AfDB initiates moves to boost African fashion, garments industry

… as Ghana seeks to take advantage of sector benefits  

With the coming into effect of the African Continental Free Trade Area (AfCFTA) agreement, Ghana has the opportunity to boost its garments industry and reverse the negative growth rates it has recorded in the sector recently. The new free trade zone is about to open a U$31 billion market in sub Saharan Africa to Ghanaian manufacturers

Currently, the combined apparel and footwear market in sub-Saharan Africa is estimated to be around US$31 billion. Under the Africa Growth Opportunity Act (AGOA), Ghana exported about US$30 million and US$29 million worth of garments in 2017 and 2016 respectively, but majority of the those exports went to the US markets rather than the African markets.

Ghana’s garment industry recorded growth rate of 15.1 percent in 2008, but this has since  dropped to 0.8 and 0.3 percent in 2014 and 2015 respectively. Subsequently, the sector recorded a negative figure of -1.4 percent in 2016. What this means is that Ghana’s garment industry has been declining in what is proving to be a sustained recession..

Currently, the value of global fashion industry is estimated to be around US$2.4 trillion, with an annual growth of 5.5 percent. Africa accounts for below 5 percent of this value, while Asia and the USA share 80 percent of the market.

To harness and exploit potentials in the industry, the African Development Bank (AfDB) in partnership with the African Union (AU) and Trade Development Bank, have established an initiative aimed at boosting the African fashion and garments industry through promoting trade benefits among member states.

Dubbed the “Pan-African Fashionomics” initiative, the project aims at promoting effective dialogue and institute strategic policies to advance the African fashion and garment industry within the context of the free trade area agreement expected to be launched in July this year following the ratification of Ethiopian last Thursday.

Majority of the countries that have ratified or signed the free trade agreement including Ethiopia, Madagascar, Mauritius and Kenya are garment-producing countries. Stakeholders see this as an opportunity to leverage on the industry by enabling countries to trade among themselves without any barriers. Ghana is now hoping to leverage on this opportunity to reverse the fortunes of its garments and apparel industry which still has huge, but unexploited potetial.

According to the AfDB, the partnership will give them the opportunity to inform African entrepreneurs most especially Small and Medium-sized Enterprises (SMEs) about the expected benefits of the AfCFTA. Aside this, the bank has made commitment to invest in entrepreneurs across the continent to develop the African fashion value chain and harness their potentials which would in turn boost their skills and competencies.

Ghana has not exploited the African garment market and the free trade policy is going to give the opportunity for Ghana to put in deliberate measures aimed at exploiting the market.

President Akufo-Addo has reiterated government’s commitment to increase AGOA’s exports to US$500 million by 2020. Meanwhile, the Association of Ghana Apparel Manufacturers (AGAM) – a business network and advocacy organization for the Ghanaian apparel business, appears to be more conservative, as they seek to increase garment exports worldwide to US$200 million annually.

Currently, a number of countries in Eastern and Southern Africa are already exporting several billions of garments worldwide, whiles Ghana still exports just US$30 million. Ghana will have a difficult time competing wit those countries within Africa.

The African free trade policy aims to remove trade barriers between African nations and expand intra-Africa trade by about US$35 billion per year. According to the AfDB, intra-African imports and exports currently account for just 15 percent of all trade on the continent.

By Dundas Whigham