THE KENYAN TEXTILE AND FASHION INDUSTRY

1
CNN Money, “Your clothes
are killing us,” 22 May 2015.
2
www.cuyana.com
3
BCG Consumer Insight
Survey 2013
4
Cotton, Inc. “Consumer
Perspectives on Green
Apparel,” 2013.
responsible, with women and Millennials agreeing
most strongly. 3 Similarly, while environmentalism
is not a top purchase-driver for consumers, “70%
would be bothered if they found out their clothes
were produced in a non-eco-friendly way.” 4 In the
same way that organic food gradually became a
major market force over the past decades, attention
is now turning to sourcing and origin of
products across all different categories, including
apparel.
In order to leverage this trend effectively, small
and medium Kenyan designers and factories will
need support and capacity-building investments.
Training would be useful for these smaller companies
on the importance of social responsibility and
how to comply effectively with national and global
standards for environmental and labor compliance.
This is both a matter of conscience, good
business practice, and a marketing differentiator. At
the core of this message is treating workers fairly—
avoiding child labor, respecting worker’s rights as
laid out in the law and international treaties, and
paying a fair wage.
Value chain trends
The apparel value chain is a game of “costs,
capacity, speed, quality, and compliance.” 5 From
cotton growing, to ginning, to spinning, to textile
production, and finally to garment manufacturing,
global brands are trying to optimize across
these dimensions. Countries seeking to differentiate
themselves from the pack need to convince
brands that they are exceptional on one or more
of these legs.
We are now in the middle of the second paradigm
shift of the past two decades in the global apparel
sourcing world. The first was when the Multi-
Fibre Arrangement (MFA) expired in 2005. The
MFA imposed garment quotas by country, leading
many successful manufacturers to expand abroad
to take advantage of unused quotas in other countries.
In its wake, with less need for this sort of
geographic diversification, a massive consolidation
towards the least expensive sourcing destinations
occurred, with China drawing a disproportionate
share and prices falling an estimated 16-30%. 6
However, with wages in China now as much as
ten times higher than other sourcing destinations,
brands are starting to look for the next hot spots.
Nearly ¾ of chief purchasing officers reported
that they anticipate reducing their China sourcing
in the next 5 years, an ongoing trend since 2011. 7
In the face of this more recent shift, many buyers
are looking to Sub-Saharan Africa (SSA), drawn by
attractive wage rates and the African Growth and
Opportunity Act (AGOA). AGOA provides most
SSA countries duty-free access to the U.S., a benefit
that provides a cost advantage of up to 32%.
The renewal of AGOA, including the Third Country
Fabric Provision, until 2025 gives SSA countries
a stable and predictable cost advantage when
exporting to the U.S. While Kenya also enjoys
duty-free access to the European Union under
Economic Partnership Agreements, the cost edge
is lower, since other competitor sourcing countries
(like Bangladesh) enjoy similar privileges. Because
of this asymmetry, U.S. buyers are more likely than
those from the E.U. to view SSA as an important
part of their sourcing strategy (33% vs. 11%). 8 Kenya
also may benefit from COMESA, which reaches
to over 360 people in 19 countries of Eastern
and Southern Africa, of which 14 have joined the
COMESA FTA.
The Kenyan Textile And Fashion Industry Report
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