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Fostering African integration through creative works – the case of the fashion industry
The creative industries, particularly fashion and design, are evolving quickly and drawing career interest within African societies, politics and business. They are expected to provide well-paid jobs and help talented Africans to achieve their full potential. But as a fledgling industry, fashion faces key hurdles, such as establishing the basic infrastructure, gaining access to finance, and developing sales outlets.
While raw talent might get a thriving career started, it is not enough to make the transition from an informal business to a medium-to-large-sized business, which can tap into international supply chains and sell finished goods in Africa’s biggest fashion stores.
Rising demand for the ‘Made in Africa’ brand
Despite these challenges, Africa’s role as a consumer and producer of fashion is increasing. The growing penetration of e-commerce and social media is opening new markets and ramping up demand for African fashion. The continent’s fashion industry is expected to expand as the middle class continues to grow (at the fastest rate in the world), with consumer spending forecast to reach $1.4 trillion by 2020.
The volume of online shoppers across Africa has grown by 18% annually since 2014 - higher than the global average - while its consumer e-commerce market was valued at $5.7 billion in 2017 (UNCTAD B2C E-Commerce Index 2018 – Focus on Africa). A recent Deloitte study showed that Africans could be buying as much as $75 billion worth of goods (including fashion items) and services online by 2025.
The creativity of African fashion entrepreneurs also attracts international attention and African-led e-commerce fashion platforms are coming into their own and finding audiences. Among the success stories of the continent is the South African-based Kisua brand, founded by Ghanaian Samuel Mensah. Soon after American singer Beyoncé’s stylist came across Kisua online, the artist was spotted with a monochrome jacket, then a skirt and a jacket from the brand. All items sold out within days. Kisua has a pan-African supply chain, sourcing fabrics from Ghana and the Cote d’Ivoire, with its manufacturing base in South Africa and Rwanda. The brand employs 60% women across the firm, including management. Kisua sells its garments globally, with distribution centres in Johannesburg, Philadelphia and London from where it fulfils its online orders worldwide.
Fostering regional and global integration through the fashion industry
The fashion industry has the potential to catalyse linkages between cotton and textile manufacturers, thereby boosting productivity and integration into regional and global value chains. This requires enhancing industry performance and competitiveness through improved farm productivity, ginning and textile manufacturing efficiency.
The room for improvement is huge: Africa’s top 10 apparel-exporting countries are all located in Eastern and Southern Africa with about 900 apparel factories. But they contributed just $2.5 billion in annual exports– that’s less than 1% of global apparel exports. Mauritius and South Africa are top exporters, accounting for half of the continent’s exports and more than two-thirds of its apparel factories. This provides a favourable platform to elevate Africa’s position in this market, helping to foster a creative ecosystem that designs unique and differentiated products while also providing a critical mass for low-cost production.
Lesotho is an example of when things go right: the country exports $418 million from 43 apparel factories, mainly to South Africa and some to the United States, showing growing links to global textile and apparel value chains. The sector is a major contributor to Lesotho’s economy, accounting for around one-third of its gross domestic product. Apparel factories are also Lesotho’s largest formal employment provider, with 80% of the workforce being women.
Yet, Africa faces challenges in developing regional supply chains because of its small market size and has been mostly engaged in upstream activities, providing unprocessed goods. According to the African Development Bank’s African Economic Outlook 2019, the rise of apparel exports is one of the partial success stories that support the development of regional supply chains, mainly through preferential access to the South African market. A combination of this preferential access and a single-transformation rule of origin (a condition under which goods are eligible for preferential treatment requiring only a single transformation from fabric to apparel within the beneficiary country), allowed firms in South Africa to relocate to lower-cost zones of the Southern African Customs Union, such as Lesotho and eSwatini. Two members of the Southern African Development Community, Mauritius and Madagascar, formed part of the regional value chain while exporting to US and EU markets.
To further develop regional supply chains, it is essential to reduce tariffs on intermediate inputs, as well as to improve customs management and adopt simple and transparent rules of origin.
Supporting fashion industry growth
Policymakers are increasingly recognising the fashion industry’s role as a vehicle for African regional integration and improved competitiveness. A responsive trade and industrial policy that promotes diversification, transfers skills and technology, and reduces dependence on preferential market access, is needed to promote integration, the basis of successful global value chains. Africa’s product quality, production management and market strategies will be pivotal in commercialising authentic and indigenous “Made in Africa” designs.
With the Fashionomics Africa flagship programme, the Bank aims to support the growth of the textile and fashion sectors by building the capacities of micro, small and medium-sized enterprises (MSMEs), especially for women and young people. The initiative aims to improve infrastructure at national and regional levels, promote regional integration through business-enabling policies; and stimulate the use of information and communication technology. Fashionomics Africa has developed an online interactive marketplace for MSMEs and relevant stakeholders in Africa to facilitate access to markets through e-commerce, finance, and specialised training and mentoring.
The aim is to connect and strengthen each link along the value chain, from producers and suppliers of primary materials, to manufacturers and distributors, creating additional linkages with investors and end-customers.
Fashionomics Africa collaborates with the African Union Commission of Trade and Industry. It also works with the Trade and Development Bank, Afreximbank, The AfroChampions Initiative, Africa 50 and the OCP Group. Together, we are rolling out the Pan African Fashion Initiative, a platform for stakeholder engagement to advance the African fashion industry in the context of the African Continental Free Trade Area (AfCFTA).
The AfCFTA is designed to remove trade barriers between African nations in a continent of more than one billion people and a combined GDP of more than $3.4 trillion. It is projected to expand intra-African trade, which currently accounts for just 15% of all trade on the continent, by about $35 billion per year. Among the signatories are key garment-producing countries such as Ethiopia, Kenya, Morocco, Madagascar, Mauritius, South Africa, Egypt, Lesotho and Tunisia. Once implemented, it will require member countries to eliminate tariffs for 90% of goods traded within the free trade area, including clothing. The Bank is involved in making this historical milestone a reality, including providing financial support to help the African Union in its implementation of the AfCFTA.
As more stakeholders share the vision for harnessing the potential of Africa’s fashion and textile industry, regional integration will lead to more inclusive and sustainable growth.
By African Development Bank’s Emanuela Gregorio, Gender, Women and Civil Society Department Economist and Fashionomics Africa Coordinator; Dr. Fadel Jaoui, Macroeconomic Policy, Forecasting and Research Department Economist, and Stephen Yeboah, Energy Financial Solutions, Policy and Regulation Department Policy and Knowledge Management Analyst
 This estimate is derived from data from the World Bank on the proportion of individuals who shop online (https://datacatalog.worldbank.org/dataset/global-financial-inclusion-glo...) and figures from Pan-African B2C company Jumia on average annual online shopping spend (“Jumia Company Presentation”, January 2018: https://11f5n223it01wurm02957bjg-wpengine.netdna-ssl.com/wp-content/uploads/2018/01/Jumia_Company_Presentation.pdf ).
 2013 Data Source: SWTO; UNCTAD UN DESA; EPZA Kenya; Mauritius Export Association; Lesotho Textile Exporters Association; TIDI Ethiopia; press; SAPI Swaziland Investment Promotion Agency; BIDPA Botswana Institute for Development Policy Analysis; MFDP; International Business & Trade TZ Initiative