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Ghana Positioning Itself as Next Garment Manufacturing Hub

By   /   December 6, 2012  /   No Comments

Ghana – Growing shipping and labor costs have made Asian nations increasingly less attractive in the garment manufacturing business. With costs rising across the region, many manufacturers are looking for lower cost countries that are closer to major European and American markets. And Ghana has been demonstrating a strong potential to become the next garment manufacturing hub.

Fueled by low labor costs and being much closer to both the Eastern seaboard of the United States and Europe, Ghana and other African nations have the potential to suppliant Asian nations as the world’s top choice for low coast garment manufacturing. Years of underdevelopment have resulted in low labor costs in many African nations, including Ghana, and governments are open to trying new ventures. Many African governments are aggressively seeking international investments in order to build up their economies, thereby increasing stability and employment opportunities. Further, clothing in Ghana has traditionally made and repaired at home. This has resulted in a high percentage of the population, primarily women, possessing strong sewing skills

Industry experts estimate that producing garments in Ghana will reduce shipping times by up to ten days. Besides cutting shipping and fuel costs, this also allows manufacturers to adjust more quickly to the fast changing trends in the garment industry. Further, traditional garment manufacturers, such as India and China, have seen increasing minimum wages and costs of doing business.

In October, 2011 the Lucky 1888 Mills garment factory was opened with high press coverage and inaugurated by both the Ghanaian Minister for Trade & Industry and the U.S. Ambassador. The factory was established in a free trade zone and provided with a subsidized warehouse by the Ghanaian government. The Lucky 1888 Mills factor now sells millions of dollars worth of garments to Walmart, mostly medical scrubs, and is looking to expand its operations. Numerous other Japanese and American companies are now vetting Ghana and other African nations for possible investments in garment manufacturing.

Ghana and Africa are also attracting sustainable development firms, such as Liberty & Justice, which produces a range of garment products, including tote bags for the famous Godiva Chocolatier. The company also produces over 350,000 pairs of jeans per month. There are also a growing number of local fashion designers and clothing companies, such as AFIA, which have been combining African and Western design motifs to create entirely new styles.

These developments are encouraging signs in a region long plagued by poverty. Following decades of colonial exploitation, many African governments lacked the necessary public administration and civic society infrastructure to develop in the immediate Post-Colonial period. In spite of Africa’s immense wealth in natural resources, many nations, including Ghana, have lagged behind their Asian and Latin American counterparts in terms of economic development. These general conditions have set the stage for bloody civil wars, numerous coups, and a few mass genocides.

Many African nations, however, appear to be turning the corner and are developing more stable, effective governments. Ghana has been one of the bright spots in recent years. Following the failed economic experiments of Marxist Kwame Nkrumah, a series of military coups would throw the country in disarray from 1966 to 1992. A new constitution based on multi-party Democracy was installed in 1992 and in the following years the country became increasingly stable and more prosperous.

Since 2002 Ghana has regularly posted growth rates above 5%, except during the 2009 global downturn, when the country clocked clocked a growth rate of just over 4%. In 2011, Ghana reported an astounding 13.6% growth rate. The country has been aided by numerous trade agreements in the U.S. and European Union, such as the African Growth and Opportunity Act, which allows stable Democratic African nations to export their products to the United States duty free.

Ghana also demonstrates a higher Human Development Index score than the average for sub-Saharan African nations, with a 2010 score of .54 vs. .46 for Sub-Saharan Africa. This is a marked increase from .527 in 2009 and the country appears to be building momentum for increased economic development. HDI scores are important for measuring the overall living and social conditions within a country, because they measure education, health, and Gross national Income.

Ghana is just one example of an increasingly prosperous Africa. As multinational companies continue to look for ways to cut costs and diversify away from Asia, Africa has the potential to grow into a global investment hot spot. Anchored by South Africa’s industrialized economy in the South and the vast natural resources spread across the continent, there is good reason to hope that stable African nations, such as Ghana, will be able to break the decades of poverty that have entrapped the region.

Source: Value Walk

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