FROM FARM TO FASHION

FROM FARM TO FASHION: DOES KENYA HAVE WHAT IT TAKES TO BE MORE COMPETITIVE IN THE GLOBAL APPAREL & TEXTILES MARKET? Event & Discussion Summary

#KenyaEnVogue

Ministry of Industry, Trade and Cooperatives, Kenya 1

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CONTENTS 1 | EXECUTIVE SUMMARY 4 2 | INTRODUCTION 6 3 | KEY POINTS 8

3.1 | STATE OF PLAY IN KENYA

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3.2 | GLOBAL MARKET TRENDS

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3.3 | WHAT THE GOVERNMENT IS DOING

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3.4 | OPPORTUNITIES – WHAT WE SHOULD BE DOING 12

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1 | EXECUTIVE SUMMARY

o g o t Info

Adam Smith International, in partnership with the Ministry of Industry, Trade and Cooperatives and the African Cotton and Textile Industries Federation, invited government, industry and development partners to discuss how Kenya can become more competitive in the global apparel and textiles market. The discussion covered the state of play in Kenya; global market trends; government initiatives in the development of cotton production, and apparel and textiles manufacturing; and recommendations on the actions that can be taken by Government, private sector and other stakeholders to enable Kenya to become more competitive.

ITHE STATE OF PLAY The apparel and textiles sector accounts for 0.6% of Kenya’s GDP and employs 66,000 people or 3% of the labour market.

The Government is targeting USD 1 billion exports in the next 5 years under AGOA. In 2016, the country’s exports in the sector were USD 360 million. Kenya wants to attract companies that can manufacture at scale. AGOA provides another 8.5 years of access to the US market, providing an opportunity to grow. Kenya also needs to take advantage of the Economic Partnership Agreement with Europe to grow exports of apparel and textiles to the European market.

IGLOBAL MARKET TRENDS Global market trends define the context in which Kenya is developing its apparel and textile industry. The trends indicate that the apparel market consumption and buying patterns are changing rapidly. The US and European markets will increase to USD 725 billion by 2025 and India and China will also grow to USD 740 billion. India and China will be supplied domestically as well as by neighbouring countries.

Africa has an opportunity to supply the growing US and European markets. In addition, Asia is looking to Africa as a destination for manufacturing to maintain their market share in Europe and US, while exploring growth of the sector for their domestic and regional market.

The trends also show that retailers in European and American markets are driven by large volumes and low costs for example, having minimum procurement orders of 10,000 pieces. Retailers are also increasingly using the fast fashion approach which requires rapid turnaround for mostly

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in-season apparel in response to changes in customer preferences and demand happening during the season.

Consumption of cotton will reduce due to a shift towards man-made fibres and shrinking production in major suppliers such as India and China. This will make cotton an expensive luxury fibre. The world is growing BT or GM cotton and it is difficult for Africa to compete with conventional cotton. In addition, 65%–70% of the fabric consumed in American and European markets is manmade fabric, not cotton.

IGOVERNMENT INITIATIVES The Government is undertaking a number of initiatives to make Kenya more competitive. It is reducing the cost of doing business through addressing the cost of electricity and implementing policy reforms that have resulted in improvement in Kenya’s ranking in the Doing Business ranking. The Government is also working in investment attraction including engaging with industry to encourage upstream investments to reduce speed to market; encouraging existing companies to expand; attracting international sourcing houses to Kenya to ease sourcing from local manufacturers; and attracting investors into cotton farming. In preparation for the influx of investors, the Government has commenced a programme of building the skills of workers.

The Government has also injected capital in the textile manufacturer Rivatex which has invested in machinery, resulting in increased capacity and demand for more cotton which is locally sourced with guaranteed prices for ginners and farmers. The Government is also developing industrial parks. Currently, 500 acres has been set aside in Naivasha for an industrial park where steam and electricity will be competitively priced. In cotton development, the Government has introduced cotton irrigation schemes involving contracting land to farmers to grow cotton; developed a protocol on seed certification; and sourced hybrid seeds from Israel. It is also working on reviving cooperative unions and societies.

