Sadie Keljikian, Top Billion Finance
East Africa is slowly becoming a popular location for apparel sourcing. Two years ago, European companies including H&M, Primark, and Tesco began sourcing some of their casual wear from Ethiopia. Others in the industry quickly followed suit. East Africa recently gained additional attention due to the African Growth and Opportunity Act (AGOA), which granted some sub-Saharan countries duty-free access to the US market. While East Africa’s growth as a destination for manufacturing is still nascent, the availability of land for development and access to low-cost labor force are promising for the region’s potential for growth as a competitor in the international textile and apparel industry, provided that governments, buyers, and manufacturers work together to improve business conditions in transportation, labor skill, and technological development.
Although Bangladesh leads the race to take over the apparel industry from China, the massive quantities of cheap and available labor in Ethiopia and Kenya are particularly drawing attention from global buyers. According to projections from the UN, the sub-Saharan region will have the highest growth in working-age population globally in the next 20 years. By 2035, that number will equal China’s working population today, with more than 900 million people. However, the relative lack of manufacturing experience (as opposed to seasoned veterans in apparel manufacture in Southeast Asia and Central/South America), is a major difficulty that requires further time and attention to address. Naturally, as investment and interest in the region grows, competency and manufacturing capabilities are sure to increase.
Beyond labor and available land, Ethiopia has cost advantages like cheap hydroelectric power and labor, and a rich supply of natural resources, but it still lags in production efficiency. In contrast, Kenya has high production efficiencies such as sources for bulk quantities of apparel basics like t-shirts and trousers, but has comparatively high labor costs and lacks a local upstream industry for raw materials, requiring the import or fabrics. While initial outlooks and projections for East Africa’s potential for progress are encouraging, countries in the region have a number of hurdles to conquer before closing the gap enough to challenge countries like China, India, Bangladesh, and Vietnam.
At present, East African apparel manufacturing is still a niche market and does not yet have the stability that many of its competitors have established over years and decades of trial and error and government investment. While East Africa still contributes only a small portion of apparel manufacturing, if businesses and governments confront the deficiencies aggressively, Ethiopia, Kenya, and other surrounding countries have the potential to grow into a major players in apparel sourcing and to forge a new standard for the garment industry.
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