Musings from Yoxi Executive Director, Kaz Brecher
In our Field Notes series, we share perspectives and insights as we take a closer look at the work being done by Yoxi explorers on their inspiring journeys of discovery. As one of our earliest investments, Liberty & Justice exemplifies the kind of brazen optimism that we love, paving the way for other intrepid entrepreneurial endeavors. As Africa’s leading ethical apparel manufacturing company, they have specialized in value chain management for high-volume, time-sensitive, duty-free goods for leading American clothing brands, trading companies, and other importers who care about exceptional quality, on-time delivery, social and environmental impact, and geographic diversity. Co-founder and CEO Chid Liberty established the business to transform the apparel supply chain from worker exploitation and environmental degradation to partnership and sustainability, most recently with their Uniform label.
Confronting Mindsets to Change Systems
Let’s begin with a thought experiment: if you had a small pot of money to start a business with a fighting chance of meaningfully impacting the lives of those employed by it, where would you place it? Would you consider how far a dollar could go and the vastly differing costs of living around the globe? How about relative political stability? Existing infrastructure? What natural resources exist that could be leveraged without the usual extractive mindset? Or even culture and work ethic? Might you consider just giving the money away in a charitable fashion?
Forgive this whiff of cynicism, but I’m willing to bet that you, like most people, didn’t imagine your headquarters in Liberia — the West African coastal country with a population decimated by two civil wars and an economy that shrank 90% as a result. Despite democratic elections in 2005, 85% of the country still lives below the international poverty line. Not exactly the obvious choice to launch a new business. That said, Chid Liberty is far from most people. A “third culture” kid, born in Liberia, Chid spent part of his childhood in Germany, where his father served as an ambassador, until they decided to seek asylum in the United States when the Liberian government fell apart.
Signs of an entrepreneurial disposition showed up early for Chid, evident in the business he started at 16 years-old managing a college band — selling it two years later. So, it’s no wonder his journey, well-documented in the many articles that Chid has inspired, took him through Silicon Valley. Life was good for him. But it was the happy accident of meeting the filmmaker behind Pray the Devil Back to Hell, a documentary exploring the role of Liberia’s women in pushing political leaders to peace, that sparked an interest in his roots and shaped his pursuits to date.
Perhaps it was the still-echoing energy from volunteering for Barack Obama’s campaign a few months earlier, but, where most people might ask why would one start a business in Africa, Chid reflexively answered “why not?”…this simple and almost childlike question holds promise for addressing one of the biggest obstacles to creating meaningful change in how Africans participate in the global economy. There is a precedent in complex systems change that shifting perspectives might be more important than almost any other single intervention.
Take the example of the drug crisis in Vancouver’s Downtown East Side (DTES), the poorest postal code in Canada and one in which almost 5000 drug users occupy ten square blocks. What do you see when you look at the image below? Entrenched homelessness? Poverty? Addiction? In 2007, nearly a third of the DTES inhabitants were estimated to be HIV-positive, a rate on par with Botswana’s. Twice that number had hepatitis C. Dozens die of drug overdoses every year.
More than additional funding or extended services, the blocker to making a dent in the lives of the DTES residents, and Vancouver’s citizens at large, was the framing of drug use as a criminal matter. While there is indeed a legal component to selling and using drugs, this focus supports a cycle of black market behaviors and revolving door incarceration. The notion of Harm Reduction was a revolutionary concept, comprising a range of public health policies designed to lessen the negative social and/or physical consequences associated with various human behaviors, both legal and illegal.
This fundamental shift acknowledges people will get high, and taxpayers will foot the bill for mitigation somewhere along the line (think ER visits vs. clean needles). Proponents of a Harm Reduction approach look at the neighborhood and see the drug users within the ecosystem of a public health crisis rather than the source of a criminal epidemic. By reframing dealers as part of a solution, public health workers were able to mount an incredibly successful effort to get needles cleaned up and users into environments where medical attention could support safer practices. Since Vancouver began seriously supporting needle exchanges and other such tactics, HIV infections have fallen by half, and hepatitis C rates have plunged by two-thirds, according to city and provincial health authorities.
So, What of the Business in Africa?
