“Why would a global luxury brand choose to build a factory on the side of a hill, in a landlocked country, thousands of miles from its primary markets?” quipped Sean Gilley of Karisimbi Business Partners, an investment and strategy firm based in Kigali, at a panel held on Tuesday at Ubumwe Grande Hotel.
The panel was convened to discuss the historic partnership between luxury giant Kate Spade & Company of New York and Abahizi Rwanda, a cooperative from Rulindo District, to launch “On Purpose” – a social enterprise that is the first of its kind in the global retailer’s 25-year history.
Kate Spade’s Vice-President and Chief Marketing Officer, Mary Beech, flew in from New York City to attend the event alongside their project partners in Rwanda – Abahizi Rwanda, Karisimbi Business Partners, Resonate and Laterite.
According to Taryn Bird, Senior Manager of “On Purpose”, this is the question they get all the time.
What had inspired a luxury retailer valued at $2.9 billion, and known the world over for their fashionable high-end handbags and accessories, to partner with women in a rural district half-a-world away?
Bird explained to the small gathering comprising representatives of the business community, fashion retail and women’s cooperatives, that Rwanda’s business-friendly, pro-women and high-quality artisanal base made the nation an ideal choice to pilot the brand’s first “profit with purpose” initiative.
In 2012, Kate Spade decided to shift away from the prevalent public-private partnership model to a social enterprise-based one that would provide a “double bottom line” to investors – profit and purpose. The mission: finance and build local suppliers, while empowering women globally.
Facilitated by the Rwanda Development Board (RDB), the company partnered in 2014 with Abahizi Rwanda, an employee-owned cooperative, who were at the time producing home decor with an annual export value of $300,000 (Rwf 251.8 million).
Three years later, the cooperative – which comprises 90 per cent women – are crafting luxury handbags that have more than tripled their annual export value to $1.4 million (Rwf1.17 billion). The women are 100 per cent shareholders of the factory.
Clare Akamanzi, CEO of RDB, also attended as a guest speaker, and helped put it in context: the total annual export revenue of tea in Rwanda is around $78 million (Rwf 65,5 billion).
One company, in 3 years, has raised almost 2% of what a whole industry operating since colonial times generates. In addition, it is a significant message to foreign investors that jobs can be created that improve talent and skill-sets, outside subsistence agriculture.
To promote Rwanda as a competitive space for Kate Spade’s pilot, RDB facilitated entry, logistics and establishment of the company as a successful export supplier through provision of an EPZ status, or Special Economic Zone, which allows it more liberal and simplified economic regulations such as permission to designate 80% of its products for export, and a tax holiday.
The factory in Rulindo utilises a process known as small-batch manufacturing, also known as ‘lean manufacturing’, used throughout Asia. Once the partnership was established with the cooperative, explained Darius Habamenshi, Abahizi’s managing head, the factory went from producing 18,000 units (including small items such as bracelets) to 32,000 units a year of luxury handbags and accessories.
“Imagine!” came the spontaneous exclamation of a member of Abahizi from the audience. The success of this partnership was clearly palpable.
The impact transcends emotion. Locally, two-thirds of factory workers have become the primary breadwinners of their families, many of whom have used their income to open their own businesses.
Beyond a salary and benefits, workers are trained in life-skills such as nutrition, leadership and financial literacy. Resonate, the “On Purpose” partner and NGO aimed at empowering women and girls, provides vocational training and management workshops to the women.
The project’s M&E partner, Laterite, a Kigali-based economic and social research company, is tasked with documenting and quantifying the actual social impact that is part of the company’s investor reports.
When Laterite asked workers how they saw their lives in five years, 7 out of 10 projected happiness, independence and health.
The effects of a globally-recognised luxury brand partnering with a Rwandan artisanal cooperative has rippled beyond the nation’s borders. At this year’s 75th Golden Globes award – one of the world’s most prestigious awards for film and television held in Hollywood, California – ‘Made-in-Rwanda’ Kate Spade New York bags comprised the gifts each actress received, thus putting Rwanda “on the map”.
This allows the nation to promote itself in international markets, tap into global expertise and networks, and enfold Rwanda into other value chains and investments outside the traditional norms.
“People can now shop a New York bag made in Rulindo”, said Akamanzi, putting into context Rwanda’s growing global reach. The New York company now has plans to grow distribution of ‘Made-in-Rwanda’ products to all Kate Spade outlets worldwide, and launch media campaigns in March 2018 to promote their successful partnership with women of Rwanda.
The partnership with Abahizi has been so successful that Coach, another popular global luxury brand and sister company to Kate Spade, is set to launch its own partnership with Rwandan cooperatives, starting in Summer 2019.