The Government has launched the Buy Kenya Build Kenya initiative to increase consumption of locally manufactured products, including cotton. In line with this, a waiver was introduced to allow EPZ companies to sell up to 20% of their produce into the domestic market duty free and VAT

free to promote consumption of locally manufactured apparel. The Government also wants to engage with the mitumba industry to leverage its distribution channels to provide access to the Kenyan made apparel market, in light of the resolution by the heads of state in East Africa to phase out mitumba.

IWHAT SHOULD BE DONE TO HARNESS THE IOPPORTUNITIES? The stakeholders provided a number of proposals that can be implemented by Government, private sector and other stakeholders. An integrated approach was proposed which looks to transform the entire cotton/textile/apparel value chain, rather than develop individual components of the value chain, and attract investors from farm to fashion. An integrated approach could involve developing the value chain as a cluster in the East African Community region, rather than each country developing the entire value chain individually.

Stakeholders also called for an increase in the tariff bands for the cotton/textile/apparel sector to adequately accommodate the different degrees of processing. In addition, the Government needs to provide incentives to local manufacturers through VAT zero rating for domestically produced textiles and charging 16% VAT on imported textiles. This will help to level the playing field with EPZ companies which are allowed to sell up to 20% of their produce in the domestic market, VAT and duty free.

Given that Kenyan runners are the best in the world, they should be used as brand ambassadors for Kenyanmade apparel. In addition, the trends show that cotton is becoming a luxury fibre and Kenya can use this opportunity to brand its cotton differently, for example providing traceable and sustainable cotton and/or organic cotton, and supplying niche markets. With the rise of man-made fibres, polyester/synthetics will play a bigger part. East Africa can take advantage of oil production in the region to develop man-made fibres such as polyester.

The mitumba supply chain is seen as efficient, getting items in quickly and in bulk. We need to invite the suppliers of mitumba to discuss what needs to be done for the local production to get into their distribution chains.

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2 | INTRODUCTION Adam Smith International has been holding Development Talks since 2014 and they have become an established, invitation only forum that brings together senior decision-makers across Government, the private sector and development community.

In partnership with the Ministry of Industry, Trade and Cooperatives and the African Cotton and Textile Industries Federation, Adam Smith International invited Government, industry and development partners to discuss how Kenya can become more competitive in the global apparel and textiles market through harnessing the opportunities and addressing the constraints, and therefore achieve the growth envisaged in the Kenya Industrial Transformation Programme and Vision 2030.

The keynote speaker was Mr Julius Korir, Principal Secretary, State Department of Industry and Enterprise Development, Ministry of Industry, Trade and Cooperatives. The panellists included: Rajeev Arora – Adviser to the Cabinet Secretary on the textiles sector, Ministry of Industry, Trade and Cooperatives; Antony Muriithi – Interim Head of Fibre Crops Directorate, Agriculture and Food Authority; Jas Bedi – Chair, African Cotton and Textiles Industries Federation; President, International Textile Manufacturers Federation; MD, Bedi Investments; Colin Forbes – General Manager, Environment & Community Affairs, Base Titanium Ltd; Neil Spooner – Private Sector Development Adviser, Adam Smith International.

The Moderator was Patrick Obath, Managing Consultant, Eduardo and Associates; Associate Director, Adam Smith International.

This report provides a summary of the key messages that emerged from the discussions.

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3 | KEY POINTS 3.1 State of Play in Kenya

3.2 Global Market Trends

The Ministry of Industry, Trade and Cooperatives launched the Kenya Industrial Transformation Plan (KITP), which prioritised the apparel and textiles sector because it creates jobs and wealth throughout the value chain. The KITP aims to create 1 million jobs. The apparel and textiles sector accounts for 0.6% of Kenya’s GDP and employs 66,000 people or 3% of the labour market. Exports grew to USD 360 million in 2016. The Government is targeting USD 1 billion exports in the next 5 years under AGOA. Kenya imports over USD 815 million worth of apparel and textiles. There are 170 medium and large companies and hundreds of small scale and micro enterprises.