As Chid describes it, outside investors primarily bring one of two mindsets to bear: either micro-lending to support Africans in extreme poverty (think Kiva and the like) or extractive industries like mining and petroleum. There are complex historical reasons underpinning this, but there are also many signs that things are changing. Take the Co-Creation Hub in Nigeria, a rapidly growing ecosystem of social and tech entrepreneurs focused on fostering economic prosperity, which has attracted notice and funding from titans of industry. But, while heartening and important, it’s obvious that app and technical platform development is a bit like playing the lottery: there’s a chance one or two people will reap enormous benefit but the rest continue to live without real hope for access to transformative opportunity.
This begs the question, once we bring a new mindset to bear on the potential for doing business in African countries, what approaches might create the most value for all stakeholders? Chid and his co-founder, Adam Butlein, note that they decided to set up a business supporting Liberian women, “to turn what was a peace movement into a jobs movement.” As such, Liberty & Justice became Africa’s first Fair Trade certified clothes factory, launched in 2010. Few people tend to think of apparel manufacturing happening in Africa, and there are a lot of stereotypes of African workers to be overcome in convincing Western brands of a reliable supply chain. For example, Edun, a clothing company started by Bono and his wife Alison Hewson, garnered negative publicity in 2010 when it became clear most of their products were being made in China, in the wake of quality-control issues in Kenya and Uganda.
But Chid believes deeply in the imperative to address the so-called “missing middle” of the economy in Africa, which could be a critical catalyst for growth. These businesses, which can be compared to the small and medium enterprises (SMEs), underpin strong social structures, create jobs that drive value for all with the tax base they create, and expand opportunities beyond subsistence. These are businesses that are often locally-owned and create some risk tolerance to the global markets.
In contrast, large multi-nationals like Firestone, the largest employer in Liberia, flow their earnings out of the country to banks in Switzerland, leaving no real benefit for Liberian workers beyond the low-wage jobs. And, of the SME investors to be found in Liberia, many are of Lebanese descent, who have been in the country for decades and now own restaurants and hotels or manage properties; but, since they’re not eligible for citizenship, they aren’t able to have the same kind of ripple effect on the culture at large.
A less complex example of these dynamics can be found in Fiji, where tourism is the leading trade. Most hotels and travel providers are owned by huge foreign conglomerates, so only low-wage jobs like housekeeping or hospitality are available to Fijians. And the money coming into the resorts mostly flows back out of the country, with little to none re-invested in improving the infrastructure in the country itself. As more and more entrepreneurs can discern the intangible infrastructure problems hidden below the surface, we can begin to have hope for significant change.
Bridge the Gap Villages, on the island of Vorovoro, is a perfect example. After witnessing the structural inequality in an early sustainable tourism experiment on the island, the American founder realized lasting and meaningful change, as well as preservation of the environment and culture itself, would only be possible through true partnership with the local Mali tribe. So, the structure of the business reflects deep collaboration and joint ownership, to benefit all stakeholders in achieving their collective goals.
Keen consideration of these dynamics have influenced the evolution of Liberty & Justice. And, while Chid is quick to point out that Africa is over-indexed for micro-finance solutions and donations to build schools and provide shoes, for example, there has to be a way to weave dignity into the way we design solutions to lift people up without scoffing at the value charitable giving likely has for its beneficiaries.
The Highest Form of Charity
With this context of finding a better way to do business in Africa, it’s no surprise that Liberty & Justice was founded with a significant commitment to a future in which producers and consumers are completely aligned in making economic choices that result in the eradication of poverty, the responsible stewardship of the environment, and the empowerment of workers through the fair exchange of quality goods and services. Despite the real troubles they faced when they launched the company — the war had left Liberia with no power, no infrastructure and no real business climate — enthusiasm can be a powerful engine for change. And Prana, a sustainable clothing company, offered a contract before they’d even set up a factory. But why a factory to begin with?
Scratching just a bit beneath the surface exposes an unlikely topic that few entrepreneurs are willing to discuss. Chid admits that while he’s Christian and his co-founder is Jewish, they share a belief in the human spirit which springs from their respective upbringings and faith. He recalls ad hoc lessons from Adam’s mother in the Jewish tradition of tzedakah, which is commonly understood as charity but actually means justice. There is a lot of nuance and history embedded in the concept, but what stuck for the pair of co-founders was that “while the second highest form of tzedakah is to give donations anonymously to unknown recipients, the highest form is to give a gift, loan, or partnership that will result in the recipient supporting himself instead of living upon others,” as noted in the Wikipedia entry.
