Can you build a fashion business with a manufacturing base in Africa?

Can you build a fashion business with a manufacturing base in Africa?
Published
Thursday, 23 February 2017 ~ LAUREN SHERMAN

Liya Kebede made her first Lemlem garment in 2007 as a way to give back to Ethiopia, where the successful model was born and raised; a crucial stop before starring in Tom Ford campaigns and walking Miuccia Prada’s runway.

She found a group in Addis Ababa, her hometown and the sub-Saharan African country’s largest city, to produce garments handwoven in the traditional technique, with the gauzy white cotton she wore growing up but had since been replaced by more Western-style (and often second-hand Western) garments.

“When I created Lemlem it was about trying to create a solution to a problem,” Kebede says, smiling from behind her desk in a sunny office located in Manhattan’s Little Italy neighbourhood.

“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 modernised the silhouettes and instructed the artisans to weave in stripes of fluo-coloured yarn, which soon became Lemlem’s signature. In that first year, she manufactured 200 units and secured three points of sale. Collaborations with the likes of J.Crew — including a successful kid’s line — followed.

In 2017, production will exceed 25,000 units, with 300 points of distribution across six continents. She now employs 250 weavers and craftspeople in Ethiopia, with salaries increasing five-fold in the past decade. In recent years, Kebede has expanded parts of her production to Kenya — where she produces trend-driven fashion items — and sources materials in Rwanda, Madagascar and Mali.

The success of the line has compelled Kebede to change her namesake non-profit to Lemlem Foundation, which has expanded its mission of promoting maternal health in Africa to supporting the economic empowerment of African women. (The for-profit business donates 5 percent of all of its direct sales and proceeds from one-off collaborations to the foundation.)

While Kebede declined to disclose annual revenue figures, her 2017 goal for Lemlem — other than to expand the label’s fashion offerings, with plans to host its first-ever live presentation during the Resort 2018 season this spring — is to raise capital in order to scale further. And she plans to do so in Africa, where she has managed to achieve success.

And yet — expansive production, especially at the higher end of the market — still seems extraordinarily difficult to accomplish on the continent — if not impossible — with commonly known challenges such as unstable infrastructure, the bog of bureaucracy and a lack of information on how exactly to do it.

It’s also difficult to train artisans to make something that they’ve never made before, which means many brands must manufacture in several countries at once in order to achieve the desired results. That’s an expensive (and logistically mind-numbing) task, so it’s no surprise that few have attempted it. There was $815 million worth of apparel imported from Sub-Saharan Africa into the United States in 2015, down 5 percent from the year previous.

And yet, Africa remains an intriguing option for some fashion companies eager to commission work from skilled artisans, either for aesthetic (trends), or ethical reasons (job creation).

“We’ve had a wide variety of different successes and failures producing there,” says Brother Vellies founder and designer Aurora James, who manufactures her accessories line in South Africa, Kenya, Morocco and Ethiopia, and sources and creates materials in Mali, Burkina Faso and Namibia. (She also sources from the Caribbean island of Haiti). “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 as 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.”

[Fashion brands] need to be committed to the fact that it might be tough in the beginning. It’s not China, you know?

To some Western eyes, Africa seems like a vastly different place than it was in 2007, when Lemlem was founded and U2’s Bono visited the Group of Eight (G-8) summit in Germany, where he advocated that the leaders of European, American and other leaders forgive their loans to Africa. Although scourges like AIDS, tuberculosis and malaria — diseases the group of nations pledged $60 billion to fight — continue to plague the continent and represent many of the struggles it faces, Africa has since become more attractive to investors thanks to its fast-growing economies.

 

Just two years earlier, 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, due in part to a rotating roster of creative directors, as well as an unfocused manufacturing strategy which included producing garments in places like Portugal.

Today, however, after many iterations, Edun makes 80 percent of its goods in Africa, mainly in Kenya and Madagascar. The other 20 percent is entirely done in the United States. Edun's creative structure has transformed as well. Instead of replacing the the most recent creative director Danielle Sherman with another head designer, a "design collective" currently runs that department. There are no immediate plans to install a new public-facing lead, according to the company.

