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In Africa, H&M only has shops in Egypt, but has talked of plans to open stores in South Africa by next year. The bulk of its shops are in Europe. Sourcing of garments from local manufacturers by H&M will offer new demand for the sluggish textile industry whose earnings and production have dropped significantly from its peak in the 1980s.
The world’s second-biggest fashion retailer Hennes & Mauritz (H&M) will open a manufacturing plant in Kenya to feed its global empire of more than 3,000 stores in 53 countries.
The Swedish multinational says it has signed deals with local factories to make its fast-fashion clothing under its famous H&M brand.
The firm outsources production to about 800 factories in Europe and Asia that are controlled by designers at the retailer’s head office in Sweden.
Low-cost production in places like Bangladesh and China has helped H&M cement its position as a top fashion house and its Kenya operation looks set to benefit local textile manufacturers who have been hit hard by cheap imports from Asia and second-hand clothes.
Helena Helmersson, H&M’s head of sustainability, told Reuters that H&M will start producing more clothes in sub-Saharan Africa and has already placed orders in Ethiopia and Kenya.
“We want to expand. It is not about moving capacity from Bangladesh or China,” Helmersson told Reuters.
The Swedish company is one of the biggest buyers of garments from Bangladesh, where the collapse of the Rana Plaza factory last April killed more than 1,100 people, drawing global attention to the poor conditions in which many in Asia work.
In Africa, H&M only has shops in Egypt, but has talked of plans to open stores in South Africa by next year. The bulk of its shops are in Europe.
But fashion retailers from South Africa like Foschini and Edgars will be opening stores in Kenya this year, helped by the rise in shopping malls that attract well-heeled consumers.
Kenya has seen multi-billion shilling shopping malls spring up fast as real estate investors and retailers seek to tap into a growing middle class with growing disposable incomes and a limited choice of leisure activities.
The sourcing of garments from local manufacturers by H&M will offer new demand for the sluggish textile industry whose earnings and production have dropped significantly from its peak in the 1980s.
Statistics from the African Cotton & Textile Industries Federation shows that the local textile industry peaked in 1984 with 52 mills producing over 70,000 bales and employing more than 42,000 people.
But the industry has declined over the years, with only 15 mills currently operating at a capacity of between 30 per cent and 45 per cent.
They include Bedi Investment, Thika Clothes Mills, Sunflag, T.S.S., Spin Knit, and Nakuru Industries. These firms currently employ about 34,000 people or half what the industry did in its peak year. The millers exported garments worth $335 million (Sh28.4 billion) last year compared to $296 million (Sh25.1 billion) in 2012, representing a 13.1 per cent growth.
Local demand is derived mainly from the government which spends about Sh3 billion annually to buy bedding materials and uniforms for its health facilities and for the security forces.
The decline of the textile firms has been linked to trade liberalisation policies undertaken by Kenya from the 1980s at the behest of the World Bank and the International Monetary Fund. This exposed the industry to cheaper textile and cotton imports from low-cost producers in Asia, hurting the competitiveness of local firms.
The policy change also saw the imports of cheap second-hand clothes that has shrunk the market for new clothes, forcing textile firms to rely heavily on the Agoa export pact that runs until September 2015 before it comes up for review.
This has seen a number of mills close shop, including Londra and KICOMI. The latter was one of the largest textile dealers in Kenya.
The bulk of local textiles are exported to the United States under the African Growth and Opportunity Act (Agoa) agreement that allows duty-free imports of selected items from low-income countries on the continent.
– Business Daily