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Africa Improves Sourcing Advantages in Uncertain Trade Times

With retail in the strained position it’s presently in and a promotional cycle that’s got stores stuck for selling product at full price, the way forward for retailers will be to look for duty savings.

Knowing that, and highlighting its duty advantages to both the U.S. and the EU markets, African apparel manufacturers are looking to improve their presence and their offering.

To undertake both efforts, the Africa Pavilion will bring together 80 exhibitors from all over the continent in an effort to feature the region’s “next-generation apparel sourcing,” at Sourcing at Magic in Las Vegas Feb. 20-23.

Trade experts have said sourcing in Africa could quadruple over the 10 years of the African Growth and Opportunity Act (AGOA), which affords eligible African countries duty free sourcing to the U.S. AGOA was renewed in 2015 and will remain in place until 2025 when it will come up for renewal consideration again.

“The long-term extension of AGOA is a unique opportunity for apparel and other accessories producers in Africa to get a slice of the U.S. buyer pie; and indeed, for investors and large brands to establish operations on the continent,” said Finn Holm-Olsen, director of trade promotion and AGOA for the East Africa Trade and Investment Hub. “Certainly with the likes of PVH and VF Corp. setting up shop in East Africa, the region has become an attractive investment proposition in textiles/apparel—and we want to build on this momentum.”

Opportunities increase further with the EU’s Everything But Arms (EBA) program, which affords similar duty savings. There are sixteen countries in Africa—including Ethiopia, Lesotho and Madagascar—that are eligible for duty savings under both AGOA and EBA. With duty savings on goods to the U.S. as high as 35 percent and an average of 12 percent to the EU, the financial advantage can be considerable.

“AGOA provides significant opportunities for companies and business organizations to build relationships with their U.S. counterparts,” the Africa Advantage website notes. “It also provides security for both SSA [Sub-Saharan Africa] exporters and potential U.S. investors by ensuring AGOA benefits,” for the next eight years. AGOA benefits cover more than 1,800 tariff line items, which comes in addition to the 4,600 items already benefitting from duty-free trade with the U.S. under the Generalized System of Preferences (GSP) program.

Many of the factories exhibiting as part of the Africa Pavilion are WRAP-certified and compliant with fair labor, environmental and global safety standards, according to the East Africa Trade Hub, which supports manufacturers for exhibiting at Magic.

Lead times for goods from Africa, in some cases, can also be quicker than might be expected—product bound for the U.S. from West Africa can reach their destination in three weeks, and close proximity to Europe and similar time zones eases trade between those two regions too.

What’s more, those interested in sourcing in Africa can benefit from on-the-ground support services from the U.S. government’s Trade and Investment Hubs based in East, West and Southern Africa. The trade hubs serve as one-stop shops for businesses looing for aid in better leveraging duty free opportunities, tailored suggestions for trade enhancing activities and technical assistance for African manufacturers to strengthen production and quality assurance.

“The East Africa Trade and Investment Hub has maintained a steady presence at Magic over the years as a core aspect of our strategy to stay connected with U.S. buyers and keep Africa at the forefront of their sourcing plans,” Holm-Olsen said. “Joined by our colleagues in West and Southern Africa, this show will be the largest African Pavilion ever, which is really fantastic.”

The Africa Pavilion (Booths 60907-61512) will be across from the main attendee Starbucks entrance at Sourcing at Magic next week. For more information, visit theafricaadvantage.com.

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