//EMERGING MARKET FACTS

 

SCOPE

In a report by the AfDB, Africa currently accounts for 1.9% of global trade. The global fashion industry is estimated to now be worth $1.3 trillion and estimated to be worth $2 trillion by 2020. Within Africa, the entire textile/clothing market is already worth more than $31billion and accounts for the second largest number of jobs in developing countries after agriculture. The artisan craft sector is the second largest employer in the developing world. In the next five years, Africa’s textile industry could generate $15.5 billion revenue. But according to the 2006 UN Human Development Report, Sub-Saharan Africa loses about 5% of GDP through shrinking trade income, this equates to around $28.4 billion annually Africa will rise not by charity or aid but through investment and trade so business acumen and an understanding of this emerging market is key to the development of a strong African economy.

Research shows that with easy shipping access to European and USA Africa has an advantage over Asian manufacturers. It takes three weeks for a shipping container to travel from West Africa to Western Europe and a month to travel to the eastern seaboard of the United States. Alongside this, lower (or comparable) labour costs and trade preferences offered by most of the Western key players, such as the Africa Growth and Opportunity Act (AGOA), Market Access Regulation (MAR), Generalized System of Preferences (GSP) and Everything But Arms (EBA) all allow apparel manufacturers in many African countries duty free deals (or reduced tariffs as much as 30% compared to Asia) when entering European, American and also Australian markets.

Through the Ethical Fashion movement, opportunities exist for African fashion businesses to successfully compete in a lucrative international market for fashion. According to Oxfam if Africa, East Asia, South Asia, and Latin America were each to increase their share of world exports by 1% that the resulting gains in income could lift 128 million people out of poverty. In Kenya for example, statistics show that every job in the garment sector in Kenya generates 5 other jobs. In Lesotho, thanks to the apparel industry (representing 94% of merchandise exports) GDP per capita increased from $558 in 2001 to $3000 in 2004.

In general, clothing and textiles represents about 7% of world exports and apparel manufacturing is shifting with the frontier of production is moving to Africa. It is becoming a top garment sourcing destination and an emerging competitor for clothing brands. This presents great opportunities as well as a challenge. According to McKinsey top global CPOs by 2020 “expect to increase their sourcing share from Africa by a factor of nine”. It’s possible to not only manufacture cost-competitive clothing in Africa with a focus on quality, but also with a focus on ethical standards and capacity building with a positive environmental impact.

This all agrees with the opportunity of Africa that the World Economic Forum has told us, that:

Africa is on the brink of a major transformation… the outlook for the region remains bright at a time when the rest of the world is facing major political and economic challenges.”

 

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