A plain cotton T-shirt is a pretty ordinary item of clothing. But for Benin, a sliver of a country on the west coast of Africa with little manufacturing tradition, it is intended to be the start of an industrial revolution.
“We call it farm to fashion,” says Ramakrishnan Janarthanan, chief development officer at Arise Integrated Industrial Platforms, a Dubai-based industrial group that is investing €550mn in textiles and apparel alongside Benin’s sovereign wealth fund and a consortium of local cotton-ginning companies.
The T-shirt, Janarthanan explains, holding up the modest-looking item, has come from cotton that has been grown, picked, ginned, spun, woven into fabric and dyed in Benin, before being cut and stitched. “Can you imagine there are so many processes before you make a shirt? We want to capture the whole value chain,” he says.
The apparel industry, which relies on cheap labour once machines have churned out the yarn and fabric, has long been considered one of the most accessible rungs on the ladder of industrialisation, drawing workers from the countryside into factories and putting countries on the long road out of poverty.
Benin, a nation of 13mn people, is trying to achieve what few African countries have managed: systematically transform raw materials — not just cotton, but also raw cashew nuts, soya, shea and even human hair for wigs — into finished goods. Until now, like many poor countries, Benin has been trapped in a trading pattern in which it sells cheap raw commodities and imports expensive finished goods.
“The industrialisation that we see now is part of a strategy to bring prosperity to our people,” says Romuald Wadagni, the finance minister, a former Deloitte consultant brought into government to help push Benin into the manufacturing age.
Virtually its entire cotton crop, of about 300,000 tonnes of lint cotton, is exported raw, mostly to Bangladesh, where it is transformed into clothing for the world’s $1.5tn fast-fashion industry. In selling raw cotton, Benin, Africa’s biggest producer, is missing out on more than 90 per cent of the value, according to industry experts.
Twenty years ago, the economist Pietra Rivoli, in her book The Travels of a T-shirt in the Global Economy, described the cotton mill and the sweatshop as “the ignition switch for the urbanisation, industrialisation and economic diversification that followed”.
Arkebe Oqubay, a government official who was in charge of Ethiopia’s successful, if stalled, attempt to build a shoe and clothing export industry, says that the UK, Germany, Japan, South Korea and China all began their journey towards prosperity via textiles, an industry that has more recently triggered economic take-off in countries such as Bangladesh. (South Korea also started with wigs.)
“If any country is thinking of industrialisation, garments is the most important avenue,” Oqubay says, adding that the labour-intensive apparel industry is uniquely capable of absorbing what he estimates to be the 30mn new jobs Africa’s bulging young population needs each year.
In the Glo-Djigbé industrial park north of Cotonou, Benin’s commercial capital, where 12,000 workers are already employed, the vast air-conditioned integrated textile factory — at 160,000 sq metres equivalent to about 22 football pitches — is filled with rows of whirring machines from Switzerland, Germany and Japan.
More than a thousand new recruits are cutting and sewing fabric that is being produced at the rate of 50,000 kilos a day. “If you see a modern factory anywhere in the world, you’ll see exactly the same,” Janarthanan says.
“Today 1,000 people are working here. They did not have these jobs or these skills before,” says Letondji Beheton, chief executive of the company that manages the 1,650-hectare industrial zone, a joint venture between Arise and the government of Benin.
“This is how you transform a country.”
Industrialisation in Africa has been a mantra for decades. But in reality, many countries on the continent have gone backwards as their fragile manufacturing sectors have buckled under global competition, especially from China.
Poor roads, corrupt and inefficient ports, lack of power, the high cost of capital and an elite that is often more interested in extracting rent from raw materials or import-export licences have done the rest.
According to the World Bank, the percentage of manufacturing value added in GDP for sub-Saharan African states, excluding high-income countries, has fallen from 18 per cent in 1981 to 11 per cent in 2023. Benin, with a GDP per capita of about $1,400 at market prices, is only at 10 per cent.
12,000Number of people employed at the Glo-Djigbé industrial park
A few African countries have bucked that trend. Mauritius, now known as a high-end tourist destination and financial services hub, began its journey from seeming entrenched poverty to upper-middle-income status via the apparel sector. It now has a GDP per capita above $11,000.