ICONSUMPTION PATTERNS ARE CHANGING IRAPIDLY

23 companies operate in the EPZ employing 52,000 people. Although EPZ companies have been in Kenya from the 1990s, aside from labour they source only about 17% of their inputs from Kenya. Kenya imports KES 238 million worth of textiles into EPZs as textiles and trims. The fabric manufactured at Rivatex and other textile firms does not meet the required standards. There is an opportunity for import substitution through local production in this area.

In the 1980s, Kenya was producing around 120,000 bales of cotton. The country had over 50 mills ginning, spinning and weaving to produce apparel. Market liberalisation made Kenya lose its edge.

Only 15 mills are currently operational at less than 45% of total capacity. They are using outdated technology and suffer from low skilled labour and productivity. Kenya used to have 23 ginneries and now has 6 that are operational.

Kenya wants to attract companies that can manufacture at scale. AGOA provides another 8.5 years of access to the US market, providing an opportunity to grow. Kenya also needs to take advantage of the Economic Partnership Agreement with Europe to grow exports of apparel and textiles to the European market.

The value of the current US and European apparel market is USD 550 billion. In India it is USD 50 billion and China is USD 170 billion. Per capita consumption of textiles in the United States is 39 kg, Europe – 25 kg, China – 24 kg; India – 15 kg, Africa – 2.5 kg (1.5 kg excluding second hand clothing). Consumption patterns are changing rapidly and in the next 8 years (2017–2025), China will consume as much as US, and India will consume as much as China and Europe. India and China will be the world’s biggest markets, approx. USD 740 billion, and Europe and the US will grow to USD 725 billion. The African market is also anticipated to grow rapidly, from per capita textiles consumption of 2.5 kg to 5 kg in 2025.

China and India, who produce 60% of the textiles today will drive the consumption. Who will supply the two countries? India will be supplied by India, Bangladesh, Myanmar and Nepal. China will be supplied by China, Laos, Cambodia and Vietnam. Who will then supply the USD 725 billion market in the US and Europe? This will be Africa.

ISHIFT IN BUYING PATTERNS European and American markets are moving towards larger procurement volumes, e.g. minimum procurement orders of 10,000 pieces. Retailers like Walmart and Primark are driven by large volumes and low costs.

ITHE RISE OF FAST FASHION Fast fashion requires rapid turnaround for mostly inseason apparel in response to changes in customer preferences and demand happening during the season.

This reduces stocks going to end of season sales.

Retailers like Inditex’s Zara use this approach.

Large procurement volumes at low cost and very fast turnaround mean that players in the market have to be cheap and quick to respond. Some countries are trying to transform their textiles sector to respond. Kenya is neither cheap nor quick – this needs to change for it to compete.

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“BY 2025, INDIA & CHINA WILL DRIVE CONSUMPTION, CLOSELY FOLLOWED

BY EUROPE & THE US. WHO WILL SUPPLY THEM?” ICOTTON IS BECOMING A LUXURY FIBRE

IMAJOR COTTON PRODUCERS

20 to 25 years ago, 50% of all fibre consumption was cotton. Today it is 30% and in the next 20 years, this will go down to 22%. Fibre consumption is 90 million tonnes, of which cotton is only 27 million tonnes. In the next 20 years, by around 2040, the world consumption of all fibres is going to be 120 million tonnes and cotton is only going to be 24 million tonnes. It is a shrinking crop. Cotton is becoming a luxury fibre as it requires a large land mass.

The biggest grower of cotton today is India; it is also a big consumer. India produces 6 million tonnes, consumes 4.5 million tonnes and exports 1.5 million tonnes. 10–12 years ago India was a net importer of cotton and used to import 1 million tonnes. The US is the largest exporter of

Total African production is 1.6 million tonnes, which is 6% of world production. Even if production goes to 2 million tonnes, this will not move the needle unless it is branded or priced differently or technology is brought into the supply chain. The world is growing BT or GM cotton and it is difficult for Africa to compete with conventional cotton. In Africa, only South Africa has successfully grown GM cotton.

