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Fashionomicsafrica (AfDB)- The exchange

Fashionomicsafrica (AfDB)- The exchange

C-19 Pandemic: The fashion industry’s black swan event

Prior to the pandemic, the fashion industry was generating $2.5 trillion in global annual revenues, but is set to contract by 27 to 30% in 2020, based on a joint report dubbed ‘The State of Fashion 2020, Coronavirus update’ by the Business of Fashion and the Mckinsey & Company.

by Opinion
June 2, 2020
in African Entrepreneurship, Investing
0
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The African fashion industry is hanging on by a thread and stitch, as it continues to suffer plummeting revenues in the wake of the Covid-19 pandemic, swiftly thrusting it into economic distress. According to the research group Euromonitor, the apparel and footwear industry is cumulatively estimated to be worth $31 billion. However, the vibrant industry is teetering on the edge of a precipice, with a plethora of challenges that have brewed up a storm, with rippling effects across the supply chain due to its interconnected nature. Covid-19 has just stirred up a hornets’ nest in the industry that was already on high alert. 

Prior to the pandemic, the fashion industry was generating $2.5 trillion in global annual revenues, but is set to contract by 27 to 30% in 2020, based on a joint report dubbed ‘The State of Fashion 2020, Coronavirus update’ by the Business of Fashion and the Mckinsey & Company. Amid retail store closures, factory shutdowns, travel restrictions, quarantined workers and fabric delays, pressure has been mounting for this creative sector and if effective contingency plans are not deployed to mitigate the adverse effects, it could burst at the seams given the uncertainty of the longevity of the pandemic. 

Also read: Digital marketplace for the Africa’s fashion creators

Upswing of African fashion industry 

Inarguably the African fashion industry has been on a positive growth trajectory, garnering global recognition, especially for the use of the ‘ankara’ and ‘kente’ fabrics, with influential people like Michelle Obama, Beyoncé, and Lupita Nyong’o among many others, proudly donning this beautiful print, considered to be the very definition of Pan-Africanism. Sub-Saharan countries have become the epicenter of innovation and creativity. Many African designers have found their niche making outfits with this unique print and are making a killing, because of the demand of African textiles both regionally and internationally. The preservation of Africa’s diverse cultures and traditional designs has assisted in the unique productivity of garments that have generated revenue soaring the economy of the continent. According to the World Economic Forum, Africa has been on the brink of a major transformation more pertinently in the creative industry. This has consequently lured international brands to venture into some African countries to leverage on the growing market size. 

The African Growth and Opportunity Act of May 2000 (AGOA), has contributed immensely to the growth of the industry, by enhancing market access and growing apparel exports to the United States from member African countries in the Sub-Sahara, whereby access to textile goods is duty-free. The abundance of raw materials especially leather and cotton, affordable labour and artistry especially from the youth have further spurred the growth of the industry with countries like Ghana, Ethiopia, Kenya and Nigeria, as the pioneers. According to Oxfam, every job in the apparel sector generates five other jobs in Kenya. The industry accounts for the second largest number of jobs in Africa after agriculture. The African Continental Free Trade Area has also contributed to the rapid growth of the sector. The agreement went into force in May 2019 and commenced operations; its main goal is to remove 90% tariffs on goods among member states, to allow free access of goods and services across the continent, establishing a single market and deepening the economic integration of the continent.

Also Read: Africa Fashionomics: The small problem with Mitumba  

‘Fashionomics’ Africa 

 The African Development Bank has made tremendous contributions towards growing the African fashion industry, with its flagship initiative dubbed ‘Fashionomics Africa’. The bank has established the Fashionomics Business to Business (B2B) and Business to Consumer (B2C) platform, to enable Africa’s fashion entrepreneurs to increase their revenues through easier access to regional and international markets. The platform brings together all the parties involved across the industry value chain, in an interactive market place. The bank also has developed a website and mobile application to help in capacity–building and online training to equip designers and entrepreneurs with skills and tools for the trade. 

However, the second–hand clothing industry, popularly known as ‘mitumba’ in Kenya, ‘chagua’ in Rwanda and ‘salaula’ in Zambia, has undoubtedly been a booming and flourishing business in the continent, especially in the East African region, providing employment for millions of people, especially the youth.  

According to the Kenya National Bureau of Statistics, Kenya imported 177,160 tonnes of second–hand garments, that were valued at about Ksh.17 billion (US$159.0M), spending Ksh.11.96 billion (US$111.8M) in the first six months of 2019. The dependence on second-hand clothes by Africans has thwarted the development of the local textile manufacturing industry. The East African Community (EAC) had decided upon a ban on used imports, in a bid to grow the regional sector by 2019.   However, this warranted charges of protectionism from exporters in the developed countries, threatening to impose trade sanctions and suspend the AGOA agreement. The revival of Rivatex, the biggest textile factory in Kenya, is a step in the right direction in boosting the local textile industry. Currently, the Kenya Bureau of Standards has banned the importation of secondhand clothes and footwear, as a precautionary measure against the Coronavirus. 

Cushioning against the outbreak 

The UK government has rolled out financial support for garment businesses with ‘vulnerable supply chains’ in developing countries, as part of its response to the Coronavirus outbreak and its wider economic impact. This is the proverbial “a stitch in time saves nine move”, which will go a long way to offset the full impact of the outbreak, following the revelation by the Sustainable Apparel Coalition, that financial support is a high concern in the sector, to prevent further layoffs. The Covid–19 ‘Vulnerable Supply Chains Facility’ (VSCF) is meant to ensure vulnerable workers and suppliers, are cushioned against the shocks of the outbreak. The Facility will support proposals on the garment sector in some chosen African countries, such as Kenya, Tanzania, Uganda, Ghana, Mozambique, Nigeria, Somalia, Rwanda, Sudan, Mali, Zimbabwe, and Zambia. A manufacturing Africa programme, that aims to inject £1.2billion into the sector and create 90,000 jobs, might soon be launched following the recent collaboration by the Department for International Development and Mckinsey. Several designers have seized the opportunity to make face masks to meet the surge in demand and also capitalize on the sales; a classic case of the drowning man clutching at a straw. Meanwhile, crisis management and contingency planning is still ongoing. 

 Also Read: Africa Fashionomics: Business of Fashion in Africa led by Ethiopia

Tags: Africa Development Bank (AfDBAfrica FashionAfrican Fashion IndustryFashionomicspremiumThe Fashionomics Africa initiative

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Opinions by contributors are views of respected thought leaders in the respective industries they operate in. The Exchange is a close partner with each of the various opinion contributors.

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