RWANDA CLOTHING currently only sells in Rwanda – its home market. Even though our marketing strategy is to target new international markets and be present around the world – right now our focus still is on Rwanda.

There is increasing competition in the Rwandan market today and it will become a buyer’s market from seller’s market. Customers will be the ultimate beneficiary of competition in the market which will reduce prices and force the manufacturer to maintain product quality to sustain in the soon to be competitive market.

The fashion industry in Rwanda is still fragmented across a small number of different competing clothing companies

The Rwandan consumer is evolving and driving retail growth in Rwanda and companies in the fashion industry like RWANDA CLOTHING must react to this evolution which suggests that fashion will become a strong industry in Rwanda, yet the industry is still fragmented across a small number of different competing clothing companies.

The few fashion enterprises in the country have only a very limited number of qualified designers, including not more than a few established Rwandan designers, some new other designers from Rwanda, as well as some designers from different countries and cultures.

But in particular because of the expanding consumer’s demand for new clothing and the governmental initiatives to stop the import of second-hand clothing to Rwanda in the coming years, it is realistic to expect that soon more national and international design houses like RWANDA CLOTHING HOME Ltd. as well as more individual designers will contribute to Rwanda’s recognition as an emerging fashion market in Africa. From our point of view, chances are good that the Rwandan fashion market will increase its meaning and financial capacity in the next years drastically.

Rwanda’s future relevance as a major African market for clothing will then be displayed by an increase in the number of large fashion events held in the country, their sponsors, hosts, size, frequency, duration, launch year, number and nationality of the participating designers and whether the event is internationally renowned (include whether the events are listed in global fashion event calendars, or whether they attracted considerable number of international participants).

But still, the present clothing market in Rwanda is dominated by second-hand clothing which is a big burden for a first to establish own textile and fashion industry. Once this problem has been overcome, the Rwandan fashion market can be expected to witness strong growth in the next years owing to a young population and an increase in disposable incomes, which is leading to increase in consumption and so to rapid growth in organized retail of new clothing.

Growth of the local Rwandan fashion industry and with it the cutback of second-hand clothing must be attributed on the one hand to the increase in awareness of domestic brands and also to government and private support of domestic Rwandan clothing companies which is already common in other countries (especially in other emerging fashion markets such as South Africa, UAE, Singapore, Brazil, India etc.).

For example government initiatives (through the Johannesburg Economic Development Unit) are fueling the growth of the fashion industry in South Africa, which is now (2013) a $4.3 billion industry, and Johannesburg is fast emerging as the fashion capital of Africa. In 2006, the Johannesburg Economic Development Unit announced its goal to develop the city into an “an internationally recognized creative city”. Some initiatives undertaken so far, include the establishing of a ‘Fashion District’ in the city that houses over 100 fashion enterprises and institutes and provides training to designers and also include organized fashion competitions in the city (“Developing Fashion Industry in Africa: The Case of Johannesburg – Introduction”, Christian M. Rogerson, the School of Geography, University of the Witwatersrand, Johannesburg, 2006).

The South African market must become a role model for the Rwandan fashion market in terms of nurturing a fashion scene and changing the consumer’s perception and buying behavior

The South African market must become a role model for the Rwandan fashion market in terms of nurturing a fashion scene and changing the consumer’s perception and buying behavior, also with regard to a similar development in the past. Before becoming a democracy in 1994 and many years after, the clothing sector in South Africa was almost exclusively dominated by foreign influences and used second-hand clothing as well. However, the last few years have seen the emergence of big fashion events held in South-Africa and several strong domestic brands. These brands include key players in the domestic market, such as Stoned Cherrie, Sun Goddess Loxion Kulca and David Tlale which have also gained international recognition.

Another example of how the future in Rwanda could look like is Singapore. In Singapore, the Singapore Tourism Board started the Singapore Fashion Festival with the objective of promoting Singapore as the tourist and shopping hub of the Southeast Asian region and in 2008, a group of domestically established designers founded a fashion foundation with the aim to assist designers and fashion manufactures in growing the local fashion industry at international level.

Especially those last mentioned projects can be of good example how to foster the fashion industry in Rwanda. Rwanda should follow these examples of combining powers and the Rwandan government, the tourism board and the clothing sector should work together.

Rwanda has a good business environment to become a strong fashion industry in Africa

Today Rwanda already has created a good business environment and the most important criteria and standards for evaluating and measuring in this context are in our opinion the facts and figures of the annual “Doing Business“ report published by The World Bank and the International Finance Corporation which comperes regulation for domestic firms in 189 economies. In ranking order from 189 to 1 (best), “Doing Business“ presents quantitative indicators on business regulations and the protection of property rights that shows how easy or difficult it is for a local entrepreneur, like one in the field of fashion for example, to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 10 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

The data set covers also 47 economies in Sub-Saharan Africa (average global rank of all Sub-Saharan African countries together in Doing Business 2015 (DB2015): 142) including Rwanda which is now the 3rd easiest place to do business in Africa (1st in the East African Community (EAC)) and number 46 (so DB2015 global rank: 46) in the world (1st in Africa is Mauritius which ranks 28th globally, and 2nd is South Africa which ranks 43rd globally).