Burkina Faso failed. Yet African cotton is priced the same as BT and GM cotton whose yield is about three times the African cotton yield. It will be difficult for the farmer to make money on a commodity price they have no control of.

cotton. It produces 2.5 million tonnes and only consumes 600,000 tonnes. China is a big consumer and grower; it consumes 8 million tonnes, growing 6 million tonnes and importing 2 million tonnes. Australia exports 1.5 million tonnes.

China has deliberately chosen to move away from cotton production however it is sitting on a stock of 11 million tonnes bought at USD 1.20.

The current price is US 80 cents. If China offloads its cotton, the price would go even lower and African farmers would suffer. Cotton production is affected by global dynamics, market forces and consumption patterns in China. If China sneezes, the world catches flu.

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“KENYAN RUNNERS ARE THE BEST IN THE WORLD. WHY DON’T WE USE OUR ATHLETES AS BRAND AMBASSADORS FOR KENYAN RUNNING APPAREL?”

ISHIFT TOWARDS MAN-MADE FIBRE 65%–70% of the fabric consumed in American and European markets is man-made fabric, not cotton. Running clothes are now 100% polyester. 10 years ago they were made of cotton. Nike, Puma and Adidas are all making 100% polyester clothing. Polyester has transformed itself into a high performance fibre.

Kenya lose 40 days and it takes 90 days to deliver to the market. Other countries take around 40 – 50 days. The Government is keen to work with industry to improve the speed to market through encouraging upstream investments in fibre, yarn and textiles manufacturing and therefore, facilitating local integration of the value chain.

IADDRESSING THE COST OF ENERGY IASIA IS LOOKING TO AFRICA AS A DESTINATION IFOR MANUFACTURING Bangladesh is the second largest exporter of apparel in the world and it plans to grow from USD 30 billion to USD 50 billion. Maintaining the market share in Europe and US is important, however it is also becoming a middle income country and wants to explore growth of the sector for the domestic and regional market. Companies in China and India are considering the same. Asia is looking into Africa as a destination for manufacturing.

3.3 WHAT THE GOVERNMENT IS DOING IDRIVE TO IMPROVE LOGISTICS EFFICIENCY IN ITHE COUNTRY Key to apparel manufacturing investment is speed to market and delays between factory and port reduce competitive advantage. Sourcing fabric from China makes

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Electricity cost is a key factor. The industry wants to pay less than US 10 cents/KWH but the government is offering US 12.5 cents/KWH. It has been agreed in Cabinet that the price of power in Kenya should be US 9 cents/KWH. The Government aimed to implement this price before the end of 2017.

IINVESTOR ATTRACTION From 2013 to the present, investment in the sector has increased by USD 77.5 million, generating 20,000 jobs.

The Government wants to attract investment through; increased investments into the sector; existing companies expanding; and sourcing houses establishing offices in Kenya making it easier to source from local manufacturers.

Meetings have been held in the US with sourcing houses.

Four have shown interest in opening offices in Kenya and one has already started the process. Each one of the sourcing houses has indicated they want to source

USD 250 million worth of products from Kenya in the next 2–3 years. Following a recent investment mission, there are companies looking keenly at investment in Kenya, including one that is considering sourcing cotton from Kenya and potentially investing in establishment of a mill.

The Government is also seeking investment in processing including spinning and dying and a company in India has expressed interest.

metres/day, up from 4,000 metres/day thus creating demand for more cotton.

ICOTTON IRRIGATION SCHEMESI

In preparation for the influx of investors, the Government has commenced a programme of building the skills of workers. Through the support of the International Trade Centre (ITC), the Government has reviewed the curriculum for cloth making and is conducting training of trainers.

500 acres have been contracted to farmers in Hola, Bura and Kerio Valley to grow cotton. Bura and Hola provide 40% of total production. The Government is also exploring non-traditional areas such as Kerio Valley. There is interest from big companies in Asia in cotton farming, including companies producing 600,000 bales a year. They are looking at Africa as a supply chain and considering outgrower schemes in addition to their own farms. The Government is currently discussing an opportunity for 10,000 acres. Investors are interested in cotton growing and working with farmers, as well as processing at source.

