Examining Africa as a Sourcing Alternative

Core Insights - Global brands are shifting their sourcing strategies from a long-term aspiration to an active priority due to rising costs, capacity constraints, geopolitical risks, and tariff exposure [1] - Africa has historically been positioned advantageously for sourcing due to preferential trade frameworks like the African Growth and Opportunity Act (AGOA) [1] Group 1: Sourcing Challenges - Sourcing from Africa involves more than just shifting orders; there are significant challenges in manufacturing capacity and supply chain integration [2][3] - Many African countries have apparel manufacturing capacity that is fragmented and disconnected from integrated supply chains, leading to limited scale and weak supporting infrastructure [3] Group 2: Investment Considerations - A critical question for sourcing executives and investors is whether there is sufficient demand to justify the necessary investments in Africa's manufacturing capabilities [4] - The demand assessment for sourcing and investment is often too narrowly focused on export potential, which creates a chicken-and-egg problem where buyers and investors are hesitant to commit [5][6] Group 3: Dual Demand Dynamics - Domestic demand in large African markets, such as Nigeria, represents a significant opportunity alongside export demand, allowing production capacity to serve both markets [7] - Nigeria, with a population over 200 million, showcases this dual-demand dynamic, as its annual apparel consumption is estimated between $2.5 billion and $6 billion, far exceeding local production capacity [8]