Strengthening value chains between Africa and the European Union (EU) is a priority objective for sustainable growth and decent jobs across the two continents. Recent market imbalances and disparities, involving supply chain disruptions and lack of attention to the social and environmental impacts on vulnerable groups, indicate the importance of trade collaboration and impact investment to tackle challenges and seize common opportunities.
Africa is home to over 1 billion people, of which 60% are below the age of 25. The continent reports steady economic growth, with a projected GDP increase of 3.8% in 2022, and the fastest-growing middle-class in the world. Up until now, the EU has been Africa’s largest trade and investment partner, accounting for a third of African commodity exports in 2018. The largest share pertains to primary goods, including raw materials, and agricultural produce. Close proximity and strong historical and cultural links, add value to the Africa-EU trade relationship.
What’s more, textiles and clothing is a fast-growing industry in several African countries. In fact, the apparel and footwear industry in Sub-Saharan Africa amounts to 31 billion US dollars and is expected to grow at 5% until 2024. Currently, the African continent is responsible for 5.8% of the world’s cotton production and employs more than 450,000 people. While China and India have been the biggest producers in the garment industry, “made in Africa” is gathering momentum. Near-shoring trends to African regions by garment and footwear actors are emerging, as an opportunity to better address value chain disruptions and bottlenecks.
Nevertheless, the EU’s regulatory environment and growing demand for sustainable business models in the textile industry risk to hamper trading operations. While there are noble goals behind promoting sustainable business practices through compliance with Environmental Social and Governance (ESG) criteria, such initiatives can also pose challenges for African exports through incurring costs, related to the need for enhanced human resources, managerial capabilities and technological skills. Advanced technologies and new requirements in the EU risk widening the knowledge gap among different players on the supply chain, especially impacting vulnerable actors located in remote areas.
Mobilizing resources for compliance with due diligence policy and legislation
“Building the traceability of sustainable value chains across the two continents with support of blockchain technology”, was the focus of recent discussions at a side-event organized by the UNECE-ITC initiative for Enhancing Transparency and Traceability of Sustainable Value Chains in Garment and Footwear, with OACPS; the Egyptian Apparel Export Council Egypt and Bishara Group; Filmar Spa; Hugo Boss; and UNIDO Egypt. It was part of the 7th EU-Africa Business Forum 2022, jointly organized by the African Union Commission (AU), the EU and European business organizations, which brought together more than 15,000 experts, government representatives, international organizations, and stakeholders.
“Increased sustainability measures in the EU require education, access to technical know-how and increased assistance in the Global South. Medium- to long-term affordable financing is needed to achieve integration in global value chains and compliance with changing legislations. Instead of individual actions we need increased collaboration between the Global North and the Global South, especially through public-private partnerships, to avoid trade barriers in the future”, highlighted Mr. Escipión J. Oliveira Gómez, Assistant Secretary General for OACPS.
The participants discussed the importance of traceability in value chains of fashion and apparel through advanced technologies, like blockchain, as a key enabler for compliance with ESG requirements and due diligence as well as to promote sustainable business models.
“Consumers’ growing interest in transparent supply chains demand more traceable actions on the business end. Blockchain is a crucial mechanism to enable visibility and to capture reliable information along the supply chain, from cotton farmers to consumers. However, we need a standard approach to implement the technology, and to make it accessible to everyone – particularly, because traceability is a key success factor for more responsible business and consumption patterns” stressed Ms. Elisabeth Tuerk, Director of the Economic Cooperation and Trade Division at UNECE. “UNECE, with UN/CEFACT’s blockchain pilots, seeks to implement universal standards that can be widely adopted in the garment industry to close the digital divide”, she concludes.
Declaration calls on innovative financial instruments and technical support to accelerate sustainable value chains
To deliver results, the Forum launched the Joint EU Africa Business Declaration to influence policymaking and business activities, and reconcile concrete actions for a sustainable fashion and textile industry of the future:
Support of SMEs’ transition to sustainable business models by financing measures in production processes and reduce trade barriers.
Increased investment to achieve economic integration of MSMEs and harness the full potential of advanced technologies for traceability of sustainability performance.
Capacity building to accelerate MSMEs’ compliance with ESG requirements.
Implementation of Textile Industry Hubs across Africa, based on the experience by the African Cotton and Textile Industry Federation (ACTIF).
Business incentives in form of tariffs, access to finance and trade facilitation.
International organizations or EU Agencies’ prevention and monitoring of costs transfer to suppliers of sustainability compliance measures.
The declaration calls on a concrete business outcome: Set-up a ‘EU-Africa Apparel and Ethical Fashion Fund’ for:
Window I – “Technology transfer and ESG support for capacity building and partnerships enhancement among value chain actors” to advance compliance with ESG standards and tech and knowledge transfer, and to harness the potential of advanced technologies and digital solutions for traceability of sustainability performance and credentials, for small and vulnerable actors.
Window II – “Green Textile, Green Apparel and Ethical Fashion in Africa and Europe”, to support SMEs in the overall green transition to sustainable value and supply chains, for those not yet ready.
Looking ahead, we must respond to the needs of African MSMEs to better integrate them in global markets. While external factors are reshaping the industry, UNECE together with partners calls to action to promote sustainable trade in an inclusive manner, especially by means of advanced technologies.