IREVIVAL OF RIVATEX

ISEED CERTIFICATION SYSTEM

The Government has injected capital in Rivatex which is required to source local cotton rather than import. Rivatex was importing 20 bales of cotton per month from Uganda and Tanzania for its use as it could not get sufficient supply from Kenya. The Government linked Rivatex to ginners for cotton. The ginners are guaranteed a price of KES 150/kg and in turn, they pay KES 50/kg to the farmers for the cotton. Rivatex has invested in machinery which has increased capacity. It is now processing 12,000

A protocol on seed certification has been developed with KEPHIS. A seed certification programme is being implemented and seeds supplied to the western region for the planting season are certified.

ISKILLS DEVELOPMENT

IOTHER COTTON SECTOR DEVELOPMENT IINITIATIVES The Government is also working on the following

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initiatives; the Agriculture and Food Authority is working with the Ministry of Trade, Industry and Cooperatives to revive cooperative unions and societies; hybrid seeds have been sourced from Israel, targeted at cotton areas; and input support schemes are being developed to enable farmers to access inputs. In future, the Government is planning to develop a price cushioning mechanism to cushion the farmers from price volatilities. The Government is also working with the county governments on cotton development, including Siaya, Lamu and Homa Bay Counties.

IIMPROVING THE BUSINESS ENVIRONMENT Kenya has been ranked the 3rd most improved/reformed country in the last 2 years in the Ease of Doing Business survey. The country is on course to achieve its goal of being in the top 50 by 2020. The Government will ensure that the cost of doing business is low and the policy environment is predictable (consistent and stable). The Government is aiming for systemic transformation/reforms that will bring about reduction in costs of doing business and is engaging closely with the industry to discuss the issues and see which areas it can support.

IESTABLISHMENT OF INDUSTRIAL PARKS The Government is developing an industrial park in Naivasha on a 500 acre piece of land set aside by Kengen. The Ministry of Trade, Industry and Cooperatives has completed a master plan around the wells (drilled for steam) so that industries can be located there. A feasibility study has also been done and the Ministry is now looking for joint venture partners to develop the park.

The first partner is already in discussion with Kengen. The Government also plans to convert the park into a Special Economic Zone so that it becomes attractive for investors.

The unique feature about the park for investors is that electricity cost is guaranteed at US 5 cents/KWH as there’s no transmission cost (generator to plant). The textile industry is a heavy user of steam and this will cost USD 2.50/cubic ton. A mill typically spends USD 20/cubic ton.

ISALES BY EPZ COMPANIES TO DOMESTIC MARKET A waiver was introduced in July 2016 to allow EPZ companies to sell up to 20% of their produce to the domestic market duty free and VAT free to promote consumption of locally manufactured apparel. The Government introduced measures to ensure this was not abused and these were completed in November 2016.

The first sale was held in December 2016. As of March 2017, KES 40 million worth of clothes has been sold.

IBUY KENYA, BUILD KENYA The Government has launched the ‘Buy Kenya, Build Kenya’ initiative to increase consumption of locally manufactured products, including cotton. From July 2017, the uniformed services will not use imported fabrics for their uniforms. This incentive has driven investment in the companies.

IIN-HOUSE DELIVERY TEAM The Ministry of Industry, Trade and Cooperatives has dedicated in-house teams focused on the apparel and textiles, leather and agro-processing sectors. They oversee the implementation of strategies in the sectors, working under the guidance of the Cabinet Secretary and Principal Secretary. Through closely engaging with the key stakeholders, the teams are strengthening the relationship between the private and public sectors.

3.4 Opportunities – What should we be doing?

IATHLETES AS KENYAN APPAREL BRAND IAMBASSADORS Kenyan runners are the best in the world. Why doesn’t Kenya have running apparel with a Kenyan brand ambassador promoting the value chain? Our Olympic, long distance or steeple chase athletes can be brand ambassadors wearing 100% cotton, made in Kenya shirts.

Kenya needs to think outside the box.

IPHASE OUT OF MITUMBA There is a resolution by the heads of state in East Africa on the need to phase out (not ban) mitumba. The only way to do that is to provide alternatives to citizens to access quality and cheap products. The citizens will then have a choice to go for mitumba or the new clothes. There’s a 3 year window to implement and the first year has passed.