“Manufacturing in Africa is expensive, the training is expensive, the quality control is expensive,” says Edun chief executive Julien Labat, who about 20 months ago. “We have more than 10 years of experience to rely upon.”

But while Edun has managed to make good on its mission to encourage fair trade on the continent, Labat says that its future success will partially rely on other labels taking a chance on Africa.

The group of upscale brands that do a significant amount of manufacturing in the country remain close-knit, sharing resources in a way that is rarely seen with designers who produce in Europe, the United States or Asia. 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. And 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. In 2015, Chinese officials made a pledge to help ensure more than 50 percent of Africa’s GDP will be manufacturing by 2063.

What’s more, for many Western companies, Africa is a fresh start: An opportunity to build facilities and processes that are more environmentally friendly, and to ensure the safety of workers. For many companies implicated in 2013’s Rana Plaza factories disaster, which resulted in the deaths of more than 1,100 people, improved working environments have been underscored in their public corporate responsibility policies.

Manufacturing in Africa is expensive, the training is expensive, the quality control is expensive.

Whether or not major corporations will succeed in Africa remains to be seen. Along with the potential environmental impact and general concern regarding factory safety and worker treatment, resettlement — when communities have to move in order to make room for factories and added infrastructure — is a challenging and often upsetting endeavour.

Some major companies are addressing these issues with transparency — laying out their plans publicly, with frequent updates — they are also emphasising the economic benefits of their arrival. PVH Corp., the US conglomerate that owns Tommy Hilfiger and Calvin Klein, worked in partnership with the Ethiopian government to build facilities in an industrial park in the city of Hawassa, and plans to hire 30,000 to 60,000 employees over the next three years.

The country’s access to hydroelectric power, which will eventually help power the plant along with geothermal energy, was a deciding factor to build the industrial park there. PVH, in partnership with third-party suppliers, is also building a zero-liquid discharge effluent treatment facility on the premises that will recycle approximately 90 percent of all wastewater produced there. Vocational and life skills training, transport infrastructure and waste management systems are also being implemented in partnership with the global donor community and local government in order to make PVH’s presence in the community worthwhile for both the country of Ethiopia and the company's future employees.

“We handpicked our suppliers — the best suppliers we had, who have the same corporate responsibility values that we as a corporation have — people who we felt could have a vision that is similar to ours,” says Bill McRaith, PVH’s chief supply-chain officer. “Here’s an opportunity to stand up for something, but do it in a different way than anything we’ve done before. Let’s look back at what we could have done better, or been smarter about the first time around.”

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 US for zero duty taxes. (Northern African countries, including Morocco, Libya and Egypt, are not included.) The United States trade act was first implemented in 2000 and is now set to remain in place through 2025.

Of course, as the Trump administration has begun to outline its protectionist strategies around trade — pulling out of the Trans-Pacific Partnership and threatening to disassemble the North American Free Trade Agreement — questions of whether AGOA will indeed last are being raised. Right now, making items in Africa does keeps taxes lower. If AGOA were to cease to exist, that would no longer be the case.

Retail executives are less concerned with AGOA, however, 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.

And yet, it’s something that can’t be swept under the carpet. “If he gets rid of that,” James says, “We have a whole ‘nother set of issues.”

 

View related news articles

'The opportunities are vast in a potential US-Kenya FTA'

Last year, the U.S. and Kenya announced the launch of free trade negotiations, the first of its kind between the U.S. and a sub-Saharan Africa country. If successful, it would be the most significant trade development in the region since the enactment of the African Growth and Opportunity Act (AGOA) trade preference program in 2000. To better understand the key issues surrounding FTA negotiations, the U.S. Chamber’s U.S.-Africa Business...

06 May 2021

Report: A look at the potential benefits and challenges of a US – Kenya trade agreement

The American Chamber of Commerce (AmCham) Kenya has partnered with the U.S. Africa Business Centre (USAfBC) and Covington to publish a business trade report. The report, titled US-Kenya Trade Negotiations: Implications for the Future of the U.S.-Africa Trade Relationship, examines the challenges and benefits of a potential free trade agreement (FTA) between the U.S. and Kenya. Speaking during the report launch, AmCham Kenya CEO,...

