The Bank Investing Millions in Africa’s Fashion Industry

Africa’s fashion industry needs significant investment, a sentiment shared by stakeholders across the continent. Without urgent funding, some promising businesses will be unable to fulfil their potential, and others will simply flounder. One major financial institution stepping in to bridge the gap has drawn both praise and scrutiny after backing a wide range of fashion projects.

Enter Afreximbank, a lender that has pledged to co-finance the construction of industrial parks in Nigeria, Benin and other countries which house manufacturing facilities, including textile mills and garment factories. It also runs a $2 billion creative industries fund supporting export-focused initiatives such as overseas trade shows for fashion designers from Kenya, Ghana and beyond.

“What Canex and Afreximbank are doing is really great because, to a certain extent, they’re shining a light on African designers and creativity,” said Laureen Kouassi-Olsson, a private equity veteran and founder of investment firm Birimian Ventures, based between Abidjan, Côte d’Ivoire and Paris, adding that the bank’s activities are important because they highlight the investability of African fashion entrepreneurs.

Beyond trade shows and production facilities, the bank also dabbles in the more glamorous side of the industry, such as sponsoring British-Ghanaian designer Ozwald Boateng’s takeover of this year’s Met Gala in New York.

But what motivates an African financial institution of this kind to bet so heavily on a high-risk sector like fashion — and to do so through such a wide range of ventures?

Financing Africa’s Creative Economy

“As with many things in Africa, opportunities in the African creative industries abound but remain untapped. This is why Afreximbank has adopted a proactive approach to catalysing the industry,” said former president Benedict Oramah last year as he announced the bank’s doubling of its funding for the Creative African Nexus (Canex) programme, from $1 billion to $2 billion for the next three years.

Spanning seven categories — fashion, film, art, music, literature, sports and gastronomy — the programme is earmarked for projects in need of infrastructure development, capacity building and production support. The creative industries are a new area for a bank experienced in sectors like energy and healthcare.

Launched in Abuja, Nigeria in 1993 by a consortium of African governments and private and institutional investors, the pan-African multilateral financial institution is now based in Cairo, Egypt, with operations in Nigeria, Côte d’Ivoire, Zimbabwe and Uganda. The African Export–Import Bank, as it’s also known, focuses on projects that stimulate the expansion and diversification of African trade through profit-oriented development objectives.

With around $37 billion in assets, Afreximbank recorded $973.5 million in net income last year. Although ratings agency Fitch downgraded the bank’s outlook to negative earlier this year — a decision the bank dismissed as “erroneous” and an African Union credit review body described as “flawed” — it continues to attract praise from high-profile partners, including Africa’s richest man.

That endorsement came in October from Nigerian industrialist Aliko Dangote, who told local media that “Africa’s dreams and aspirations have been materialised by Afreximbank,” describing it as “Africa’s crisis-solving bank.” It’s worth noting that Dangote is currently seeking $5 billion in financing from the bank for an oil refinery project.

Enabling Commerce From Algiers to Zanzibar

It was during Oramah’s tenure that South African Khanyi Mashimbye came on board as a manager of the bank’s fashion division. Prior to her appointment in 2021, the bank had not been actively supporting major fashion design or apparel manufacturing initiatives on the continent.

With experience in buying and merchandising at major South African retailers Woolworths and Edgars, and in leading a footwear manufacturing firm, Mashimbye was a fitting choice. One of her first priorities for the bank’s Canex programme, she says, was to help “African creatives enter the European market.”

Around the same time, the bank unveiled a partnership with Portugal Fashion Week called Canex Presents Africa. The scheme brought a handful of designers to Portugal, where the fund underwrote their runway shows. Designers presented their collections to buyers and press, gaining access to a “three-month incubation component” of mentoring for the European market.

The instigator of the Portugal scheme is said to be Lulu Shabell, founder and chief executive of consultancy Lulubell Group. A Tanzanian national based in Switzerland, Shabell later stepped aside from her role in the programme but says she pitched the idea to Afreximbank and secured its involvement.