Botswana, another upper-middle-income country, with a GDP per capita of $7,200, has achieved relative success through its diamond industry. Instead of exporting uncut diamonds, it has struck progressively better deals with diamond company De Beers to ensure that value-added activities, such as cutting and polishing, is done at home.
In north Africa, Morocco has combined excellent infrastructure, skilled labour and easy access to European markets to build a competitive auto and aerospace industry from scratch.
In Benin, under President Patrice Talon — a business tycoon known as the “King of Cotton” for his involvement in the industry — the west African country is trying to emulate these success stories.
The textile and apparel factory north of Cotonou, which will also produce bed linen, towels and garments such as polo shirts and leggings, is part of a national industrialisation strategy intended to quintuple the country’s manufacturing capacity by 2030. The finance ministry estimates that manufacturing contributes 9.8 per cent to GDP, but says that more than two-thirds of this is artisanal manufacturing. The formal industrial sector, restricted to a few activities such as cotton ginning, contributes only 3 per cent to GDP. If the entire cotton crop were processed into apparel, it would at a stroke add $12bn to Benin’s $17bn economy, say industry experts.
Talon says the country’s politicians and business class has traditionally lacked the ambition to industrialise, finding easier profits in trading. Many have got rich smuggling goods across the leaky border with Nigeria, a market of 220mn people.
“Leaders were always willing to take commissions on the trade of raw materials. They never tried to get into the transformation phase,” he says. “We want to change that.”
6%Benin’s average annual growth rate since Patrice Talon became president eight years ago
Though the president, now in his second term and thought to be contemplating a third, has been criticised by the opposition for curbing civil liberties and stifling democracy, his administration has won grudging praise for its no-nonsense, business-friendly style that some compare with Rwanda’s president Paul Kagame. Talon’s government has simplified the formalities for registering a business, brought in one of Africa’s quickest visa procedures, offered incentives to foreign investors and upgraded infrastructure, including roads, power and Cotonou port.
Since Talon became president eight years ago, Benin’s growth rate has rarely dipped below 6 per cent, even during the Covid pandemic, making it one of the continent’s best-performing economies. Beheton, who runs the Glo-Djigbé industrial zone, vouches for the president’s pro-business attitude. “If I call him, I’ll say, ‘Mr President, we are having this issue’. And he’s available 24/7. You can call him at night,” he enthuses.
The government, according to the managers at the textile factory, has helped solve many potential obstacles. It supplies electricity at a competitive 8 cents a kilowatt hour and has established an on-site one-stop shop to smooth the licence procedures and co-ordinate different government departments.
“No more going here and there to avoid any corruption or administrative issues,” says Herbert Semassa Moutangou, the industrial zone’s senior marketing officer, referring to endless stamps investors often have to obtain.
Gagan Gupta, founder and chief executive of Arise, which has invested in manufacturing in 11 African countries, says Benin’s government has impressed him with its seriousness. In just 18 months, five factories have been built to transform the country’s entire crop of cashew nuts into packaged goods. Previously they were all sent to Vietnam for processing and packaging, but this change increases their value to Benin’s economy 10-fold, he says.
Textiles is the big play, says Gupta, who claims Benin can become a significant textile hub for Europe, the Americas and the west African market. The fact that its cotton is rain-fed, not irrigated, and that raw cotton doesn’t have to spend 45 days on a ship to factories in Asia and 45 days on the return leg means “made in Benin” garments will be up to two-thirds less carbon intensive, he says.
As Europe erects barriers to discourage carbon-intensive goods, that ought to become a competitive advantage. The Arise factory will embed a pigment into its fabric that acts like a serial code containing supply chain information, using a patented technology called FibreTrace. Gupta says this will provide buyers with assurances over issues like farm labour and pesticide use.
Arise says Benin’s workers have already reached productivity levels on a par with Bangladesh and Sri Lanka and command similar wages of about $140 a month, up to a third cheaper than for similar jobs in China. Sections of the factory floor have been cordoned off as instruction centres. In one, a few dozen workers are gathered around an instructor standing in front of a sign reading: “Terry Towel Classroom Training Zone.”
