LAGOS, Nigeria—From her Gorgeous Look embroidery shop, Monica Adeola has a front-row seat on a new Nigerian consumer ready to dress up.Her customers—stay-at-home moms, young professionals and laborers with newfound spending money—barter over the latest embroidered dresses, blouses and shirts, which are known here as “lace.”
..No longer reserved for the rich, lace today is on the backs of motorcycle-taxi passengers and nightclub goers, part of Africa’s growing middle class. The African Development Bank estimates that the continent has around 300 million people with incomes in excess of their basic needs, up more than 60% from a decade ago.
“We’re trying to rebrand lace,” says Folake Folarin-Coker, a Nigerian fashion designer who helped stage a lace-themed fashion show here last month. “There is a huge middle-income market in Nigeria.” The Nigerian lace industry also opens a window on broader change in Africa as a whole: As the consumer class expands, so, too, has the underground, informal economy.
Mrs. Adeola for years has brought her lace into Nigeria through underground channels that the government largely ignores. Her store is next to an open-air market abuzz with vendors hawking blue jeans and soap-opera DVDs from shops, makeshift stalls and rickety wood tables.
A merchant folds lace at a stall in Lagos last month. Embroidered fabric, or ‘lace,’ is no longer reserved just for the wealthy. Phone maker Samsung Electronics Co. of South Korea and Spain-based retail chain Mango are among the foreign companies to set up shop in Africa in hopes of feeding off the spending power of consumers who earn their living from the informal economy.
While the informal sector, from street-side welders in Kenya to sign makers in Senegal, has created jobs and lifted incomes, it also has strained urban infrastructure. As many as 90% of African city dwellers work in the informal economy, untaxed and unaccounted for, according to the Geneva-based U.N. International Labour Organization.
Economists estimate that Nigeria’s informal economy is at least as big as the country’s roughly $200 billion formal one. But the country suffers from poor roads, chronic power outages and dirty drinking water. Enforcement efforts that would bolster government revenue have been erratic. Tax enforcement only recently began in Lagos but is essentially nonexistent elsewhere in the country.
An Austrian trade commissioner in Nigeria is credited with kick-starting the lace trade between the countries in the 1960s, after he noticed that Nigerians are particularly fond of dressing up on special occasions. The countries now conduct an estimated €26 million ($37 million) a year in lace trade, according to the Austrian Embassy in Nigeria.
Mrs. Adeola began selling lace in 1970 when she was on vacation in Europe and saw an in-flight magazine’s ad for a Swiss lace maker. Describing herself as a restless housewife looking to make some money, she changed her travel plans to find lace to sell at home. Swiss lace was too expensive but before long, she was able to purchase lace in bulk from small family-owned businesses in Austria.
“I got some start-up money from my husband, who imported European beer…, and started selling wholesale from my house,” Mrs. Adeola says. “Some women who bought lace from me bragged about how much they were making selling at shops, so I started looking for a shop.” She now has two.
Until late last year, she smuggled in most of her lace to circumvent a Nigerian government ban on imported textiles. Mrs. Adeola says she does $200,000-$300,000 in sales annually and used to travel to Austria with stacks of U.S. dollars wrapped in her clothing. To get around the import ban, Mrs. Adeola says, she and other lace-seller traders paid bribes to Nigerian customs agents and other officials to get the product into Nigeria.
“We had to be careful,” Mr. Adeola says. “The government said they were going to raid our shops and threatened us too much.”
The government lifted the ban last November. But high tariffs mean importers bring lace to the continent through third countries and then smuggle it into Nigeria, usually by bribing customs agents.
“If you’re now paying 5% of your costs to your guy at customs or at the port to get a shipment cleared, why would you want to pay 20% to the government?” says Rudi Boesch, an Austrian who operates one of two lace factories in Nigeria. He says that even with the import ban lifted, textiles will still cross the border illegally.
Nigerian customs say they are cracking down on graft and seizing more illegally imported goods. “We’re not saying that corruption has been totally stamped out, but we’re confronting the problem and we’re getting there,” says Wale Adeniyi, a spokesman at the Nigerian Customs Service. “It’s a gradual process.”
Beyond the occasional threat of a government crackdown, Mrs. Adeola also has to contend with the same pressures as any established business in a competitive market. As demand from the growing consumer class has increased, so has the interest of foreign manufacturers in tapping that market.
Relatively inexpensive Chinese fabrics have come to dominate the markets in Nigeria and elsewhere in West Africa. Lace exports from China to Nigeria reached $115 million in 2006 from less than $100,000 in 2000, according to the General Administration of Customs of China. The figure subsequently dipped but rebounded to $63 million last year and is expected to rise this year. China exported over $200 million in lace last year to Nigeria and its smaller neighbors Benin and Togo, with most of the product ending up in Nigeria, lace sellers say.
Chinese lace sells at about $45 for 15 yards, while Austrian lace costs between $250 and $1,000 per fifteen yards, though the Chinese fabric isn’t as good, Nigerian traders say.
Austrian manufacturers say they are working hard to ensure that their slice of the Nigerian market isn’t eroded by less-expensive goods from China, South Korea and Thailand. The Austrian manufacturers’ association and the Austrian Embassy last month sponsored a fashion show here to court younger customers and are sponsoring a museum exhibit this month, on the history of the business.
As new rivals began selling less-expensive lace from Asia, Mrs. Adeola considered doing so as well but instead chose to establish her niche in the higher-end Austrian products. Her concern about government raids and lower-priced competition has given way to cautious optimism about a new crop of Nigerians eager to be seen wearing lace.
“Lace can never go out of fashion in Nigeria,” she says.
Source: wsj
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