Rwanda has been the number 2 global reformer over a period of 5 years from 2006-2011. Together with Georgia (1st rank), Rwanda has been the most consistent country in reforming over the last years. In DB2014 however, Rwanda was nominated top reformer in Africa and second globally to Ukraine when Rwanda even overtook Georgia as the economy advancing furthest toward the regulatory frontier since 2005, with a total of 34 reforms – most in Sub Saharan Africa – over that period.

The economy profile of Rwanda in “Doing Business 2015“ (DB2015) indicates further strengths:

–  Getting credit: Rwanda ranks 4th in the world (from 32nd in 2010) after putting in place a fully functional private credit reference bureau
–  Paying taxes: Moved from 43rd in 2010 to 24th easiest place to pay taxes in the world
–  Registering property: Rwanda is the 15th easiest in the world

Further the ratings of credit rating agencies (CRA) focus on political and economic strengths and weaknesses of countries and give important information about Rwanda.

Standard and Poor’s (S&P), the world’s largest CRA, has now revised in 2015 Rwanda’s long-term credit outlook upwards from a ‘B’ to ‘B+’ rating. According to the agency, the upward revision is attributed to the government’s ability to access capital markets and reducing risks to external financing due to stable donor flows.
The agency in the ranking process also took into account the Gross Domestic Product (GDP) growth rates that stood at more than 6 per cent in 2014 (averaged 6.9% in 2009-2014) and projected a growth of about 7 per cent between 2015 and 2018. At B+, Rwanda is placed alongside countries like Kenya, Senegal, and Mozambique.

Fitch Ratings has also recently upgraded Rwanda’s Long-term foreign and local currency Issuer Default Ratings (IDR) to ‘B+’ from ‘B’. The Outlooks are Stable. The issue ratings on Rwanda’s senior unsecured foreign and local currency bonds have also been upgraded to ‘B+’ from ‘B’. The Country Ceiling has been upgraded to ‘B+’ from ‘B’ and the Short-term foreign currency IDR affirmed at ‘B’.

Rwanda’s ‘B+’ upgrade in 2015 reflects for the largest rating agencies in the world, the strong political and economic leadership in Rwanda that have favored pro-growth structural reforms and delivered a strong macroeconomic performance.

Ernst &Young, one of the world’s largest assurance and tax consultant, also marks Rwanda’s business environment in its report on African economies as “extremely friendly” (in “It’s time for Africa – Ernst and Young’s 2014 Africa attractiveness survey“).

Rwanda is, and at RWANDA CLOTHING we can also confirm and testify this, politically stable with well functioning institutions, rule of law, zero tolerance for corruption and a clear vision for growth through private investment set out by President Kagame (Vision 2020) (also compare RDB report “INVESTING IN RWANDA – AN OVERVIEW 2011”).

The present performance makes Rwanda, which was also mentioned in the World Economic Forum’s Global Competitiveness Report (2011- 2012) as the most competitive place to do business in East Africa and 3rd in Africa, to one of the most attractive business and investment destination in Africa not only with regard to the political and economic situation.

A low demand of the Rwandan consumer market for new textile goods and accessories produced in Rwandan could become a risk for the Rwandan fashion market

But even though the business environment in Rwanda can be described as supportive and stable for a brand like RWANDA CLOTHING, the Rwandan market also has some particular risks which besides general economic risks can influence our growth negatively.

A particularly crucial factor here for us is, as a company of the consumer goods industry, the economic situation in our sales markets Rwanda, which can result in a risk of reduced demand for new textile goods and accessories. The RWANDA CLOTHING brand’s dependence on consumers’ buying behavior always includes risks for the corporate profits and growth and makes it important to effectively counteract possible negative impacts of changes in the economic situation at an early stage. In order to minimize country risks with regard to sales, RWANDA CLOTHING products will be only sold in countries with stable economic environments.

The risks relating to changes especially in our major sales market and home country Rwanda, may arise as a result of changes in the political and regulatory environment but also terrorist acts and environmental disasters constitute other possible risks to our assets, financial position and earnings.

But even with regard of these risks, we believe that the sustainable developments in Rwanda will offer good opportunities for a long-term growth over the next decades of the local Rwandan fashion market. Especially the progress in the ICT sector gives excellent possibilities for value-oriented growth in the future also in the fashion sector.

In our opinion Rwanda has the potential to transform itself from a subsistence agricultural to a knowledge-based economy and in accordance with the international ratings of Rwanda, RWANDA CLOTHING also draws up an overall positive balance from the political and economic situation in Rwanda and looks forward to further positive developments in our country.

The potential of Rwanda are its young people. Rwanda has the possibilities and the power of its young, fresh and motivated population. The new generation of Rwandans will build the new Rwanda. In future RWANDA CLOTHING will be just one example amongst many others more for great achievements of the “new Rwanda”.

Author of this Article:

avatar for Roman SchulzRoman Schulz

I'm writing for this blog as one of the Co-Founders of RWANDA CLOTHING giving you background information and sharing my opinions about business

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