CAPE TOWN, South Africa — The promise of Africa as a viable production venue is beginning to bear fruit.
Source Africa, featuring African apparel, textile and footwear manufacturers, attracted regional and international buyers here for three days ending June 20.
The well-attended event, now on its second year, combined seminars with industry heavyweights forming the various discussion panels, and a trade fair that highlighted exhibitions from manufacturers throughout the continent, including ones from Kenya, Mauritius, Madagascar, South Africa, Ethiopia, Botswana, Zambia, Zimbabwe and Mozambique. Egypt, which did not participate last year due to political tensions in the country, was back this year.
Steve Lamar, executive vice president of the American Apparel and Footwear Association, a sponsor of the event, said, “On an anecdotal level, there are a number of [international] companies that were not here last year that are here now. There are also a number of companies that are expanding their sourcing horizons that last year were kind of dipping their toes in the water. Now they’re going in for the plunge. That’s occurring at the micro level, with individual companies.
“As word about those companies is starting to get out, you’re hearing more people who weren’t looking at Africa before saying to themselves, well, if those companies are going there now, what do they know that I don’t? So they’re starting to explore Africa as an option.”
Lamar added that on a statistical level, trade numbers are starting to show definite growth. He cited Ethiopia as such a rising star, particularly with regard to footwear.
“Ethiopia is the place,” he said. “If you look at all of the footwear coming in from Africa, it’s around 96 percent from Ethiopia. The numbers from Ethiopia are doing a very steep climb. You go back about five or six years and you really see incredible growth that’s going on.”
According to the Office of the U.S. Trade Representative, Ethiopia’s footwear exports to the U.S. were $19 million in 2013.
Along with 39 other sub-Saharan African countries, Ethiopia has benefited from the African Growth & Opportunity Act, a trade preference program enacted in 2000 and up for renewal in 2015. Textiles and apparel are among the leading AGOA import categories, with the U.S. importing $815 million worth of combined goods in 2013.
While most everyone expects AGOA to be renewed — Lamar said this was one issue where Republicans and Democrats agreed — the uncertainty surrounding it has made the industry somewhat nervous. Addressing industry concerns was keynote speaker Gail Strickler, assistant USTR for textiles and apparel responsible for supervising negotiations affecting the sector.
She stressed the Obama administration’s support for AGOA and its seamless renewal, citing “the creativity, productive capacity, energy and strength of this diverse continent. We need to stand together to extend the reach, integration and opportunity for designers, manufacturers and workers that are in this industry here in Africa.”
Reflecting on the past 14 years of growth in sub-Saharan Africa through AGOA, she said, “I’ve been inspired by the way the industry has grown and continues to thrive despite great shifts in the world trading system, how it is evolving to make more complex and higher-value products, how companies are taking advantage of tariff savings a U.S. importer can realize by sourcing here in Africa.”
As much as 42 percent of U.S. importers want textiles and apparel from Africa, and Africa is learning to satisfy their demands, she said.
“AGOA has been instrumental in attracting investment, creating jobs and elevating how business is done in Africa,” Strickler said. “Through AGOA, the United States has demonstrated its commitment to aiding the growth of Africa. And, as we look to the renewal of AGOA, what I call AGOA 2.0, we want to broaden the idea of that growth.”
Lamar pointed out that for a lot of companies, the extension of AGOA would be “a determining factor as to whether or not they are able to continue their business here. There is a lot of optimism that it will get extended, but at the same time, you can’t plan your business around optimism. You have to plan your business around reality. So we’re going to get to a point where, if it’s not extended, it’s going to start having a depressing effect on the industry.”
Tony Wardle, chief operating officer of Gelvenor Textiles in South Africa, said, “AGOA is a gift that Africa is battling to accept. The reason is, we’re not big enough to fulfil the bigger orders that China can.”
Specialities, he said, is where Africa can supply U.S. demands because the quality coming out of Africa was not an issue.
Geoffrey Lurie, managing director for business operations at Marvin Traub Associates, said, “Worldwide, people are trying to find sourcing opportunities in Africa as an alternative to China….The quality that comes out of Africa is particularly good. So the issue is not quality, it’s capacity. It’s the ability to produce in the numbers required.”
Lurie said “specialty stores that buy fewer, where the demands for the quantities are fewer, frankly that’s where I believe the opportunities lie for an emerging continent looking to manufacture for and sell in the United States because generally the factories can’t meet the quantities required by, say, a Wal-Mart or a Target, and can’t meet the idiosyncrasies of the on-time deliveries as required by the department stores.”
Mercedes Gonzalez, director of the New York-based Global Purchasing Cos., said specialty stores were her company’s “bread and butter,” and with 70,000 independent retailers in the U.S., there were many opportunities in that segment for Africa.
“But Africa,” she added, “will never be the new China. Nor does it want to be the new China. You want to be the new Italy. You want quality, you want small production, you want craftsmanship, you want limited production. This is exactly what specialty stores want and these stores are the ones with their pulse on the trend.”