The State of Fashion in Africa may surprise us in 2023

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Author
Michael Stanley-Jones, Sustainability and Capacity Building Advisor -CRF Italy
Roberta Annan, Founder, African Fashion Foundation

Africa’s fashion economy in 2023 may surprise those who are glued to global market trends.

As 2022 came to a close, industry analysts believed that the fashion industry was heading for a global slowdown. Geopolitical factors and inflation sapped consumer confidence, while governments and central banks withdrew COVID-era fiscal stimulus measures that had propped up national economies during the pandemic crisis.

The World Bank growth forecast issued in January 2023 was dire, with worldwide economic output projected to be just 1.7% in 2023, the third lowest year of the century. Earlier, in October 2022, McKinsey Global Institute had forecast global Gross Domestic Product to grow a mere 1.5% in 2023, down from 3% in 2022.

The McKinsey growth forecast is reflected in The Business of Fashion (BoF)‒McKinsey forecast for global fashion sales growth of 5%  to 10% for the luxury market, and negative 2%  to positive 3% for the rest of the industry, in 2023.[1]

Sentiments expressed by respondents to the BoF-McKinsey State of Fashion 2023 Survey of Markets’ expected growth prospects in 2023 were equally glum, with Africa taking last place among the nine regions of the world. Only 15% of survey respondents saw growth prospects in Africa in 2023 as “promising”.

These forecasts have since proven to be overly pessimistic.[2]

The April 2023 Update of the World Economic Outlook issued by the International Monetary Fund forecast global economic growth to slow from 3.2% in 2022 to 2.8%  in 2023. Notably, its authors said, “emerging market and developing economies are already powering ahead in many cases, with growth rates (fourth quarter over fourth quarter) jumping from 2.8% in 2022 to 4.5% this year.”[3] Such a rate of growth for these developing countries is three times higher than McKinsey’s global projection of growth a mere six months ago.

The resilience of the global economy and rebound in emerging market and developing economies led us to reexamine the 10 global trends highlighted in BoF‒McKinsey‘s The State of Fashion 2023 report.

We ask ʻHow revelent are these factors and trends when viewed through the lens of Africa’s emerging fashion economy?’

The 10 trends are categorized into three groups:  Global Economy, Consumer Shifts and Fashion System.  In our review we focus primarily on the first two with a brief glance at the third.

Global Fragility is the first of the two trends the authors highlight in Global Economy. Inflation, war, climate crisis and consumer confidence are cited as factors of the global economy’s present volatile state.

These factors may be overly influenced by OECD, especially European and North American, dynamics. Sub-Saharan Africa’s inflation rate is ebbing from its peak of 14.5% year on year aggregate in 2022, and was forecast to drop to 12.5%.[4] Lower levels may be expected, however, as global inflationary pressures have noticably eased since the end of 2022.

The risk of a global recession has similarly fallen, with China, Germany and the U.S. – the three leading economies – having avoided falling into recession in the first quarter of 2023.

War may also be seen, sadly, through the eye of the beholder. The Ukraine war spawned by the Russian invasion in February 2022 is arguably of less significance to the Global South that the two-year armed conflict in northern Ethiopia, which began in November 2020 and has received far less attention by Western media. A truce was reached by the main warring parties in November 2022. Given the key role Ethiopia plays in East Africa’s fashion economy, the ending of the conflict may bring unexpected economic and social benefits to the sector and region.

The climate crisis and sagging consumer confidence, along with inflation, remain problem areas. The FNB/BER Consumer Confidence Index for South Africa slipped to -23 points in the first quarter of 2023, from a two-year high of -8 points in the previous three-month period.[5] Prior to 2023, confidence was rising, against the general trend of falling confidence in the developed countries up until the third quarter of 2022, when consumer confidence among G20 nations slowly began to rise from its post-COVID-19 lows.

Among Regional Realities, the second trend identified by BoF-McKinsey, analysts recommend that “brands re-evaluate regional growth priorities and hone their strategies so they are more tailored to the geographies in which they operate.”

The trend among global brands to increase localization in their supply chains, with consumers increasingly buying local brands imbued with local culture and heritage, and the young in particular seeking locally produced fashion, are factors highly relevant for African producers. With about 200 million people between 15 and 24 years old, Africa is the youngest continent in the world. Youth will define fashion’s future here.

Another shifting dynamic in fashion’s supply chains involves nearshoring. By moving manufacturing closer to consumer markets, brands can increase their speed to market and reduce the cost of transport and, in some cases, duties.[6] African manufacturers which are relatively close to Asian, European, Middle Eastern markets may benefit from this trend.

In the category Consumer Shift, we find consumers are increasingly shopping across gender categories, a factor which may be related to LGBTQ+ movements.

