Africa has potential to rival Asia as an apparel sourcing hub, but should learn from Asia’s successes and failures, according to industry experts.

Africa is emerging as a viable, even strong, sourcing alternative to Asia, but still needs to learn significant lessons from its rival on establishing a strong sourcing hub, say industry experts.

For instance, sub-Saharan suppliers should note how Asia’s garment and textile industry is well-coordinated and integrated regionally, with strong inter-country links. Simply put, the region will "need to allow an African-grown version of [Hong Kong’s] Li & Fung to emerge if it wishes to become a sourcing hub," Dr Patrick Conway, department chair of economics at the University of North Carolina, US, told just-style.

"Across-country coordination," is important, says Dr Conway, stressing how a major intermediary can build supply chain links. He authored the 2010 World Bank report ‘Incentives, Exports and International Competitiveness in Sub-Saharan Africa: Lessons from the Apparel Industry’.

Another key lesson that Africa can take from Asia is building trust by fulfilling contract obligations accurately and efficiently, he adds. "Asian firms are excellent sub-contractors…[they] so rarely disappoint the contractor with either the quality or the time of delivery of the product."

And for the sub-Saharan African industry to thrive, the region "needs to develop that same trust," he says. They need to "develop the ability to guarantee delivery of standardised quality. It also needs the cross-border linkages that allow firms across borders to collaborate in filling orders," he adds.

Africa’s affordability will help to make it an attractive sourcing destination. "As the previously preferred production platforms of those countries [in Asia] become more expensive in terms of production costs, the alternative of production in African markets will become more attractive," Dr Conway notes.

Safety and sustainability
That said, ongoing debates about safety and sustainability in Asia will not necessarily play to Africa’s advantage, he warns. "The Asian countries are typically already under greater scrutiny for these issues, but potential [customers] for the African sub-contractors are quite uncertain of Africa’s producers’ quality for safety and sustainability," he argues.

Backlashes regarding safety and sustainability issues in Asia are indeed a "wake up call for Africa" says Jaswinder Bedi, chairman of the Kenya-based African Cotton and Textile Industries Federation (ACTIF). "We have to make sure that we learn from Asia," he says, saying African suppliers need to take both issues on board as they grow.

Meanwhile, a senior European textile industry association official, who wanted to remain anonymous, told just-style that Africa needs to "learn its lessons from Bangladesh" – especially issues regarding safety and poor wages – in going forward.

Adding value
For the industry in sub-Saharan Africa, a top priority is adding value: Africa grows 67% of the world’s cotton but 70% of the crop is still exported as raw cotton, Bedi stresses. "We need to start adding value to raw cotton exports and by doing so we can create 9m new jobs."

But for that to happen, the industry needs to invest in new technology and modernise its machinery, where Africa is lagging behind. "There are huge gaps in the intermediate sectors of the cotton value chain," Bedi says. "And the operating costs are pushed further up due to obsolete technology and equipment."

Dr Conway agrees. Africa’s low labour costs are often "offset by other costs of doing business: unreliable infrastructure, for example. Modernisation of the industry in Africa is important."

And this is where governments in Africa can help, says UK-based textile industry consultant Peter Alderslade, who has worked in Morocco, Nigeria, and India. "An efficient supply chain and supportive government will be a great asset," Alderslade says. "In my opinion, the success or otherwise will depend primarily on the business and manufacturing skills available," he adds.

One key benefit for Africa is that it well situated geographically to sell into Europe, says Dr Conway, adding: "Many countries have the additional ties that come from their colonial heritage. Moreover, shipping times to Europe, and to a lesser extent, the east coast of the US, are less [than from Asia], he says.

By nature, "textiles and apparel are reliable export-led growth sectors," Dr Conway explains, and once the sector establishes its reputation as a modern, timely, reliable supplier, "Africa could benefit across this spectrum." There are particular opportunities in the large-volume segment for Africa, for example with standardised products such as undergarments or T-shirts, says Dr Conway.

And the future looks promising, according to Bedi. Brands have earmarked Kenya, Ethiopia and Uganda for major manufacturing investments, with "boots on the ground" in Africa, not just purchasing offices.

Click on the following links to read other articles in this briefing:

Sourcing in Africa: AGOA extension key
Sourcing in Africa: EAC readies for EU market access
Sourcing in Africa: Foreign investment flows in