With the support of a $1.3 million co-investment grant, Ethical Apparel Africa (EAA) is raising the bar on human-centered manufacturing and cost competitive production for the garment industry in Ghana.
The Trade Hub is a five-year, $140 million trade and investment facilitation activity that seeks to improve private sector competitiveness in West Africa through a market-based approach. As one of the Trade Hub’s first grantees, EAA will establish a model factory with modern equipment and new technology to accelerate the industry’s growth in the region, creating 800 jobs over the course of the project. With funding support from the U.S. Agency for International Development’s (USAID) Women’s Global Development and Prosperity Fund, 70 percent of its jobs at the new factory will be dedicated to women.
“West Africa is a market that is larger than the United States and is growing at one of the fastest rates in the world,” says Sharon Cromer, USAID Ghana Mission Director. “This partnership with a dynamic, woman-owned business is a model for how Ghanaian women and youth can raise Ghana’s profile on the world stage while improving their own livelihoods.”
Funded by USAID, the Trade Hub aims to address some of the region’s biggest development challenges, such as women’s empowerment and employment, by unlocking private capital and directing it to high-impact projects.
Scalability without sacrificing quality
Historically an apparel sourcing company, EAA brings technical capacity building and assistance in meeting international standards to locally owned partner factories. EAA is now investing in one of their local partner factories, Maagrace Garment Industries Ltd. The Trade Hub’s co-investment will support this project to rapidly expand production and integrate innovative practices, enabling it to become a model facility.
“The shift from sourcing to manufacturing for us is really about being able to scale more quickly,enabling faster job creation,” says Paloma Schackert, Co-Founder and COO at Ethical Apparel Africa. “It’s really exciting to start to see that job creation come to fruition and to see growing demand from U.S. clients.”
Primarily U.S. uniform and scrubs clothing companies, EAA’s clients place large orders and have the potential to grow business in Ghana as local capacity increases. By filling high-quantity, cost-competitive garment orders while maintaining strict standards for its working conditions and going beyond baseline compliance, the company is setting a precedent that cost-competitive manufacturing does not mean exploitative relationships.
“Our operating model is based on the fact that all manufacturing should be done ethically,” says Keren Pybus, the company’s CEO and Co-Founder. “And to us ‘ethical’ is more than just doing the baseline compliance.”
Pybus notes that when consumers look for ethically produced clothing, they usually are shopping for high-end fashion products or eco-wear. By taking EAA “beyond compliance,” the business can change that expectation and bring that same sensibility to markets like uniform suppliers, for instance.
“We want to be a thought leader in the space,” she says. “We want to be open about what we are doing here.”
This transparency is aligned with the goals of Prosper Africa, a U.S. government initiative to foster two-way trade and investment between the continents. Pybus says that as more companies see the business potential of investing in West Africa, sustainable growth will follow.
More than minimum wage
Maagrace’s facility is located in Koforidua in the Eastern region of Ghana. Semi-urban, this region has high unemployment, with less than 20 percent of its population holding formal jobs. According to Pybus, the next largest employer in the area after Maagrace has 50 to 100 employees.
Looking at the region’s challenges, EAA hopes its partnership with Maagrace and the Trade Hub will benefit far more than the 800 new jobs they plan to create. The economic development stimulated through the factory’s employment opportunity is expected to reach 4,000 indirect beneficiaries.
“The needs of a working factory in a city center will be different from those that are working in a rural environment… so it’s not just about meeting the minimum wage laws in a country,” Pybus says. “It’s about paying the right wages that are fair and sustainable and working for a living wage. It’s about creating incentive programs and benefits programs that meet employees’ needs.”
A baseline study conducted by Ethical Apparel revealed that two thirds of the people living in the region cannot afford to eat three meals a day. The study also reported that transportation costs are a barrier for people to get to work. Responding to these needs, Maagrace has already instituted a lunch and transportation subsidy program for its workers, and through the Trade Hub’s co-investment grant the company will also implement sexual and reproductive health courses designed specifically for the women they employ.
“Our mission is to train and invest in people so they can reach their utmost potential and have a career,” says Reuben Katako, Human Resources Manager at Maagrace.
In line with one of the Trade Hub’s central goals to advance economic opportunities for women, EAA is looking beyond just hiring women for its production floor jobs. Through the Trade Hub’s grant, the company is developing training programs to raise women to middle- and upper- management positions.
“There’s a real opportunity in Ghana to create a model for gender that’s truly equitable,” says Pybus.
In addition to ensuring that 70 percent of its jobs go to women, the company is also allocating 70 percent of its total jobs for youth. Ghana and West Africa’s largest demographic is skewing young, with almost half its population aged 15 years and younger, presenting a potentially huge problem as more and more young people enter a tight job market.
“Empowering Ghanaian women and youth is the core of our development approach and one that we embrace as we advance Ghana’s journey to self-reliance and prosperity,” says USAID’s Cromer.
Looking ahead
EAA’s founders look to global trends in the industry as they anticipate major growth in West Africa.
As an example, during the last five years, Myanmar grew its garment industry by more than $3 billion with 1.1 million people employed in the sector, illustrating the potential the industry has for countries like Ghana to create jobs. The garment industry is typically the stepping stone for countries moving toward manufacturing. Over time, countries shift from low skilled industries like garment manufacturing to ones that generate higher wages.
EAA views the continent as the next frontier in the garment industry, as rising costs and logistical issues make Asia less attractive for investors and producers.
If Ghana follows a similar trajectory and finds a way to integrate its cotton producing and processing capacity, it could become one of the fastest and most cost competitive hubs in the world.
In this, EAA sees a way to advance using the garment industry’s hard-earned lessons, applying best practices and creating prosperity for West Africans without diminishing their dignity.
“Given the sheer size of West Africa, we need to think big,” says Daniel Moore, Mission Director for USAID’s West Africa Regional Mission. “Key among what we can leverage are jobs. When you talk about potential, there is huge potential in unlocking the ambition and drive of women.”