The Government is working with the mitumba industry and wants to leverage its distribution channels to provide access to the Kenyan made apparel market. The Government engaged with 40 mitumba distributors who indicated they can make similar margins on new clothes as they do with mitumba. Mitumba distributors can be ambassadors for Kenyan apparel. We need to dignify our people with new, quality clothes at affordable prices.

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IAPPLY AN INTEGRATED APPROACH IN THE ISECTOR Most countries start with backward integration.

Bangladesh started with a very strong apparel industry and built their market. They then went into fabric manufacturing and are now going back to spinning.

As they don’t produce cotton, they have to rely on the rest of the world.

In Africa we do not need to go that way. We need to burn the candle from both ends i.e. apply an integrated approach in the sector. Instead of looking at components of the value chain individually, look at the sector on a scale that will transform it and attract investors from farm to fashion.

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Kenya exported USD 360 million worth of apparel, the largest exporter of apparel from Africa. Kenya needs to continue growing that market but at the same time develop the production side and link production to demand.

The integrated approach will require transformation of the entire value chain. This requires huge private sector investment, public investment in integrated textile parts and big policy changes all the way through the value chain. Supply chain coordination is needed.

No one is going to invest in cotton production if there is no spinning and weaving; no one will invest in weaving if there is no apparel manufacturing; and no one will invest in apparel manufacturing if there is no low cost fibre.

The market opportunity is there and Kenya should go for it but we should not underestimate the significant scale of the challenge and what it means for the industry in terms of its need to work together.

The continent will move into the integrated approach but that time will be around 25 years from now.

IREGIONAL APPROACH An integrated approach could involve developing the value chain as a cluster in the region rather than each country developing the entire value chain individually. We should work as an East African Community for example, one country does cotton production, another apparel manufacturing and another does textile manufacturing.

IDEVELOPMENT OF MAN-MADE FIBRES Due to the global trends, preferences and consumer tastes, cotton will become a luxury fibre. There will not be enough cotton fields to provide basic clothing for everyone and polyester/synthetics will play a bigger part. East Africa can take advantage of oil production in Uganda, Kenya and South Sudan to develop man-made fibres such as polyester.

IADD VALUE TO KENYA’S CURRENT COTTON IPRODUCTION The two largest players, China and India, are looking at shrinking their cotton production and are changing their mind set to man-made fibres. Bangladesh and Vietnam do not produce cotton. The cotton value chain is shrinking in the rest of the world and it is going to be an expensive fabric. How we cater to that market is what we need to understand. Africa has an advantage. The continent produces 1.6 million tonnes of cotton, 75% of the crop is exported and not having added value. We should focus on what we can change by adding value to this 1.6 million tonnes production instead of looking to grow production. That can add 1 million jobs and USD 8 - 12 billion worth of business. Look at what we have in hand rather than what is going to happen 20 years from now.

IBRAND KENYA’S COTTON DIFFERENTLY We cannot compete with BT or GM cotton as our yields are lower.

However we can brand our cotton differently by including a social angle and providing traceable and sustainable cotton. By 2020, all the big consumers of cotton/ retailers such as Ikea, H&M, Walmart, Tesco and M&S will want sustainable and traceable cotton. Africa can quickly prepare for this and capture an identity cotton which they will

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probably buy. We do not have to be a supplier to a discounter and can supply niche markets e.g. organic cotton, Better Cotton Initiatives.

IHARNESS THE ‘MITUMBA’ DISTRIBUTION CHAIN FOR INEW APPAREL The Kenyan Government allowed EPZs to sell 20% of their produce on the local market duty free and VAT free. All the EPZs in Kenya are selling their overruns and export surpluses in factory outlet stores in the US at USD 1.00 a piece. Nobody will buy second hand clothes if the price of brand new clothes is the same as mitumba. The mitumba supply chain is seen as efficient, getting items in quickly and in bulk.

There are about 40 mitumba suppliers in Kenya. We need to get the suppliers of mitumba to the table to discuss what needs to be done for the local production to get into their distribution chains.

