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Ethiopia Among Nations Leading Africa’s Apparel Sourcing Surge

Long considered fertile ground for apparel manufacturing, Africa is finally starting to be cultivated.

Exports from a group of countries in the region to the U.S. and European Union (EU) are experiencing steady to exponential growth, and the next decade could see the continent become a substantial player in global sourcing, according to two expert speakers at the “Doing Business in Africa: Trade and Sourcing” seminar at Texworld USA.

Gail Strickler, president of global trade for Brookfield Associates, noted that Morocco and Jordan each have bilateral free trade agreements (FTAs), while the Africa Growth & Opportunity Act (AGOA) offers preferential trade treatment to a host of sub-Saharan Africa countries, from Ethiopia to South Africa.

Strickler said the concern for AGOA is that it is up for review in 2025, “so how many people are going to invest in 2019” when in six years it could go away. She said there are efforts to push for it to be turned into an FTA or have a longer renewal stipulation.

“We’ve seen that with the tariff threats on China imports, everybody is looking for alternative sourcing,” she said. “For example, we’ve already seen more goods imported from Morocco, Jordan and Madagascar in 2019 than we saw in all of 2018.”

Jordan also has an FTA with the U.S., while Madagascar is part of AGOA. Ethiopia, Strickler noted, is seeing the fastest rate of growth in apparel imported into the U.S. among the AGOA countries. Egypt, which ships goods to the U.S. under a link to the Israel FTA, which doesn’t expire, has shown consistent strength as a supplier to U.S. brands.

There’s no doubt that U.S. importers continue to look to Africa for fresh sourcing alternatives, as they invest in and build relationships with factories there.

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Ethiopia has led the charge, posting a 119 percent year-to-year increase in May with $120.86 million worth of apparel shipments to the U.S. Imports from Kenya rose 44.8 percent to $39.25 million, Madagascar’s gained 20.4 percent to $20.16 million and Lesotho’s were up 19.8 percent to $20.26 million.

Manon Clavel, a consultant for the Morocco agency for investments, development and exports (AMDIE), said the country’s apparel sector employs 175,000 people–the largest in Morocco–with 1,200 textile and apparel companies with a capacity of 1.3 billion pieces of apparel annually.

“Morocco is the third most attractive investment destination in Africa,” Clavel said. “There are many reasons why Moroccan apparel is attractive,” she said, including an established industry, the ability to service fast-fashion firms, the free trade agreements it has with the U.S. and EU, and the relative proximity to New York City and the U.S., noting that it is only a seven-hour plane ride away.

Clavel said Morocco has registered a 5 percent year-over-year increase in exports to the U.S. and EU. She said, “The Moroccan market is highly integrated to the European fashion industry because of the proximity and Moroccan apparel factory owners attend European trade shows in places like Paris and London.”

She said there are industry development programs focused on the fast fashion, knitwear and denim sectors as growth markets over the next five years, “so capacity is going to increase.”

Responding to a question about different countries’ specialties, Strickler said Egypt is known for its textile industry, particularly cotton, as well as tailored clothing and denim manufacturing. Jordan, on the other hand, produces no textiles and has a forte in cut-and-sew synthetic knitwear.

Ethiopia does maintain a native textile sector known for ornate fabrics and prints, while many foreign apparel firms have made large investments there to produce a range of goods. The same is true of South Africa, she noted.

Strickler noted that one downfall for Africa is longer shipping times compared to places like Central America, although several ports are investing in infrastructure to improve transit times.

Asked if Africa can become the next China, Clavel said, “I think there is a good chance for Africa to become a key manufacturing center in the world. There are many reasons – the trade tensions, labor costs rising around the world and staying quite low, especially in sub-Saharan Africa.

“There’s also a lot of interest from the private sector, from the Chinese government, the European Union, which is very keen on increasing trade with Africa,” Clavel added.

Strickler said, “There’s never going to be another China–nothing is going to have a central government that makes decisions and organizes the kind of supply chain growth the way that China did. And I don’t know that we want another China. But that being said, as an alternative, there are definitely some great opportunities both for sourcing and job creation.”