Over the past four years, 100 designers from 34 African and Caribbean countries have participated in the Canex Presents Africa programme. “We’ve had a lot of momentum [with fashion]… because of the strong partnerships we were able to establish early on,” says Mashimbye.

Canex has also sought to expand business opportunities within Africa. In September, it brought nine designers to Algeria from countries such as Senegal and Nigeria for the Intra-African Trade Fair (IATF), a biennial event positioned as a B2B marketplace for the African Continental Free Trade Area (AfCFTA).

Some designers who have taken part in similar Canex initiatives say they were valuable. Tunisia-based Anissa Meddeb’s participation led to her label Anissa Aida being sold at Tanzanian designer Doreen Mashika’s concept store in Zanzibar. Without such opportunities, she said, “it takes a long time [for independent designers] to build those connections before being stocked.”

Brokering Early-Stage Investments

Afreximbank’s new president George Elombi, who succeeded Oramah in September, recently described the bank as “a force for industrialising Africa and for regaining the dignity of Africans wherever they are.” But to be a lifeline for Africa’s creative economy, the bank must also mobilise third-party equity investment — something it set out to do last year by hosting a pitching session in Algiers where designers presented their business to prospective angel investors.

The bank added a grant component to last year’s Canex pitch session, where three designers — Cameroon’s Kibonen Nfi and Zimbabwe’s Pam Samasuwo-Nyawiri and Thulani Ngazimbi — were awarded prize money of $10,000, $6,000 and $4,000 from Afreximbank. The same designers were considered for a cumulative investment of up to $350,000 from angel investors, subject to individual investors’ due diligence processes and signing of agreements.

The bank, which acted as a broker between the two parties, said some designers have received funding from investors. One example is Pam Samasuwo-Nyawiri, co-founder of Zimbabwe’s Vanhu Vamwe, who secured a six-figure investment for an undisclosed stake. Mashimbye says the artisanal handbag brand, which now employs over 150 women, has grown its stockist list from zero to nearly 50 international stores since joining the Canex programme.

“It is important to note that Afreximbank is not a party to the said investment agreements — the bank’s role was to convene the ecosystem and create the enabling environment for engagement,” a bank spokesman said, in response to questions about some designers not receiving an investment at the end of the process.

One criticism levelled at the Algiers pitch event centres on the suitability of shortlisted brands.

Nigerian designer Tokyo James, a regular at Milan Fashion Week, argues that it was a missed opportunity for more investment-ready brands — buzzy young designers with a higher-profile and more experienced names with a commercial track record — who were largely absent. “We need investors to see [those kinds of] brands, the people that have done the work, and take equity [to] build these brands up,” he said.

It’s not an issue that’s unique to the continent. “We are all realising that it’s very difficult to invest in companies [at that very early stage of development]. And it’s not a question of African fashion. We see it [on] the global stage,” said Kouassi-Olsson, adding that Afreximbank’s activities are mostly marketing “activations” rather than pure investments.

Another challenge is the growing gap between African investors seeking meaningful returns, and African designers seeking funding without a business plan or a compelling business model. As Shabell says about the latter, “a lot of them are…highly creative …but not good businesspeople,” and operating without a management team.

Streamlining Market Access

As consumers outside the region often face hurdles when shopping for African brands, Canex developed initiatives to streamline international market access.

“We recognise that it’s very difficult for African brands to, first and foremost, be accessed by whoever’s looking for them… so we decided to focus on ensuring that African brands are found at the spaces where global trade is happening,” said Mashimbye. That means access to retail buyers at trade shows in hubs such as Paris, Tokyo and New York.

In July, Canex teamed up with trade show Tranoi and luxury department store Galeries Lafayette to host the “Africa Now” pop-up in Paris, which showcased four regional designers–– namely LVMH Prize semi-finalist Boyedoe, the Ghanaian label designed by David Kusi Boye-Doe, Nigerian brand Wuman by Chukwuma Ekwerike, Morocco’s Late For Work and Kenya’s We Are NBO.

