The law provides sub-Saharan African countries with duty-free access to the US market and Biden “strongly” supports reauthorisation in a “timely fashion” and suggests modernising what he describes as an “important Act for the economic opportunities of the coming decade”.
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He states: “In so many ways, Africa is the future – and so when Africa succeeds, the whole world succeeds”.
Hansult tells Just Style during an exclusive chat over Zoom that irrespective of what happens with AGOA his company is dedicated to creating a fully vertical synthetic fashion supply chain in Ghana by 2026, however he believes an AGOA renewal of at least 10 years but ideally 15 or 20 years will benefit the entire fashion supply chain.
He explains it’s important to understand what DTRT stands for, and says: “I’d like to emphasise our philosophy is Do The Right Thing” and “it’s something we want to do and we want to do it for Ghana,” which is where DTRT Apparel has its manufacturing facilities.
The manufacturer was one of the first to identify West Africa and specifically Ghana as a tremendous opportunity for fashion sourcing: “We anticipated a potential shift towards sourcing in West Africa and made the decision to invest.”
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By GlobalDataHe highlights there’s certainly a few more players building up operations in the region today but DTRT Apparel remains the largest in terms of employees, volume and export.
AGOA is a significant part of DTRT Apparel’s business and he says it incentivises buyers significantly from a cost perspective especially as his business from the very beginning has been focused on synthetic which has the highest duty among apparel – upwards of 30%.
AGOA really helped DTRT Apparel to set up in West Africa with Hansult pointing out: “We had to make significant investments to build up skills [for our workforce] and that came with a tremendous cost”.
He’s hopeful AGOA will be renewed for another decade long before it expires in September 2025.
Hansult states: “When AGOA gets extended, it’s not just the investment that will come but it’s the fact that Africa can take all the learnings made elsewhere [such as other sourcing destinations] and over decades and leverage technical advances and environmental footprints to build a much better industry and that’s exciting.”
He is realistic about its renewal and when it will happen as there’s always the question – of how it can be improved based on what’s worked and what hasn’t: “There’s a push for a better version of AGOA – that has made it more difficult to have an extension of the existing agreement.
“Everything I hear in terms of improvement – it is about driving more investment into building our vertical capabilities – that hasn’t really happened to the extent the US would’ve liked to see.”
Hansult admits that to a certain extent AGOA hasn’t delivered on the expectation of driving more investment into the industry, but he argues “the market conditions today in our sector and the need for global supply chains has never been as great as it is today.
“There’s a lot of people ready to invest that are ready and waiting for the AGOA renewal to happen.”
Hansult is keen to urge the US Administration and President Biden to renew it now as the investments will happen because the market needs alternatives and needs to diversity from existing supply chains.
“The time for AGOA to deliver success has never been better,” he says.
Plus, he’s quick to add that West Africa and more specifically Ghana has a number of advantages to offer to global fashion brand sourcing professionals.
It has the sub-Saharan Africa advantage of being duty free and the cost competitive labour advantage.
Ghana is the closest country in Africa to both the US and Europe which gives it the speed to market advantage that is increasingly important for buyers.
Plus, it has the benefit of political stability, which is incredibly important during these times of global geopolitical turbulence.
He says the rest of the world needs to overcome its perception that Africa is “risky” as “it is not just one region – it is many countries with many realities”.
Another benefit, he adds is the tremendous opportunities available to focus on ESG from the get-go and invest in greener equipment and technology because it doesn’t have to work around existing infrastructure, which is often the case in other regions.
DTRT Apparel’s growth strategy – with or without AGOA
For Hansult, the intention is not just driven on third country fabrics and lower labour costs and he argues that shouldn’t be the strategy of anyone: “Africa should be viewed as an opportunity to grow a vertical manufacturing platform – this is our strategy”.
He continues: “There’s a space in the market for third country fabrics but to move the needle in Africa and gain market share building vertical capabilities is critical and that will enable sub-Saharan Africa regions to make those investments and compete with China.
Hansult admits that to make it a reality it requires significant capital investment and investors need to have a long term perspective so 10-15 years or 15-20 years. This is why he believes a 15 or even 20-year AGOA renewal would be far more beneficial than a decade.
“No-one comes in and sets up a textile mill knowing there’s three or four more years where AGOA will be in place so we need this long-term perspective which AGOA would deliver,” he declares.
Of course, Hansult believes AGOA could always be improved but right now he’s adamant that it’s more important for an AGOA renewal to happen as quickly as possible and to send that renewal signal to the world as adjustments over time could still be made.
“For our business – we’re committed to Ghana and we’re doubling on our original investment. We believe it will get renewed and we’re operating under the assumption it will get renewed.”
DTRT Apparel is in the final stages of financing for its first textile mill in Ghana to make synthetic-based performance garments in the region.
“We’re focused on sustainable technology that cuts down water consumption and we’re tremendously excited about it.”
Hansult sees DTRT Apparel becoming a true alternative to traditional sourcing by helping companies to diversify and the textile mill investment is the first step.
His longer term perspective is to be a facilitator of building out an eco system with yarn capabilities and having partners to set up yarn extrusion in the region.
There’s also “exciting conversations around circularity” as Hansult points out the used clothing market is a huge issue in Africa with it going into landfill so there’s conversations around used clothing and DTRT Apparel is part of those conversations as well.
Plus, he says: “I would expect that by the end of 2025 to early 2026 we’ll have an operational full verticality for synthetics in Ghana.”
This is a massive leap for the global fashion supply chain as he explains there’s huge concern about China from a geo-political perspective and he claims there isn’t a synthetic supply chain that doesn’t touch China or Taiwan so for DTRT Apparel it is a huge breakthrough to become vertical in the region from finished product backwards through to textile mill and yarn and these conversations are already happening all the way through to finished product completely without China or Asia.
He believes that once that’s achieved within a three to five year span, the market share towards Africa can increase: “We’re not going to take 20% market share over the next 10 years but we only need 1% or 2% to have a transformational effect so that will be so impactful.”
He concludes: “And that’s what AGOA is all about – creating jobs, economic development and driving export growth.
“We believe our strategy checks all the boxes of what AGOA intends to do.”