IREVIEW THE TARIFFSI The East African tariff book has 3 tariff bands: 0% for raw material; 10% for semi-finished products; and 25% for finished products.

Imported fabric is considered a finished product. The apparel and textiles supply chain is long and the degree of processing is not adequately covered by the tariff book. Other countries have numerous tariff bands for this sector. Ideally, the sector should have at least 4 tariff bands so that the degree of processing is adequately covered: 0% for raw material/fibre; 10% for yarn; 25% for fabric; and 35% or 40% for garments. This allows the designers who source locally and produce apparel to compete with imported products.

The tariff band issue is an East Africa one therefore needs to be addressed at that level.

IPROVIDE INCENTIVES TO LOCAL MANUFACTURERS The Government has allowed EPZs to sell up to 20% of their produce in the domestic market, VAT and duty free. While this is a good first step in promoting local apparel consumption, this creates an uneven playing field as local apparel manufacturers outside the EPZs cannot compete as they are charged VAT and import duty. The Government can provide incentives to local manufacturers through VAT zero rating for locally manufactured textiles and charging 16% VAT on imports.

The Government is trying to resolve this issue in this year’s budget so that other investors are not disadvantaged.

IPOLICY AND REGULATORY REFORMS These are already underway including changes to the Companies Act, ease of doing business reforms and cost of utilities. We also need to develop the domestic policies to facilitate speed and connectivity in the value chain.

IKENYA FIRST President Trump says America first. We also need to say Kenya first.

A new world trade order is in the making and focuses on protectionism e.g. Brexit, Trumpism and EU fragmentation. Everyone is talking about jobs. We need to create jobs or we are sitting on a social time bomb. An option is to use subsidies. India and China used subsidies to develop their industries. The cotton/textile/apparel value chain is a favoured sector to create jobs, for example one small factory can generate 10,000 jobs.

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INAMIBIA

TOGO

IEGYPT

INIGERIA

TUNISIA

IETHIOPIA

IRWANDA

UGANDA

IGHANA

ISIERRA LEONE

ZAMBIA

IKENYA

SOMALIA

ZIMBABWE

ILESOTHO

SOMALILAND

ILIBERIA

SOUTH AFRICA

Our Practice Areas in Africa:

SOUTH SUDAN PRIVATE SECTOR INFRASTRUCTURE PUBLIC DEVELOPMENT DEVELOPMENT ADMINISTRATION REFORM

JUSTICE, CIVIL SOCIETY SECURITY & PEACE & DEMAND-SIDE BUILDING ACCOUNTABILITY

EXTRACTIVES INDUSTRY GOVERNANCE

PUBLIC FINANCIAL MANAGEMENT

EDUCATION DEVELOPMENT

REVENUE REFORM

CLIMATE CHANGE

CROSS-CUTTING SERVICES

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“The key to a successful apparel business is speed to market. Delays between factory and port, are a huge logistical obstacle. Only a value chain that is fully integrated locally can overcome this.”

Julius Korir, Principal Secretary, State Department of Industry & Enterprise Development, MoITC

“I want a supply chain that is so responsive to market needs, that when a client orders the last pair of cotton bed sheet, a cotton plant has already been planted by Kenyan farmers.”

ANTHONY MURIITHI, AGRICULTURE & FOOD AUTHORITY

“If East Africa is successful with its proposed phase out of imports of second hand clothing (‘mitumba’) this could ensure the region doesn’t miss an important opportunity for growth.”

NEIL SPOONER, ADAM SMITH INTERNATIONAL 18

This report has been put together based on the actual discussions between the panellists and participants of the development talk “From Farm to Fashion: Does Kenya have what it takes to be more competitive in the global apparel and textiles industry” that was organised by Adam Smith International in partnership with ACTIF and the MoITC in Nairobi, Kenya, on March 16, 2017.

All statistics and numbers mentioned in this report have been taken from the actual discussions, as cited by participants.

All photos used in this report are either Adam Smith International or public domain pictures.

Twitter updates of that day can be found under the hashtag #KenyaEnVogue.

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#KenyaEnVogue @AdamSmithINT www.Adamsmithinternational.com 20