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World Bank Study
quick response, fast-fashion production. The la er is suitable for the South African market but not necessarily for other export markets. But even in the South African market there are opportunities to engage in more basic and high-volume production, in particular for the largest retailers. Some restructuring would be necessary as the volumes would not be comparable with U.S. volumes, but as the successful export experience of some Taiwan, China-owned firms from Swaziland and Lesotho to South Africa shows, these firms should be able to cope with these differing demands. For this strategy, however, it is important that sales and merchandising functions are located in the region and are adapted to the South African market. For both types of potential regional suppliers certain capabilities will be demanded as buyers, including South African retailers, have increased direct sourcing. Thus, besides manufacturing, other capabilities such as input sourcing, financing, product developing, design understanding, communication, and merchandising capabilities are demanded from suppliers. This is because buyers generally want to work with FOB or full-package manufacturers and not with CMT firms. Further CMT production is the most vulnerable as labor costs are the largest expense driving sourcing decisions and as the value added from CMT production is comparatively low. Mauritian firms have upgraded and generally offer full-package manufacturing functions to buyers. Other firms in SSA still have to upgrade their capabilities to be able to fulfill these functions and create direct relationships with South African (and other) buyers. Given the current window of opportunity—South African retailers are currently developing and formalizing their sourcing strategies—regional suppliers have to become proactive and approach South African retailers. Coordination and market information
Coordination and strategic partnerships are central to establishing competitive regional production and sourcing networks. Coordination and partnerships need to develop between different countries in the region on the one hand and between co on, textile, and clothing sector associations on the other. For instance, in several SSA countries there are strategies and funds to revitalize the co on sector because of its potential to support poor rural households. However, it seems that these programs are not aligned with initiatives in the T&C sectors. In 2005, the establishment of the African Co on and Textile Industries Federation (ACTIF)—a regional organization of textile and clothing associations from different SSA countries—was a very positive development in this regard. One initiative by ACTIF, for instance, is the ‘Brand Africa-Origin Africa’ campaign, which aims to promote a regional value chain from co on, textile, and clothing to design and help Africa make its mark in the fashion world by showing buyers the scope of its design, fabrics, and factories. The initiative is backed by co on, textile, and clothing manufacturers in 18 SSA countries. The initiative begins with a fashion show involving designers from Tanzania, Uganda, Kenya, Ethiopia, and co on and silk fabrics made in East Africa, followed by a larger event in Mauritius in November 2010 that will involve around 20 designers from 18 countries using African fabric in their designs (just-style 2010h). Another positive example is the annual Source Africa Business-to-Business event—an Africa-wide sourcing event. The event brings buyers from around the world—including U.S. and EU buyers, international sourcing houses, and South African retailers—face-toface with textile, clothing, and trims suppliers. In April 2009 this event (organized by the USAID-funded Southern Africa Global Competitiveness Hub) took place for the sixth