Chid is quick to note that, rather than kicking charity in the teeth and complaining about how much is spent on administration as has become fashionable, we need to remember that there are real issues where the philanthropic sector is better suited to create change than the free markets. But they decided to strive for a business model that engages women as co-owners of the business, enabling them to create for themselves and take pride in the enterprise they have built together: the Liberian Women’s Sewing Project is a worker-owned corporation with 49% of the company’s shares owned by its workforce (which is 90% women); the majority (51%) share is owned by Liberty & Justice, USA; and the profits are pledged to the Liberty & Justice Community Development Fund — a nonprofit fund hosted at the Tides Foundation that supports programs in economic empowerment, education, and healthcare.
It’s no coincidence that we’re seeing signs pointing to an interest in different ways to structure businesses, direct capital and demand more from its impact — be that from larger organizations, like the Bank of America, who are now prioritizing ways to support women in entrepreneurship, or the companies who want to use their clout to solve global challenges by leveraging Benefit Corporation (B Corps) certification. But there is a facet to be considered while venturing into new markets and new models that almost no one but those with truly patient capital — or the kind of optimism and zeal driving Chid and Adam — are ready to handle.
Best Laid Plans Meet the New Normal
Liberty & Justice began with an audacious question: how might we use African natural resources to create wealth for Africans? And despite all of the geo-political and historical challenges, the business was picking up steam. As international and consumer focus continues to put more emphasis on social responsibility, led by demand from Millennials, brands that can walk the talk are most likely to rise, buoyed further by their ability to tell their story. By 2014, the company had signed two agreements worth about $40 million USD a year with men’s company, Haggar, and Japanese behemoth, Itochu. The deals would create 2,500 jobs in Liberia and thousands more in other parts of Africa. Liberty and Justice spent $1 million USD on a factory, machinery and training new workers.
Catastrophically for the country, the Ebola virus outbreak began in Guinea in December of 2013 and reached Liberia by March 2014, threatening economic and political stability. When the president declared a state of emergency and put the West Point slum, where most of the 300 factory workers came from, under quarantine, Chid could see the writing on the wall. They also understood that if even one person was infected and came to the factory, they’d be finished. Liberty & Justice provided food and cash to their workers, and they were incredibly lucky that not one of the workforce contracted the virus. But when the epidemic was declared officially over in May 2015, more than 10,000 Liberians had been infected and almost 5,000 people had died.
By that point, the orders had stopped coming in and, while the company had political risk insurance, no one had considered Ebola. While some refer to catastrophes like these as Black Swan events, for their unexpected and rare quality, our increasingly fragile and interconnected global systems seem to indicate that the unforeseen should be treated as the new normal. Take the impact on tourism and conservation in places like Puerto Rico or Barbuda, who must now direct precious resources to rebuilding from scratch. Or the impact on strategy and political calculous for brands and advertisers, as they are buffeted by movements like #MeToo and #NeverAgain, upending previously predictable revenue streams.
From climate events to boycotts, only those able to rapidly adapt will survive, both in life and in business. Building resilience into our plans and our systems is no longer a luxury but a necessity. Chid and Adam were able to pivot and keep their mission going by connecting the dots between the materials sitting in the factory, the women who needed jobs, and the children whose lives could be changed with the simple gift of a school uniform.
They launched and ran a successful Kickstarter campaign for a new label of sleek and affordable basics, including an organic cotton t-shirt completely made in Africa, with a supply chain spanning from “from dirt to shirt,” and ambitiously remixing the one-for-one model, which has come under attack for not building more lasting capacity and impact. UNIFORM believes that the “remix” means business and charitable giving are combined to optimize benefit to both the Liberian women employed to make the clothing and the children in their community who receive school uniforms.
Why does this have such a potentially disruptive effect? In Liberia, and throughout Africa, kids are required to wear school uniforms in order to attend free public schools. When parents can’t afford uniforms, they often just keep some or all of their kids at home — one of many contributing factors to Liberia’s low school enrollment rate. According to the World Bank, only about 41% of Liberian children are enrolled in school. Additionally, researchers at Massachusetts Institute of Technology (MIT) found that donating school uniforms to children in Kenya increased both attendance and test scores. And, for every three young girls who received a donated school uniform, two would delay their first pregnancy.
