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Fashionomics Africa: Outlook for 2017
The challenge: Youth employment
The continent has experienced a high rate of population growth, which has the potential to be a demographic dividend, but only if there is sufficient investment in jobs, skills and education. Africa has a huge problem with unemployment, particularly youth unemployment and the need for jobs are growing faster than ever.
Africa has 480 million youth today and that figure is projected to grow to 850 million youth by 2050. Despite the 10 to 13 million youth that enter the workforce each year, only 3 million formal jobs are created annually (in the public and private sector). Even when jobs are available, youth often do not have the skills required, despite gains in education access over the past several decades. Women are particularly impacted, often facing even greater barriers to accessing opportunities and earning equal pay.
Diversifying African economies and furthering regional integration are essential parts of the African Development Bank’s ambition. With a view to building a prosperous Africa based on inclusive growth and sustainable development, drawing on the ‘High 5 Agenda’, the Bank is investing in high-growth sectors that have the potential to promote women’s economic empowerment and create 25 million jobs over the next decade. To respond to this urgent needs, the AfDB has a transformational vision for youth employment and entrepreneurship in Africa and has developed a Jobs for Youth in Africa Strategy 2016-2025 to catalyze the youth opportunity focusing on agribusiness, ICT and manufacturing.
A solution: Investing jobs in the textile/fashion industry
In this context, the development of labour-intensive sectors is imperative and the African creative industries oﬀer massive potential for continent-wide job creation and GDP growth. The African fashion is a case in point. From South Africa to Egypt, from Senegal to Nigeria and Kenya, across the continent, hundreds of thousands of tailors and designers, most of them operating in the informal sector, are producing unique clothes, ties, shoes and accessories with a visible “made in Africa” brand for a growing middle class. It is increasingly recognized that the vast and diverse African cultures and traditions are not only descriptive of our continent, but represent an economic asset that we need to promote and exploit to support inclusive growth. This are exciting times to invest in the African fashion industry as there is still room for growth.
Countries like Ethiopia intend to become “leaders in light manufacturing”, which includes apparel, leather and agro-processing and create 300,000 jobs for the industry. The country is investing in the construction of new industrial parks as part of the government plan to increase its textile and apparel exports by US $1 billion through its second growth and transformation plan (GTPII) and attract more foreign direct investment (FDI).
As AfDB President Akinwumi Adesina stated in an article published by the African Report in its January 2017 issue, the Bank wants to help countries develop industrial zones such as Ethiopia’s Hawassa Industrial Park, where the Ethiopian Government has worked with apparel giant PVH Corp, owner of the Calvin Klein and Tommy Hilfiger brands, in a public-private partnership. The public-private partnership has led to the newly built US $250-million Hawassa Industrial Park, where the AfDB has invested in the construction of the Modjo-Meki (56.8 km) section of the Modjo-Hawassa expressway (202.48 km). The Mojo-Hawassa highway lies mostly in Oromia Region and is part of the major Mombasa-Nairobi-Addis Ababa highway project that will facilitate local agri-business and international trade.
The Bank will be also providing financing up and down the value chain. In the 1960s just after independence, countries were trying to produce everything to be self-sufficient, Adesina told The African Report. “Today, you have global value chains and changing landscapes in terms of procurement systems. Labour costs are changing rapidly in China and countries like Bangladesh, where textile and garments have been the big thing.” Now, international companies are seeking new territories, says Adesina. “They are looking at African countries such as Morocco, Ethiopia and Egypt, and so on. This provides new opportunities for the continent.”
What distinguishes the AfDB from other multilateral development banks (MDBs) is its African character. It gives us a comparative advantage in our work, as we are closer to our clients and a trusted partner. In 2015, the AfDB launched the Fashionomics Africa initiative. Fashionomics (the economics of fashion) is a pan-African program to support the development of the textile and fashion industry with a focus on micro, small and medium-sized businesses (MSMEs), attractive to large number of young people – skilled and unskilled. It is envisioned that the Fashionomics program will support AfDB’s “High 5” priorities, in particular, the Jobs for Youth in Africa and Industrialization programs. The goal is to enable African designers and fashion entrepreneurs to create and grow their businesses.
In 2016, the Bank launched the Fashionomics initiative in five African countries (Côte d’Ivoire, Kenya, Ethiopia, Nigeria and South Africa), to promote the concept, develop the platform’s database, forge strategic partnerships and discuss its proposed engagement with a wide range of stakeholders. Most importantly, it provided an occasion to come closer to beneficiaries and established networks of investors and connect them with African fashion entrepreneurs.
The Bank is in the process of operationalizing the full-scale Fashionomics platform to connect the different stakeholders in the industry (suppliers, buyers, retailers, designers/fashion entrepreneurs, financiers, donors, etc.), along with the financial community and end-users (consumers or people interested in the sector). Other goals of the project: to increase transparency in the sector, and generate more business and increase productivity through skills development, starting with a pilot phase in five African countries: Côte d’Ivoire, Ethiopia, Nigeria, South Africa and Kenya.
To further develop an impactful program in all five pilot countries, the key next steps are to: increase access to markets; increase access to ﬁnance by connecting designers/fashion entrepreneurs with commercial banks and established investors, but also by tapping into alternative ﬁnancing channels, such as crowdfunding mechanisms, and linking them to angel and impact investors; improve the skills of the target group, enhancing productivity (shared-production facilities/incubators), mentorship, tutorials, skills development (through boot camps/trainings on produce high-quality garment, but also business acumen on how to prepare business plan, etc.), and develop market intelligence surveys that will assist them to prosper and sustain their businesses; and provide networking opportunities.
The initiative goes beyond the online platform – it aims to give structure to the industry and connect all the players of the value chain. The Bank is exploring different ways by partnering with private and public sector to recreate the enabling environment needed for the industry to develop (cross-cutting all the High 5 priority areas) by looking at increasing production capacity, access to finance, access to markets and skills development.
The Bank, together with its development partners, intends to invest in the sector through a value chain development approach. The message is clear: Africa should be seen as a centre of creation‚ of innovation, not just a source of labour.
For more information on Fashionomics, please contact Emanuela Gregorio, Economist, firstname.lastname@example.org.