textile industry value chain begins with the production of cotton, spinning and twisting of the fibre into yarn, the weaving and knitting of the yarn into fabric, and the bleaching, dyeing and printing of the fabric to obtain the fashionable garments that we all wear today.

At each step of the value chain, more value is added and additional jobs are created. 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.

At the African Development Bank (AfDB), we look 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.

Creating the right policy environment for businesses to thrive and attract investments is essential. The Government of Rwanda is a good example: it is one of Africa’s most competitive economies and a top reformer in improving the business environment. And it has recognised that fashion means business. This 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.

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% of what the US consumes and 2.8% 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.

Finally, building an industry requires investing in the skills and qualifications of people. Achieving high-quality production flexibility while raising productivity is only possible with a workforce that has the necessary skills. As governments become increasingly aware that apparel production offers large-scale employment opportunities, they need to 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.

What can we do?

Industrialisation is one of the AfDB’s High 5 strategic priorities. Africa currently accounts for just 1.9% 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. By fostering value chain development, the bank prioritises, among others, the agriculture and agro-processing industries, given their potential for value addition, and close interactions with the textile, fashion and clothing industries.

The AfDB initiative ‘Fashionomics’ intends to support micro, small and medium enterprises (MSMEs) operating in the African fashion and textile sectors. The Bank is currently undertaking a study that will be launched by September 2016, looking at the feasibility of setting up a Fashionomics online platform with the aim of strengthening the value chains in the textile and fashion industries. The platform will link designers throughout Africa with other designers, buyers, and suppliers. It will also connect them to financial services providers and mentors to help them grow their businesses.

This article was originally published on the African Development Bank Group’s blog.