Sourcing in Africa isn’t a fad or simply the latest hot region to talk about. Big brands are investing and those that have already invested are looking at how to spend more.
At the first edition of the Destination Africa sourcing show in Cairo on Friday, 85 exhibitors from around the continent gathered to display their products and discuss their offerings with major brands from the U.S. and Europe.
“When we thought about Destination Africa, the aim was to attract the attention of the buyers of Africa as a region, not only Egypt. Especially now that prices are increasing in China so we have to let the buyers know that there’s another part of the world,” Dina Abdel Aziz, project director for Destination Africa, said. “We are here, we are working, Africa is working and Egypt is the hub.”
Egypt doesn’t benefit from duty free access to the U.S. market under the Africa Growth and Opportunity Act (AGOA), but it does enjoy the same duty free trade privileges under the Qualifying Industrial Zone (QIZ) program.
Alex Apparels, the manufacturing arm of Alpine Creations in Egypt, has been making product for Walmart for 22 years and the retailer is so confident in the company’s abilities that it taps into its design expertise and technology expertise to guide the product it puts in its stores.
“We don’t wait for Walmart to give us designs, we are making our own designs and getting information from our R&D about things like antimicrobial and heating and cooling fabrics,” commercial manager Mohamed El Sharkawy said. “Most of the customers now try to reduce their budget by excluding the designer side and they want the vendors themselves to present the designs and present the technology, so that’s why we are trying to align with this demand.”
Walmart makes up half of Alex Apparel’s customer base, but the company also supplies Under Armour, Hanes and Carters/Oshkosh, with 80 percent of its business in knits and the other 20 percent in wovens. Product is made out of five factories in the Alexandria City region of Egypt.
The company has also started work on building its own mill in Egypt, in order to be less reliant on fabric sourcing from Asia, and is aiming for eventual vertical integration.
“We want to have our own mill in order to shorten the supply time and increase flexibility,” Sharkawy said. “We have everything here [in Egypt] to enhance this industry.”
Talk of sourcing in Africa hardly goes without mentioning Kenya, and the country is primed for taking on more manufacturing—not to mention its duty free benefits under AGOA.
Stability and guaranteed quality are among the two main things manager of the country’s Export Processing Zones Authority, Benjamin Chesang, said are key to Kenya.
“In terms of labor, the companies that have actually come and set up in Kenya as FDIs [foreign direct investors] have testified that our labor is good and people are easy to train,” Chesang said.
Labor in the country is also stable, foreign investors are welcome, and the country’s ranking in terms of ease of doing business has improved steadily in recent years.
The minimum wage for workers in Kenya is roughly $100 per month, and though it’s a touch higher than some of its neighboring nations, Chesang said manufacturers there aren’t in the business of giving buyers goods that are low quality and over-priced.
“Kenya is a country that is looking forward to improving the quality of life of its people,” Chesang said. “And the only way to do that is for factories to expand. And the only way for factories to expand is they have to get the market for their product.”
Lesotho, among the key countries set to present the greatest potential for textiles and apparel sourcing, wants buyers to know it has the capacity to fill their orders, access to the U.S. and EU markets duty free and a reasonably low cost of doing business.
“The manufacturing sector is the second biggest employer after the government,” said Puseletso Makhakhe, investment services manager for the Lesotho National Development Corporation (LNDC).
What’s more—and perhaps among the most important for sourcing—is the country’s stability, both in terms of its social and political environment.
For companies like Luqy’s Manufacturing based in the industrial area of Maseru in Lesotho, that fact has been a major selling point.
“I haven’t seen any labor unrest,” company director Mairoon Adams said.
Luqy, which specializes in athletic wear, has grown its staff from 80 people in 2015 to more than 300 today based on recent major orders. Capacity at the factory is 120,000 pieces per month, but Adams said they have the capacity to grow that to meet demand. The company currently makes goods for Fila, Russell, Danskin and Layer 8 brands and has counted Kohl’s among its clients.
Putting the perks of doing business in Lesotho simply, Adams said “Our working capacities are extremely good, the environment is clean, wages are low and, of course, we’re duty free.”
The current minimum wage for unskilled workers is around $80 a month, and for skilled workers, the rate jumps to $100 a month.