The future of the apparel industry – East Africa

The future of the apparel industry – East Africa

Last month we kicked off a new series of posts, looking to the future of apparel production. We discussed why and how things were changing, with emerging markets poised to challenge established leaders like China and Bangladesh.

Among these rising regions, East Africa stands out as a promising contender. With its strategic location, growing workforce and increasing focus on sustainable production, the region is capturing the attention of global brands.

In this post, we’ll explore East Africa’s potential, focusing on three key players: Ethiopia, Kenya, and Mauritius.

What East Africa offers to potential businesses

Africa isn’t exactly known for its stability, so why would companies consider moving there? Well, first of all, Africa is HUGE. You can fit the USA, China, India and most of Europe in with plenty of room to spare. Tarring the entire continent with one brush is a mistake. Yes, there are some countries where setting up a factory might not be the best idea, but there are also plenty of countries that have a stable, democratic government, a solid GDP and lots of potential for growth.

Geographical advantage

East Africa’s proximity to major markets like Europe and the Middle East offers a significant logistical advantage. The closer markets are to production, the shorter, faster and cheaper shipping times are. On top of that, the region has access to the Suez Canal, making it a strategic hub for global trade.

Labour market potential

With a young and growing workforce, East Africa offers one of the most cost-effective labour markets globally. Governments and NGOs are investing heavily in upskilling workers, creating a pipeline of talent capable of meeting the demands of international brands. Companies are always looking for cheap labour, and with the rising middle-class in China, Africa is looking like a more profitable region to set up production.

Trade agreements and incentives

The African Growth and Opportunity Act (AGOA) has been a game-changer for East Africa, providing duty-free access to U.S. markets. Regional initiatives, like the East African Community (EAC), are also improving cross-border trade and infrastructure, making the area even more attractive for investment.

So, there you have three reasons why East Africa is a good region for potential growth in the apparel industry. Let’s focus in on some of the countries which might be the key players in the next decade.

Ethiopia

Ethiopia has had a hard time shaking off the images of famine from the Eighties, but the country has made leaps and bounds over the past 25 years. According to the IMF, Ethiopia was one of the fastest growing economies in the world, registering over 10% economic growth from 2004 through 2009.

Why Ethiopia has potential

Ethiopia has positioned itself as a leader in East Africa’s apparel sector through strategic government initiatives. Industrial parks, such as the eco-friendly Hawassa Industrial Park, provide state-of-the-art facilities with built-in infrastructure, access to utilities and tax incentives. More than 23 investors from the United States, China, Ethiopia, India, France, Sri Lanka, Belgium, Indonesia and South Africa are generating various types of clothing and textiles at Hawassa Industrial Park and will offer their products exclusively to the foreign market.

With a population of 133 million, there’s no shortage of workers. Ethiopia boasts some of the lowest labour costs in the world, making it a magnet for global brands seeking cost-efficient production. International companies like H&M have already established operations here, drawn by the country’s affordability.

What are the challenges?

However, Ethiopia’s potential is not without obstacles. Political instability and regional conflicts pose significant risks, while gaps in infrastructure, particularly in transportation and logistics, can create bottlenecks for brands.

Kenya

Kenya’s economy is the largest and most developed in Eastern and Central Africa, making it an obvious choice for brands looking to move production. It is a country with a strong economy, skilled workforce and diverse business environment.

Why Kenya has potential

Kenya’s apparel industry is centred around its Export Processing Zones (EPZs), which offer tax benefits and streamlined operations for export-focused businesses. Nairobi, the country’s capital, serves as a logistical and business hub, further enhancing its appeal.

The country is positioning itself as a leader in sustainable manufacturing, with factories increasingly adopting renewable energy and eco-friendly practices. With sustainability at the front of many brands’ minds, this is an attractive venture, leading to an all-time interest in outside investment.

What are the challenges?

Despite its advantages, Kenya’s labour costs are higher than Ethiopia’s, which can deter companies that are looking at keeping overheads down. Additionally, while infrastructure is more developed than in many neighbouring countries, there’s still room for improvement in scaling production capacity.

Mauritius

On a per capita basis, Mauritius is the wealthiest country in Africa, and by quite some margin. Known as a tropical paradise for tourists, the small island state of just over a million people isn’t the first place that comes to mind when thinking about apparel production, however it is known within the industry for its high-quality products, skilled workforce and cost-effectiveness.

Why Mauritius has potential

Unlike Ethiopia and Kenya, Mauritius already has a long-standing reputation in the apparel industry. The country caters to both luxury and fast-fashion markets, offering diverse manufacturing capabilities and infrastructure that’s already in place. It’s also at the forefront of sustainable practices, embracing circular economy principles like textile recycling and waste reduction. Many factories in the country utilise renewable energy, reducing their carbon footprint and appealing to eco-conscious brands.

What are the challenges?

Mauritius’ biggest problem is its size. The entire country is only about the size of Madrid, and so faces limitations in scalability due to its smaller workforce and geographic size. Production costs, both in manufacturing and wages, are also higher, making it less competitive for cost-driven brands.

Comparing these emerging regions

Each of these three East African nations brings their own pros and cons to the table:

• Ethiopia offers unmatched cost advantages but struggles with infrastructure and political stability.
• Kenya provides a more developed ecosystem and sustainability innovations, albeit at higher costs.
• Mauritius excels in quality and sustainability but faces challenges in scalability.

Brands can leverage a multi-country strategy to balance these strengths. For example, using Ethiopia for cost-effective bulk production, Kenya for logistical advantages and Mauritius for high-quality, eco-friendly lines could create an optimised supply chain.

The future of the apparel industry in East Africa

East Africa’s potential has not gone unnoticed.

Major brands are increasing their investments, and governments are actively working to enhance infrastructure and attract more foreign direct investment.

There are, of course, challenges. For the region to truly thrive, continued efforts are needed to improve infrastructure, ensure political stability and maintain ethical and sustainable practices. Brands also have a role to play in fostering these developments, ensuring their operations support local communities while meeting global standards.

As the region continues to develop, it presents an opportunity for businesses to not only cut costs but also contribute to ethical and sustainable growth.

At immago, we’re committed to helping brands navigate these new developing regions.

Whether you’re looking to diversify your supply chain, explore sustainable production practices or expand into emerging markets like East Africa, our expertise ensures you stay ahead of the curve.

Contact us today to discuss how we can help you build resilient, ethical and cost-effective solutions tailored to your brand’s unique needs.

For a company willing to navigate the challenges, East Africa is a region worth watching.