Gupta says the factory has already shipped orders for garments like shirts and trousers to The Children’s Place, a US clothing outlet, and Kiabi, a French fashion chain. For woven towels and bedsheets, there are “expressions of interest” from Carrefour, El Corte Inglés, Walmart and others. It has also been making camouflage uniforms for Benin’s army far more cheaply than its previous supplier.
“In the end you need to be able to produce competitively on a global scale,” Gupta says. “Otherwise all this is just a good photo op.”
Even if Arise meets its targets, it will only be transforming 40,000 tonnes, or about 13 per cent, of Benin’s cotton crop by the end of 2026. To meet Benin’s goal of manufacturing its entire cotton crop at home would mean attracting investments in around 25 new factories.
Oqubay, who ran Ethiopia’s industrialisation drive and is now an academic at Soas University of London, is sceptical about Benin’s chances of reaching its targets. He cautions how hard it is to build a manufacturing sector from scratch, saying that scale, single-minded determination and constant adjustment of strategy are required.
Ethiopia — with 120mn people and cheap hydroelectric energy — made steady progress in apparel, leather and shoes, but its success was interrupted by war and its subsequent removal in 2022 from tariff-free access to the US market under the African Growth and Opportunity Act, a heavy blow.
Even before that, it took years of study, experimentation and false starts to get an industry off the ground, Oqubay says. He questions Benin’s integrated factory approach, saying it is better to get specialist investors in yarn and fabric to create economies of scale. “My understanding of Benin is that the investment is too small, but it could be a good beginning,” he says. “There is no single prescription you can read from a textbook. You need to be pragmatic.”
Joe Studwell, who is writing a book on African industrialisation, says he has not studied Benin’s efforts specifically. But, he argues, African countries, after years of expanding education, have finally achieved the literacy levels, as well as the population densities, to begin much-delayed industrial take-off.
A big problem in many African countries, he says, has been weak leadership and bureaucracies that are far less competent than those that steered manufacturing revolutions in several Asian countries.
“States continue to be pretty hopeless, so an awful lot of what is happening is driven by the private sector,” adds Studwell, an academic who has written extensively on factors leading to industrial take-off in several Asian economies. He cites the example of Bakhresa, a Tanzanian agricultural processor, with 15 product divisions, and Nigeria’s Aliko Dangote, whose company has moved steadily up the industrial value chain, beginning with salt, flour and cement and ending up by building a $20bn oil refinery, Africa’s biggest.
Studwell says that, even without strong states, industrialisation can still occur. He cites Cambodia, where Chinese companies have invested as they have looked for lower-cost alternatives to manufacturing at home. “Cambodia is now exporting over $10bn of textiles a year, not because they got their act together but because the Chinese needed somewhere to go.”
Dani Rodrik, a Harvard economist, is more pessimistic about the chances of Benin, or any other country, emulating the growth-through-factories model that has been so successful in Asia. In an age of automation, he argues, there will be fewer manufacturing jobs required for labour in low-cost countries. “The escalator of development has become much flatter.”
Ha-Joon Chang, a South Korean economist who has also studied African industrialisation, disagrees. Manufacturing jobs are not disappearing, he says. He points to an academic study by Nobuya Haraguchi of the UN Industrial Development Organization showing that the manufacturing sector’s employment and value-added contribution to global GDP has not changed significantly since the 1970s.
Chang says he also detects greater ambition among African governments to industrialise. “There are stirrings. And ambition is the start,” he says, commending Benin for at least trying.
Alongside its ambitions in textiles, factories in Benin’s Glo-Djigbé will also produce ceramic tiles and, with luck, electric motorbikes, initially from knockdown kits. Packaging companies there have started producing some, though not all, of the plastic and cardboard needed to ship finished goods, though even apparently simple items for the apparel sector like buttons, zips and labels are imported from China and India.
“When people tell me that none of these countries will amount to much, I always draw their attention to the fact that South Korea had less than half the per capita income of Ghana in the early ’60s,” Chang says. Today, it is eight times richer in purchasing power parity terms, an indication of what Chang says can be achieved through industrialisation.
Studwell says there is nothing to prevent at least some African countries starting on an Asian-style trajectory. “I don’t expect 55 countries to get their act together in unison,” he says. “But if five do, it will have a very positive demonstration effect.”
Data visualisation by Keith Fray
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