Manufacturing apparel in Africa is expensive. Training and quality control are expensive. For many Western companies, Africa is a fresh start an opportunity to build facilities and processes that are environmentally friendly and safe. And don’t forget the tax breaks. Most apparel will continue to be made in Asian countries where labor is still relatively cheap and infrastructure is already in place. However, in China, the world’s leader in apparel manufacturing, wages have increased 80 percent since 2010. Can you build a sustainable fashion business by manufacturing in Africa? Brands like Lemlem have proven that scaling is possible in Africa.
Ethiopia-born model and entrepreneur Liya Kebede walked Miuccia Prada’s runway and starred in Tom Ford campaigns before starting Lemlem, a garment company, in 2007. She hired a firm in Addis Ababa to produce gauzy white cotton garments handwoven in the traditional technique that she wore growing up. They have since been replaced by more Western-style (and often second-hand) clothes. “When I created Lemlem it was about trying to create a solution to a problem,” Kebede said at her office in Manhattan. “The market of the weaving had gone down a lot and there were all these artisans that were looking for jobs and not finding any. What can I do to help move the needle a little bit along?”
Kebede taught artisans to weave in stripes of fluo-coloured yarn that have become Lemlem’s signature. In her first year, she manufactured 200 units and secured three points of sale. Collaborations with J.Crew and a kid’s line followed. In 2017, production is expected to exceed 25,000 units, with 300 points of distribution in six continents. She now employs 250 weavers and craftspeople in Ethiopia. Salaries increased five-fold in the past decade. In recent years, Kebede expanded production to Kenya, and she sources materials in Rwanda, Madagascar and Mali. Her 2017 goals include raising capital to grow further, and she plans to do so in Africa. Expansive production, especially at the higher end of the market, seems extraordinarily difficult to accomplish on the continent. Challenges include unstable infrastructure, bureaucracy, and lack of know-how. And yet, Africa remains an intriguing option for some fashion companies eager to commission work from skilled artisans.
“We’ve had a wide variety of different successes and failures producing there,” says Aurora James, founder and designer of Brother Vellies. She manufactures her accessories line in South Africa, Kenya, Morocco and Ethiopia, and sources and creates materials in Mali, Burkina Faso and Namibia. “We started in Southern Africa with rolling blackouts and strikes, and managed to get past all of that.” A small, if high-profile, number of businesses large and small are looking to Africa, especially as costs to manufacture in Asia rise and a desire to build companies that produce garments in a sustainable, ethical way increases.
There is also the tendency for fashion brands to create one-off projects that generate buzz, but don’t offer long term employment. “They need to be committed to the fact that it might be tough in the beginning. It’s not China, you know?” says Ethiopian-American Yodit Eklund, founder of surf label Bantu Wax. “(African manufacturers) don’t have as long of a history as other places. I don’t think it’s wrong that there are Turkish factories, Chinese factories in Africa. I think it’s great. But it’s important to have a sustainable business.”
In 2005, Bono and his wife, Ali Hewson, founded Edun, a ready-to-wear company that aimed to promote African fair trade and production. LVMH acquired a 49 percent stake in Edun in 2009, but it has struggled to gain its fashion footing. Today, Edun makes 80 percent of its goods in Africa, mainly in Kenya and Madagascar. The other 20 percent is done in the U.S. In 2016, Artisan Fashion, a Kenya-based production company that makes accessories for well-known brands including Karen Walker, Vivienne Westwood and United Arrows, produced more than 72,000 units, working with more than 1,000 artisans.
The Lagos-based Maki Oh, designed by former LVMH Prize finalist Amaka Osakwe and worn by the likes of Michelle Obama, is produced in Nigeria. Eklund’s Bantu Wax is not only produced in Africa, but sold there as well. At one time, the self-funded line, founded in 2009, was sold at Barneys New York, Saks Fifth Avenue and Beams. But Ecklund soon realised that the retail opportunity was in Africa itself, with a surf culture ignored by Western brands. “I pulled out of my wholesale and opened stores in Morocco, Senegal, and Cape Town,” Eklund says. “I’m trying to build the Quiksilver of Africa.”
In some ways, these early, higher-fashion entrants are also being buoyed by the cheap manufacturing that is taking place across the continent. While Africa collections from fast fashion retailers including H&M and ASOS have made headlines, there is a serious contingent of retailers — and the third-party manufacturers they contract — that have made Africa a priority. To be sure, the majority of apparel goods are, and will continue to be, made in Asian countries including Cambodia, Vietnam and Bangladesh, where labour is still relatively cheap and plentiful and the infrastructure is already in place.
However, in China, the world’s apparel manufacturing leader, average manufacturing wages have increased by 80 percent since 2010. For now, the consumer has been protected from these costs. The rising prices of rent, labour and energy have been masked by the decline in prices of commodities, meaning that retail prices of goods have been static for several years. But soon, the increase in costs will outweigh the decrease in commodity prices, forcing retailers to raise suggested retail prices. China’s textile exports, for instance, dropped 5 percent in 2015 to $286.8 billion, according to one report. Spurred by changing circumstances in the Far East, many manufacturers are building factories in Africa.
One of the biggest reasons to manufacture in Africa is the tax break it affords companies. The African Growth and Manufacturing Act (AGOA) which gives duty-free and quota-free status to apparel made in more than 45 countries in sub-Saharan Africa, allows companies to import goods from Africa into the U.S. for zero duty taxes. (Northern African countries, including Morocco, Libya and Egypt, are not included.) The U.S. trade act was first implemented in 2000 and is now set to remain in place through 2025.
The Trump administration has begun to outline its protectionist strategies around trade.
Retail executives are less concerned with AGOA, believing that Trump has more significant trade policies to tackle, such as the “border adjustment tax” proposed by Congress, which could significantly raise income taxes for companies that import goods.
Source: AFK Insider