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McKinsey survey finds that global apparel buyers have growing interest in Ethiopia and Kenya

Published on August 10, 2015

The East Africa Trade and Investment Hub is one of many organizations that is promoting East Africa as the next big apparel sourcing destination. To find out if East Africa is indeed on the radar of American and European purchasing officers, the McKinsey & Company, a global management consulting firm, visited factories in the region; interviewed stakeholders, including manufacturers and buyers; and analyzed market data. They also conducted a 2014 survey of chief purchasing officers (CPOs), with a series of questions focused on East Africa. Forty apparel CPOs, representing a combined $70 billion in 2014 purchasing volume, responded to the survey. Curious as to what they discovered? Keep reading.

Nearly three-quarters of survey respondents said, as they did in 2011 and 2013, that over the next five years they expect to reduce their purchases from Chinese firms. Bangladesh was at the top of their list for future sourcing locations. But for the first time, an East African country, Ethiopia, also made the short list of future sourcing destinations and Kenya made the longer list. The survey showed that  Ethiopia has cost advantages whereas Kenya boasts higher production efficiency.

McKinsey goes on -

The East Africa opportunity

According to United Nations projections, sub-Saharan Africa will have the highest growth in working-age population anywhere over the next 20 years. By 2035, the working-age population in the region is expected to be as large as China’s today—more than 900 million people. This massive labor pool is capturing the attention of several industries, including apparel.

Within sub-Saharan Africa, East African countries—especially Ethiopia and Kenya, and to a lesser extent Uganda and Tanzania—are of interest to apparel buyers (Exhibit 2). The governments of both Ethiopia and Kenya are taking steps to develop their domestic textile and garment industries.

Find the complete McKinsey article, here.