Global apparel industry soon have a new hub

AGOA’s positive impact on sub-Saharan Africa’s clothing industry

GMT 11:59 2015 Friday ,17 July

Sriyadithatextile - AGOA’s positive impact on sub-Saharan Africa’s clothing industry

Global apparel industry
Courtesy Google

The global apparel industry may soon have a new hub.

For a long time now, some of the world’s top brands have looked to outsource their production to Asian countries such as Bangladesh, Sri Lanka and India. But with rising minimum wage demand and economies of scale in these markets are forcing these companies look elsewhere to source their products. And Africa is emerging as the next best alternative, say media reports.

According to the International Labor Organization, the minimum wage in Bangladesh is at least $67 per month. This is three times the amount Ethiopia’s garment sector, which actually has no minimum wage for its workers.

Most countries in Africa that produce their own cotton are benefiting from the recently renewed free-trade agreement with the US, under the Africa Growth and Opportunity Act (AGOA). And from a business point of view, the continent has suddenly become a magnet for the world’s major clothing companies.

Cotton cultivation by most of the African countries shortens the production period, which is why US retail chains such as Walmart are increasingly stocking trousers made in Ghana.

AGOA’s positive impact on sub-Saharan Africa’s clothing industry has led textile plants being opened across the region, according to a media report.

A World Bank official says that light manufacturing traditionally moves around in the global economy and as far as the textile industry is concerned, there is a distinct possibility of that kind of a move from Asia mainly because of rising labour costs.

For now, Ethiopia seems to be a favourite sourcing destination for clothing companies. A country with a rich fashion sense and a century old textile industry, Ethiopia is now global fashion radar thanks to its homegrown supermodel Liya Kebede.

In an effort to accelerate the move to Africa, two of the biggest clothing companies and rivals - VF and PVH – teamed up and invited their best 20 suppliers from Asian countries like China, India and Sri Lanka on a tour across Africa to show them the need to invest in apparel factories in the continent.

Ethiopia, which recently commissioned a $250 million industrial park at Bole Lemmi exclusively for foreign investors in the garment sector, stood out as one of the best destination for these suppliers.

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