Although homosexuality remains outlawed in 34 African countries, styles perceived as ʻgender fluid’ may be gaining in markets here. The blurring of the lines between menswear and womenswear may require brands to rethink their product design, marketing, and in-store and digital shopping experiences.[7]

African designers may have an advantage over their northern competitors in this growing niche of the fashion market. Traditional gender markers found in West European and American fashion may not be applicable to Africa, which has always enjoyed a freer aesthetic than in the more restricted west.

President Barack Obama once told Vanity Fair, “You’ll see I only wear blue or grey suits. I’m trying to pare down decisions about what I’m…wearing – because I have too many other decisions to make.”

African men’s style shows greater variety and creativity in business and business casual wear. This is also evident among formalwear, with wider array of fabrics, patterns and colours supporting a greater selection of imaginative designs worn by both men and women.

“Encourage creative teams to reimagine the formalwear category with as much diversity in terms of colours, shapes, products or materials as any other category,” advise BoF‒McKinsey authors.

Africans have a head start in this direction.

Two-track Spending, the final consumer shift highlighted in The State of Fashion 2023, where consumers seek bargains through alternatives to high street retail, is less of a factor in Africa. Limitations on transport and access to outlets by consumers provide fewer options for domestic shoppers.

Brand loyalty may remain an important factor in the African luxury market.  Securing brand loyalty in digital shopping media could present challenges for Africa’s small- and medium-size designers seeking to break into the global marketplace. The rising cost of digital marketing could prove to be a barrier.

“Digital direct-to-consumer [DTC] channels, mounting digital marketing costs and e-commerce readjustments have put the viability of the DTC model into question,” reports BoF‒McKinsey in their Fashion System discussion.

DTC factors have less of a role to play in Africa, where distribution options remain limited. Kenya, for example, does not have a direct postal delivery system, making online shopping relatively expensive and inconvenient.  DTC channels should be reserved for the most loyal, high-value customers operating in the luxury market.

The crackdown on Greenwashing – defined as “Communication that suggests a company or its products are environmentally friendly in a way that is misleading, exaggerated or not reflected in overall business practices” – by the European Union may be expected to affect African producers exporting to OECD markets.  The EU Directive on corporate sustainability due diligence will likely have spillover affects on African producers participating in global value chains.

With more than 70% of the industry’s greenhouse gas emissions generated from upstream activities, some manufacturers may leverage their improved sustainability credentials to differentiate themselves from the competition, and place increasing demands for evidence of sustainable practice on their suppliers.[8]  African textile producers should take note.

Further investments in physical infrastructure to improve manufacturing facilities, logistics, and supply chain management are needed so African fashion entrepreneurs can increase production capacity, improve product quality, and reduce lead times.[9]

Last year, nine of the world’s 20 fastest-growing economies were African.[10]

Africa’s current population of 1.2 billion people is estimated to grow to 2 billion by 2050 and 4 billion by 2100. According to the African Development Bank Group, Africa‘s middle class population, those with a those with a household income of over US$3,900, aleady stands at 300 million people across the continent.

The African fashion economy will continue to grow rapidly.

Revenue in the Fashion segment is projected to reach US$8.26bn in 2023 and grow by an annual growth rate (CAGR 2023-2027) of 12.66%, resulting in a projected market volume of US$13.30bn by 2027.[11]

In the face of such growth, the tremendous economic potential presented by Africa fashion should no longer surprise anyone.

References

[1] Business of Fashion, The (Bof) and McKinsey & Company (November 2022). The State of Fashion 2023 is the seventh annual State of Fashion report by The Business of Fashion and McKinsey & Company.  Released in November 2022, the report draws from the McKinsey Global Fashion Index (MGFI) and the The Business of Fashion‒McKinsey State of Fashion 2023 Survey of business leaders.

[2] To take one dramatic example, the Economist Intelligence Unit in October 2022 had forecast that “Natural gas storage in Europe is likely to be completely depleted by spring 2023.” Economist Intelligence Unit (October 13, 2022). The reality turned out to be starkly different. “Storage facilities across Europe will end winter between 45% and 61% full – an average of 55% capacity – bypassing the previous end of winter record of 54% in 2020.” Sarah Taaffe-Maguire (March 6, 2023).

[3] International Monetary Fund (April 2023).  See References for full citation.

[4] Economist Intelligence Unit (December 2022).

[5] FNB (2023).

[6] Business of Fashion, The (BoF) and McKinsey & Company (December 2022).

[7]de Vries. T. (n.d.).

[8] Granskok, A., and Lee, L. (October 19, 2020).

[9] BellaNaija Style (2023).

[10] Toppan Digital (2023).

[11] Statista (2023).

 

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