This paper assesses the export-oriented clothing industry in the five main sub-Saharan African (SSA) clothing exporter countries (Mauritius, Madagascar, Kenya, Lesotho and Swaziland).

The focus is on analysing the various characteristics driving firm and value-chain dynamics as well as upgrading and industrial development outcomes. This includes challenges related to global dynamics as well as unfavourable domestic conditions, such as limited skills and industrial capabilities and poor infrastructure.

It gives a short overview of the global clothing industry, discussing the clothing global value chain (GVCs) and its main actors, the regulatory environment of the global clothing trade, and global trade patterns. The development of export clothing sectors in SSA is explored, with different types of clothing firms and value-chain channels and their implications on upgrading, skill development and sustainability identified and the main challenges assessed.

It concludes by proposing policies to secure sustainability and foster upgrading and broader industrial development in SSA export-oriented clothing industries. It focuses on four broad policy issues: upgrading and skill development; market diversification and regional value chains; local firm development and locally embedded clothing industries; and trade policy and preferential market access.

---

Introduction

Export diversification into higher-value-added products and away from primary commodities remains a major development objective for low-income countries (LICs). The clothing sector has traditionally played a central role in this process. In most developed and newly industrialised economies, the clothing (and textile) sector was central in the industrialisation process. Given its low entry barriers (low fixed costs and relatively simple technology) and its labour-intensive nature, the sector absorbed large numbers of unskilled, and mostly female, workers and provided upgrading opportunities into higher-value-added activities within and across sectors. Hence, clothing sector development can have important short-term effects by providing employment, incomes and foreign exchange, and long-term effects by furthering export diversification, industrial development and linkages to other sectors, most importantly textiles.

Many LICs have tried to become clothing exporters. In 2013, global clothing exports accounted for US$378 billion, making clothing one of the most-traded manufactured products. It is also the first manufacturing sector in which exports became dominated by developing countries. In the mid-1960s, developing countries accounted for around 25 per cent of global clothing exports; this increased to 37 per cent in the late 1980s and to above 80 per cent in 2013. The share of least developed countries (LDCs) increased from 0.3 per cent in the late 1980s to 10 per cent in 2013. Global clothing exports are dominated by Asian developing countries. However, particularly since the late 1990s, LICs from other regions have developed export-oriented clothing sectors. For many LICs, clothing exports are the main manufacturing export and provide the largest share of formal manufacturing employment. However, the defining characteristics of the clothing industry also mean that it is very competitive. It is easy to enter and relatively footloose, as production and trade patterns can be adjusted quickly to changing market conditions.

In many countries in sub-Saharan Africa (SSA), the clothing industry is seen as a priority sector for export and employment generation and industrial development. Clothing and textile exports accounted for 5.2 per cent of total SSA manufacturing exports in 2013. If South Africa is excluded, they account for 11.2 per cent. In some countries, the share of clothing exports in manufacturing exports is substantially higher: Madagascar (76.3%), Mauritius (54.4%), Lesotho (48.8%), Ethiopia (21.2%), Kenya (20.2%) and Swaziland (11.5%). The export-oriented clothing sector has developed and/ or expanded in several SSA countries since the turn of the millennium. This was driven by the favourable trade policy context (i.e. through the Multi-Fibre Arrangement (MFA) and US and EU preferential trade agreements (PTAs)) and national industrial policies supporting exporting and foreign direct investment (FDI). However, after the MFA phase-out (end 2004), SSA clothing exports declined, and this was accelerated by the 2008 global economic crisis.

The rise of clothing exports from SSA countries in the 2000s are generally perceived as successful cases of starting an industrial development process through PTAs and FDI. However, simply using an aggregated analysis of SSA clothing exports masks some crucial differentiating features: end-market shifts, the political-economy dynamics driving these processes, the variety of types of firm inserted in different clothing value chain channels serving diverse end markets, and the different development trajectories of national industries. Firm ownership variations and differential value-chain insertion in SSA’s export-oriented clothing industries influence end markets, governance structures and firm set-up. This explains significant disparities in levels of local and regional embeddedness, with important implications for the sustainability of clothing-export operations and for upgrading trajectories.

These differentiating features have important policy implications. Understanding the dynamics of different forms of clothing firm ownership in SSA, and the distinct clothing value chain channels they are integrated into, is critical for identifying the opportunities and challenges for upgrading and broader industrial development. In particular, the emergence of a new regionalism centred around regional investment and end markets provides opportunities for more sustainable value chains and local industrialisation.

To illuminate these analytical and policy points, this paper assesses the export-oriented clothing industry in the five main SSA clothing exporter countries (Mauritius, Madagascar, Kenya, Lesotho and Swaziland). The focus is on analysing the various characteristics driving firm and value-chain dynamics as well as upgrading and industrial development outcomes. This includes challenges related to global dynamics as well as unfavourable domestic conditions, such as limited skills and industrial capabilities and poor infrastructure. These challenges have to be addressed at national and regional levels for the sector to fulfil its potential for industrial development.