30 April 2021

Kenya: 'Uhuru–Blinken talks a breath of life to US trade deal'

Trade talks between Kenya and the US could resume soon following Tuesday's virtual meeting between President Uhuru Kenyatta and US Secretary of State Antony Blinken. This is after a five-month break occasioned by change of g-uard in the US as President Joe Biden took over from Donald Trump after last November’s elections. The settling down of the Biden administration put foreign trade negotiations and policies on hold, which included...

29 April 2021

'Changing jeans sourcing scene has these countries coming up roses'

The sourcing landscape for denim jeans is slowly but certainly shifting, while overall U.S. blue denim apparel imports continue to decline. Imports of jeans fell 7.43 percent in the first two months of the year compared to the same period in 2020 to a value of $460.25 million, expanding on a 5.36 percent year-over-year falloff in January, according to the Commerce Department’s Office of Textiles & Apparel (OTEXA). Coming off...

09 April 2021

'Biden Administration dampens Kenya's hopes for bilateral trade deal'

The Biden administration's plans to review foreign trade policy and refocus it on America's economic recovery have thrown long-running free trade negotiations with Kenya into disarray. In a development that casts doubts on the future of a bilateral free trade agreement (FTA) with Kenya, United States Trade Representative Katherine Tai has informed Kenyan Minister of Industrialization, Trade and Enterprise Development Betty Maina of...

05 April 2021

Lesotho: '45,000 textile jobs at severe risk'

With only about a week left, the United States government says it is "disheartened" by Lesotho's failure to address its human trafficking concerns. This puts the country on the brink, with the real risk of losing billions of maloti in funding under the second compact and about 45 000 textiles jobs facing serious jeopardy. The US had given Prime Minister Moeketsi Majoro's government a 1 February 2021 deadline to address an array of human...

29 January 2021

'Uncertainty around Kenya-US Free trade deal'

A cloud of uncertainty has engulfed Kenya’s pursuit of a free trade agreement (FTA) with the United States due to the impending change of guard at the White House.  Even before he takes office, President-elect Joe Biden has sent strong indications of plans to annul many of President Donald Trump’s policies, cutting across trade, environment and geopolitics - something that has Kenya on edge over the ongoing negotiations for a...

18 January 2021

Kenya exports to US climb to Sh67 billion

Kenyan exports to America under the Africa Growth Opportunities Act (AGOA) hit Sh67 billion last year, a marginal increase of 3.7 per cent from Sh64 billion recorded in the previous year. According to the latest report from the Office of the US Trade Representative, Kenya emerged the fourth exporter under Agoa, after Nigeria (Sh310 billion), South Africa (Sh200 billion) and Angola (Sh60 billion) in Africa. “Kenya is currently our 96th...

30 December 2020

Ghana Apparel Training Centre launched to develop garment industry

In efforts to support Ghana’s garment manufacturing industry, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, together with its partners – Ethical Apparel Africa (EAA), Gerber, Groz Beckert, Freudenberg and Accra Technical Training College (ATTC), have officially launched the Ghana Apparel Training & Service Centre, in Accra. The launch forms part of a public-private partnership between the German Federal...

27 November 2020

Opinion: 'Kenya-US relations really do matter'

With the shadow of the bitterly contested American presidential elections looming over us, the past few weeks have seen much discussion on the relationship between Kenya and the US. The average American may not care much who gets to be the president of Kenya – indeed would generally have no idea of it, if there was a presidential election taking place in Kenya. But most Kenyans are very keen to see if this most unusual of American...

05 November 2020

'From AGOA to FTA - Kenya-US ties growing from strength to strength'

[Opinion] The 56-year-old United States-Kenya relationship flourishes because we trust each other, respect each other and our nations share common values. Both believe in a strong economy through an open, free marketplace allowing entrepreneurs, businesses and the private sector to thrive and create jobs. The African Growth and Opportunity Act (AGOA) enhanced markets, allowing Kenyan businesses to grow. Agoa will expire in 2025 and, while...

29 October 2020