Interview IAF about sourcing in Africa

An interview with the IAF, who was invited to speak at

the Source Africa Event in Cape Town, 9 – 12 april 2013.
Source Africa is a combination of a sourcing fair and a seminar series. The IAF’s member AAFA and the African umbrella association ACTIF (Africa Cotton and Textiles Industry Federation) were among the organizing partners. ACTIF has been in touch with IAF regarding IAF membership for the past months and will most likely join shortly.
Written by: IAF

What does the IAF think about a collaboration with South African parties?
The IAF is excited about this prospect on two counts: Firstly, with ACTIF’s joining IAF would be truly represented on all of the world’s inhabited continents. And secondly, as became clear during the Source Africa Event, Africa’s clothing industry is on the threshold of a new period of growth.

What was most important message given in this conference?
The seminars made clear that despite serious barriers to overcome(i.e. production is scattered, raw materials must often be sourced outside of Africa, infrastructure, including internet access is often in a bad state and there are power outages) the past five year there have been enormous improvements in airports, roads, buildings, equipment and in stitching quality. Africa has a strong and high quality cotton base. The continent is now at a tipping point to growth taking off.

Do you think there will be a shift from China to Africa when you talk about ‘production location’?
The biggest opportunity is offered by what IAF has dubbed the ‘2nd phase post MFA sourcing strategies’. After quota disappeared China obtained an enormous market share in garment making. Many firms employed a China +1 policy, but firms are now devising ‘China + more than 1’ sourcing policies to sufficiently spread risk and to achieve a perfect mix of different advantage offered by the different production locations. And, of course, as a cause of fast rising labour costs in China firms are reducing the percentage of their product they have produced here. Garment retailers and brands have again a strong appetite in this climate for searching for new production locations and most African countries fall in this ‘new’ category.

Which parts of Africa are the most interesting to do business with?
It became clear that sourcing in Africa is becoming a real alternative to explore. Trade policy advantages, such as the US’ Agoa and the EU’s GSP are of course of a major and continuing importance. Mauritius is a long established location, but Madagascar is making a rentree and Kenya, Tanzania and Ethiopia have seen growing exports to the US especially. Madagascar is proving its worth with high quality knitwear priced below the Chinese and Turkish products.
In Ethiopia a number of very large Turkish investments have established competitive vertically integrated factories utilising high quality African cotton. In Kenya a factory is setting up a ' field to fashion' concept.

These vertical concepts are particularly interesting because they cater to the buyer's demand for transparency in the supply chain. Vertical operations or 'virtual vertical' operations (where fabric supply is included in a conglomerates portfolio or within a group of cooperating companies) help solve the problem of the lack of a variety of available fabrics in Africa. Sourcing the fabric from Asian could lead to unacceptable lead times.

What are some short term opportunities?
African and South African retailers especially are now looking to increase the share of their African sourcing. A growing interest for fast fashion from these retailers is spurring both the possibility and the need for their African sourcing. Regional retail could be a very good catalyst for African garment production. And thinking further, US, European and Asian retailers could work together with African retailers, in this way linking supply chains and markets. The counter seasonal effect, where such alliances could benefit from each other’s manufacturers’ slack periods in the northern and southern hemispheres, could be exploited more.

And what will IAF do?
First of all, we will do all we can to welcome Actif into the global apparel family of IAF. With that, we will add to Actif’s already impressive international network. The more associations and companies know about Africa’s possibilities and the more information flows about this subject, the greater the chance that we will indeed witness a fast growth of the African clothing industry. Secondly, ‘Africa’ is warmly invited at the IAF’s 29th World Fashion Convention in Shanghai. The world met Africa in Cape Town at Source Africa; in Shanghai, on the 24th and 25th of September Africa can meet the world in Shanghai.