With sourcing costs constantly on the rise and the race to the bottom when it comes to price becoming increasingly less favorable for brands, the last way left to shave dollars off of FOBs is to capitalize on duty savings.
Recognizing this opportunity in the market and the rising interest in Africa as the next sourcing hub, the Egyptian Exporters Association and other textile organizations in the country saw it fitting to bring the sourcing world to the continent for Destination Africa, an event designed to give companies a real feel for the continent’s capabilities and highlight existing duty saving opportunities.
“The dynamics of the textile trade is changing around the world and we want to make sure Africa gets its fair share of the market,” said Mohamed Kassem, head of Egypt’s Ready Made Garment Council, which has helped to organize the event.
From Nov. 11-12 at the Nile Ritz Carlton Hotel in Cairo, Egypt, manufacturers, suppliers and investors will gather to give U.S. and EU buyers and decision makers an opportunity to explore what’s on offer all over Africa in one place. Exporters from countries like Egypt, Morocco, Tunisia, Mauritius, Madagascar, Ethiopia and Kenya, among others, will exhibit at the show.
“This show is different from others as it brings together exhibitors from both North and Sub-Saharan Africa, and in that sense, you can say it is the first Pan-African show,” Kassem said. “The show also is not limited to apparel. Yarn and fabrics manufacturers as well as trim and accessories suppliers are showing their products in an attempt to start building our continental supply chain.”
Africa is made up of 54 very different countries, 1.1 billion people and total apparel and textile exports out of the region hover around $17.6 billion. More than half (55 percent) of those goods go to the EU and 15 percent to the EU. The country has been working in recent years to build up its manufacturing capabilities as companies continue to look away from China as costs increase.
“As China continues to develop rather rapidly, the costs of labor is also rising, making the very labor intensive sectors, like garment manufacturing no longer a lucrative business,” Siddarth Sinha, founder and CEO of Dubai-based Vogue International Agency, which operates state-of-the-art factories in Ethiopia and Egypt as part of Velocity Apparelz and an exhibitor at the upcoming Destination Africa show. “The industry is scaling down as prices rise in China, buyers need a new home for their supply. Africa is the perfect destination to pick up this business.”
Labor costs are low, the population slants to the younger side, which means a viable labor force is already present, education levels are fair and new infrastructure is being implemented left and right. Ethiopia just completed a new railway between its capital Addis Ababa and neighboring Djibouti, which has access to a port. Compliance issues have also been minimal, according to Sinha.
“This is the right mix for labor intensive industries like apparel,” Sinha said. “The problem is that so little is know about the capabilities and capacity of Africa. An exhibition like Destination Africa is timed perfectly to expose the true potentials and capabilities of this vast, yet hidden manufacturing haven.”
Africa’s biggest competitive advantage, according to Kassem, is its market access. More than 20 nations in Sub-Saharan Africa—including top talked about soon-to-be sourcing markets like Ethiopia, Kenya and Madagascar—enjoy duty free access to the U.S. market under the recently renewed African Growth and Opportunity Act (AGOA). Others, like Egypt, can export goods to the U.S. duty free under the U.S.-authorized Qualifying Industrial Zone (QIZ) program, provided the products contain 10.5% Israeli inputs, which has fostered partnership in trade between the two nations. Similar schemes exist for duty free apparel trade between Africa and Europe.
For Sinha, the upcoming show will not only be a chance to share its offering with buyers who remain unknowing about what’s going on in Africa, but also a chance to explore other potential markets in Africa for his own business.
“We have interests in more than one African country,” Sinha said. “Egypt has been our base for 20 years and now we have added a huge state-of-the-art facility in Ethiopia. We would like to expose our capabilities, capacities and innovations, but most of all, we would like to share the vision of Velocity that has made us a world class manufacturing organization standing on the frontier of technology, sustainability and social responsibility.”
As Kassem added, “Destination Africa offers those buyers a unique opportunity to sample the continental industry, then visit to the country of choice and deep analysis of the capabilities of this particular market is a must.”