The client:
The client on this project was a pan-African multilateral financial institution, committed to enhancing the economic prosperity and stability of African nations. The client’s industrialisation and economic diversification initiatives contribute to sustainable economic growth and a stronger global trade presence for Africa.
They provide a diverse range of financial services, including trade financing and risk bearing through guarantees and credit insurance. They also provide advisory services aimed at improving trade infrastructure and capacity on the continent.
Background:
The textile and apparel industry in Africa has great potential, due to Africa’s abundance of resources and its burgeoning fashion sector. Despite these advantages, opportunities for further industrialisation and job creation remain largely untapped.
The industry faces systemic challenges that hinder its growth and scalability. Manufacturers are under intense pressure due to global trends such as large-scale production, rising labour costs, and a shift towards synthetic materials like polyester. These have diminished the demand for traditional cotton and are compounded by competitive pressures from established markets, particularly China, where manufacturers set a high bar for cost-efficiency and quality.
Domestically, the industry grapples with macroeconomic issues such as rising inflation, which erodes purchasing power and requires stringent policy measures to ensure price stability. Weak infrastructure and socioeconomic disparities further limit market access and economic growth.
The problem:
In collaboration with a major European textiles and clothing association, the client planned to introduce a major industrialisation programme for the African textile industry. The primary focus of this project was to enhance value-added textiles manufacturing, provide financial and up-skilling resources, and promote export activities within the industry.
In order to identify opportunities for investment and areas where improved industrialisation would be both possible and beneficial, the client required a deep understanding of the African textile market landscape. Farrelly Mitchell was retained to conduct a scoping assessment of the African textile industry. This would provide a detailed analysis of current capabilities, market trends, and potential barriers within this market and allow the client to develop and fund projects accordingly.
We conducted an in-depth scoping review of African textile industry, covering the countries of Benin, Burkina Faso, Cameroon, Chad, Côte d’Ivoire, Ghana, Mali, Niger, Nigeria, Senegal, and Togo. The project included a thorough assessment of relevant markets and regulations which would ultimately identify development opportunities and form the foundation of an implementation plan for the client.
Phase 1: Market assessment
Our scoping review of Africa’s textiles and apparel industry provided the client with a comprehensive understanding of market dynamics and supply chain mechanisms. This assessment evaluated market size, growth rates, and key drivers and constraints affecting the industry. We examined historical data and projected growth trends over the next 3 to 5 years, providing an overview of demand and supply on a regional and global scale.
Next, we conducted a value chain assessment to map the African textile industry from raw material extraction to finished products. This analysis highlighted the roles of both international and domestic trading companies. We explored partnership models to enhance value addition within the industry and examined international trade agendas, assessing Africa’s comparative advantage along the textile value chain.
We identified manufacturing opportunities based on country-specific advantages and competitiveness. We reviewed regional strengths with a view to capitalising on potential partnerships and foreign direct investments. We also proposed mitigation measures for potential market disturbances and explored opportunities for enhancing competitiveness through R&D, innovation, and developing niche sectors like high-fashion and ethical fashion.
We also assessed market share by region for both exports and imports. We identified best practices for tapping into continental demand trends and ways to integrate African textiles into regional and global value chains. This extended to exploring linkages with other sectors such as tourism and agriculture.
Phase 2: Regulatory overview and analysis
This stage provided a high-level overview of the prevailing regulatory framework within the textile and apparel industry across the target countries. We reviewed policies, regulations, and legislative frameworks to identify key gaps and opportunities for synergies. Our analysis included current trade agreements like AGOA and AfCFTA, exploring policy options for vertical integration of the industry in different African countries. We also identified opportunities for enhancing local demand and integrating with regional and continental organisations. This included proposing policy adjustments that would support industry growth and sustainability.
Phase 3: Environmental impact of regional textile value chains
In this stage, we reviewed the environmental impact of building regional textile value chains in Africa. Our high-level overview identified key practices generating significant environmental footprints and assessed their impacts on global carbon emissions and climate change. We summarised the environmental implications of developing regional textile value chains, highlighting both challenges and opportunities for adopting sustainable practices within the African context. This analysis would ultimately enable the client to implement environmentally conscious strategies without foregoing industrial growth.
Phase 4: Potential opportunities
In this phase of the project, we used a structured and phased approach to identify key African countries where the client could focus their investment efforts. We developed detailed business cases for each country, highlighting initiatives and investment opportunities, while emphasising the potential for value addition and export enhancement. We provided high-level estimates of the funding required for these initiatives. We also identified potential risks associated with these investments and proposed corresponding mitigation measures to facilitate successful implementation.
Phase 5: Implementation plan
The final stage focused on developing a detailed implementation plan, that outlined necessary tasks and activities and provided clear timelines. We summarised key findings and recommendations, detailed various investment opportunities and provided a continental strategy designed to capitalise on new market access opportunities and attract further investment. This strategy was developed in collaboration with the client and the European textiles and clothing association.
We identified potential offtakers for the value-added products, along with a plan that would ensure effective and timely execution of the proposed initiatives.
