The value chains that exist within the Fashion Industry
A significant part of the informal sector in the contemporary world is essentially an outgrowth ofthe formal economy in more ways than one. The activities in the informal sector are directly linked to and often constitute an essential part of the processes of production, exchange and accumulation. In certain cases the sector consists of industries that have artisanal origin and have evolved into cottage industries with informal production and labour processes.
The informal sector in Kenya carries around 84% of the population. The major contributors arethose engaged in creation, manufacturing and production, performance, broadcasting, communication and exhibition or distribution and sales of copyrighted works. The total value of creative industries in 2007 was Ksh 85 million, which represented 5.3% of the total GDP. Interestingly however, is the fact that youth unemployment among young women aged 15-34 is on all time high of 40%. Based on these statistics, we need to have a paradigm shift of thoughts, processes and value chains that currently are at play.
Globally, according to the annual UNESCO Creative Economy Report (2013), the creativeeconomy is cited as one of the most rapidly growing sectors in the world economy. The report describes creative industries as a highly transformative sector in terms of income generation, job creation and export earnings for countries.
Creative industries in Kenya face a number of challenges. First, is the lack of capital especiallyamong the upcoming creatives who are the youth. Access to start up funds is difficult due to high poverty levels among youth and their inability to access loans in an ‘uncertain market’. These industries are viewed as high risk. Second, is the lack of entrepreneurial skills among the youth. Vocational training courses are urgently needed. Third, is the lack of infrastructure and institutions. This includes inadequacy of input into the industry, inadequacy of distribution networks, and lack of institutional support. Fourth, insufficient understanding of Intellectual Property Rights for creative work creates problems and the spread of piracy inhibits creativity. Finally, archaic laws that still regulate the creative industry, that need to be reviewed as they are currently set to fail.
Creatives Garage is a multi-disciplinary collective space for creatives to network, share ideas,collaborate, learn, gain market accessibility and push boundaries. We believe that we can start fixing some of these issues that creatives face by building an ecosystem that helps these creatives thrive. Our key goal is market access for our creatives either through established or new alternative markets. Without doubt, creative industries have immense potential to contribute in social and economic development but they require support from government, private sector and citizens.
In 2011, the core creative industries in the 27 countries of the European Union generate €558billion in value added to GDP, approximately 4.4% of total European GDP. The value added by the total creative industries is approximately €860 billion, representing a 6.8% share of GDP. The creative industries represent approximately 8.3 million full time equivalent jobs, or 3.8% of total European workforce. Employment in the total creative industries is approximately 14 million, or 6.5% of the total EU workforce. Studies in the UK and other countries in Europe identify the creative industry as steady and reliable, and less subject to the kinds of pressures and tensions common in the overall economy. Also, the interconnections of creative industries with other sectors of the economy make them have a major impact to the broader economy. In Africa, the United Nations Conference on Trade and Development (UNCTAD) puts the average of the annual growth rate of the creative sector at 13.9%.
Africa accounts for only 3% of global trade.Intra-Africa trade, that is, trade between countries inAfrica is at a marginal 10%. Unemployment rates in Africa average 40% in most countries, most of these are youth. Most workers or enterprises are found within the informal economy (unregulated, unregistered enterprises). The public sector is only able to absorb 20% of the annual labour force.
Based on these numerous statistics it is therefore imperative that informal sectors start employingthe youth.
In the 1980s, many African countries did have textile industries. These were however squeezedout of the market through competition from Asia. In Kenya, Rivatex, Raymond and Kenknit were all too familiar names but sadly we saw the death of these textile industries in the early 90’s and the rise of the ‘Mitumba’ (second hand clothes) industry.
We have seen the rise of African fashion, with Maasai and Kente prints making it into theinternational market. Here at home, a new generation of African trendsetters are designing apparel using African fabric as a fashion statement redefining the African narrative. The potential of this is interesting and if we continue to nurture this, then we start building value chains within the fashion ecosystem and continually innovate new ideas within the fashion industry for global consumption.
We understand that to create a thriving ecosystem, their is an immediate need to start addressingthe underlying challenges as we create market access to these creatives.
Preliminary findings on the value chain
We have had numerous talks around the Fashion industry and the needs and lacks of this industryin Kenya. While, there seems to be a “working value chain” We need to ask ourselves what we need to do to make it more efficient.
Many Creatives, especially in Creatives Garage, are coming up with great concepts of appareldesign. The likes of Mathenge Akisa, Kimmy Collections, Urban Phunk, Afrishiq and Sticckky are just but examples of Fashion designers defying all odds to put out their fashion labels. Urban Phunk has been in the market the longest amongst these brands but they still face the same worry, month on end of closure. Some of the issues these Designers face are; lack of a mass market, lack of mainstream or even alternative markets, Competitive pricing between their brands and the ‘Mitumba’ industry, lack of a wide range of products, lack of consistency in terms of finishing that could be fixed by partnering with mass production industrial firms, lack of raw materials to work with and most importantly lack of financing.
From our preliminary findings we realized that even though the value chain exists, this chainseems to be broken.
Case studies on Broken Value Chains
Case study 1: The designers perspective
In a round table meeting, a designer had to meet an order of two thousand uniforms and therestarted her quest to look for fabric she could use. She went to Rivatex and realized that the quality of fabric was low for 3 times the price as she would get in China. When Rivatex was asked about this, they said that could be true as their machines could currently not produce the quality needed plus the cost of production was expensive in terms of staffing, Government licensing and operational costs. To add on to this, Cotton farming in Kenya is no longer a thing in Kenya and therefore the likes of RIVATEX have to get their cotton imported into the country, this skyrockets the cost of production.
Case study 2: The Manufacturers perspective
While the manufacturers are able to meet demand and get markets through the AGOA treaty, Acouple of things come to play as well. The most important thing would be what do the Manufacturing plants do with rejects of the products already produced for market? What happens to the offcuts from the raw materials used?
Leather Industries Kenya is an example of having heaps of off cuts that they are left with afterprocessing leather while Creatives creating leather product goods within our space have challenges in getting raw materials for their bags, shoes and accessories. How do we intervene in this process of cutting down the waste on offcuts while producing these products for the market
Case study 3: The Retailers perspective
Muchiri Wahome, Deacons CEO, on a trip to china was approached by someone who wasinterested in his Maasai beaded leather belt. This apparel distributor was intrigued by the design of this belt and asked if he could get 10,000 identical pieces of this belt. The sad reality if we don’t have anyone who manufactures this to scale. He continued to mention that they would be interested to carry the Kenyan brand under the Deacons group, however they don’t know of any fashion designer who had a 35 piece catalogue for four seasons and therefore as a result of this not able to carry any Kenyan brand.
Case study 4: A designers perspective
Nancy quit her day job to follow her passion in creating hoodies and other apparels for theKenyan market. Her designs stood out and soon enough she started getting orders in for her collection. Her initial turnaround time was two days. A few months later, people started complaining about her because her turnaround time had moved to two weeks. She got frustrated to a point of not picking up calls. Soon enough she fell into the ‘fundi’ category (fundi’s are know not to deliver in time and give numerous excuses)
Case study 5: A financiers perspectiveOne of Kenya’s major banks put out Kes.100,000,000 to give to fashion designers in loans at an 8% interest rate. Yet the few who applied for the loan did not qualify for these loans. With all the above case studies, it begs to ask the question how do we solve these challenges?
Written by Liz Kilili