After securing deals with trade shows, the bank covers a range of costs on a case-by-case basis, such as sample shipping, showroom space fees, PR, scenography and sales support. For certain projects, it can also cover the designers’ flights and accommodation costs.

Yet some critics question the strategy, noting that fewer buyers at the big four fashion weeks are seeking to stock emerging African designers amid tighter budgets and increasingly crowded trade events.

Mashimbye challenges that view. Without such initiatives, she says, some designers would be blocked from overseas sales opportunities altogether. Even basic factors such as unfavourable foreign exchange rates are “a massive cost for a small enterprise.”

These and other barriers, she said, have prevented Africa from capturing a meaningful share of the global fashion market, even though strong contributions are made by other creative sectors such as music.

In a bid to flex its muscle in both sectors, the bank decided to marry the two in a collaboration with Savile Row tailor Ozwald Boateng at this year’s Met Gala. The takeover saw the designer dress numerous celebrities, including Nigerian musicians Tems, Burna Boy and Ayra Starr.

Backing Manufacturing Clusters

To complement downstream initiatives like designer showrooms, Afreximbank is financing major upstream projects in partnership with Dubai-based Arise Integrated Industrial Platforms (Arise IIP), a developer operating in 11 African countries. One example is the building of industrial parks housing textile mills and garment factories in cotton-growing countries such as Benin.

“African cotton shouldn’t travel 10,000 kilometres just to create value abroad — it’s time to ensure that value stays within the continent,” said Arise IIP founder and chief executive Gagan Gupta, who says the vast majority of cotton from Benin, Burkina Faso, Côte d’Ivoire and Mali is exported to Asia as a raw material and brought back to Africa, often via Europe, as finished garments.

Gupta is keen to see the value chain reorganised by developing new textile and garment manufacturing clusters on the continent. Mashimbye says these initiatives are central to Afreximbank’s broader strategy for the fashion sector.

The partnership between Afreximbank and Arise IIP reached a significant milestone last year when the Glo-Djigbé Industrial Zone, which is managed by the latter, began exporting children’s clothing from Benin for French high-street brand Kiabi. That followed the joint launch of a state-of-the-art quality assurance centre programme within Benin’s industrial parks which helps boost exports by improving compliance with international standards and technical regulations.

For Gupta, the potential of expanding such projects across the continent is clear. Despite the well-documented challenges of doing business in the region, he maintains that “Africa can deliver world-class manufacturing at scale.” And he’s not alone in backing that conviction. In September, Arise IIP raised $700 million from Saudi Arabia’s Vision Invest, in a deal that saw the Riyadh-based firm join existing investors including Afreximbank’s development impact platform.

The bank teamed up with Gupta again earlier this year, pledging to construct a $5 billion integrated textile manufacturing hub in Nigeria in partnership with Swiss textile machinery giant Rieter. Such projects are especially important in light of the recent expiry of the African Growth and Opportunity Act (AGOA), the duty-free preferential trade programme granting access to the US market for qualifying products from 32 African countries.

While the bank’s rationale for financing manufacturing infrastructure projects may be straightforward, its rationale for initiatives like designer-facing sponsorships is less clear. Observers say Afreximbank may be taking the long view, backing young entrepreneurs early in their careers in the hope they will later turn to the bank for financing when their brands are ready to scale.

Bank executives have been reluctant to address these questions head-on, although some of their comments have been revealing. After suggesting that the bank measures return-on-investment for designer initiatives purely in terms of “impact,” Mashimbye later went on to say that “part of where the gold lies in Africa is with its youth and its abundance of talent.”

Some of her colleagues seem to take a broader view. Temwa Gondwe, director of creatives and diaspora, said Afreximbank wants “African fashion to be synonymous with innovation, quality and economic transformation, where designers don’t just succeed individually but collectively elevate the industry.”

This suggests the bank’s efforts are not only interconnected but part of a bigger picture to develop an ecosystem where funding is channelled to projects across the fashion value chain, from fibre to finished product.