The Future-Proofing Entrepreneurship
The UNIFORM line has been incredibly well-received, with distribution through Bloomingdales and brisk online sales. They also released the Traplord collaboration last year, a 10-piece capsule collection designed by A$AP Ferg. Following Traplord’s success, Uniform and Ferg teamed up again to create UNIFORM +1, an innovative subscription box service that mixes their minimalist design with pieces curated by a variety of influencers.
And, while the factory in Monrovia is running at reduced capacity, with only 40 full-time workers, Chid is hardly deterred. “I would rather learn the way we did than be among the people who hear ‘Liberia and anything innovative’ and just stop the conversation right there,” he says. “At some point these things are going to break through. If we just say, the government is too corrupt, the people are uneducated, the banks lose all their money, we’re assigning Liberia to this future that will make this a certain failure. If we can muster up the courage to say we’re going to try some new models and we know that some of them are going to fail and we’re okay with that, then I think something positive can really happen.”
Chid’s journey so far will surely serve him well as he continues to develop skills which stretch far beyond balance sheets and fundraising. Early lessons in the importance of trade agreements and working with the government to create win-win legislation have allowed him to pay higher wages and keep his prices competitive with Asian factories because his garments can be imported duty-free to the US.
There are an incredible number of hurdles ahead, from the mundane but critical like adequate roads and ports, to the seemingly intractable, like bureaucratic corruption and power struggles. But there is also hope. The African Continental Free Trade Area (AfCFTA) has been signed by 44 African countries at a summit of the African Union in Kigali, Rwanda, and the AfCFTA has the potential to bring over 1.2 billion people together into the same market. The bloc of 55 nations would be the largest in the world by member states.
Liberty & Justice continues to demonstrate what is possible when stakeholders are aligned — from government regulation that benefits Africans, to business that creates ownership, dignity, income, and agency for its workers, to the schoolchildren who represent the future of Africa itself both figuratively and literally and finally, the consumers who are becoming more connected to and more influential for brands and manufacturers.
But Chid is clear that the UNIFORM model needs to extend opportunity further, in different ways, so that people can participate economically and solve their challenges in their own ways. And he suspects that it’s possible to create market conditions such that investors benefit from including local populations more directly in the way businesses and solutions are structured. In this context, he’d love to see Liberia evolve to the point where a uniform isn’t a barrier for any child to get an education.
Interestingly, upon reflecting on what might be the biggest barrier to his ability to create more transformative impact, Chid shares that it might be the sense of his own limitations. The tech world teaches entrepreneurs that there’s a proscribed way to grow and, thus, to raise money in stages, i.e. get your angel investment, then seed funding, then pursue a Series A, and so forth. But when people heard about the vision for Liberty & Justice, the common refrain was “you should raise a lot more capital” because it was Africa and it was an Africa-sized mission. “It doesn’t work like that,” Chid would think to himself, throttling his potential to create change before even rolling up his sleeves.
But he has come to believe that this kind of vision, creating wealth for Africans by harnessing their own resources, can and should be bigger. While not everything needs to work at scale, this kind of change must. And working with 30, or even a few hundred, women in a factory basement would only get him so far. Chid has begun to look more closely at the supply chain in West Africa and the fact that Africans grow a lot of cotton but tend to export it and then re-import clothing. And his involvement in the Ignite Fund Liberia has given him a first-hand experience of what’s necessary to create more “missing middle” funding as a scaffolding, disabusing him of the false impression that entrepreneurs have to grow through the middle to achieve significant impact.
Yoxi’s Founder, Sharon Chang, often marvels at how many impossible challenges Liberty & Justice has overcome. “Chid, and the journey we’ve taken with Liberty & Justice, taught me how to meaningfully invest in learnings,” Sharon says. “It’s easy to follow the industry definition of success; and it’s easy to proclaim the appetite to invest in failure. Yet the most valuable thing in social entrepreneurship is neither success nor failure. Rather, it is the willingness and capacity to grow from hard learned lessons. Liberty & Justice’s impressive growth is testament to Chid’s commitment.”
We are driven by and fund questions at Yoxi. Liberty & Justice reminds us that so much can be done by first challenging our belief systems and, sometimes, only if we do so collectively. Carefully re-calibrating our true north and resisting the pressure to blindly follow trends, we must develop the capacity for finding clarity in our intention while being resourceful in our pursuits, letting the power of ambition fuel both ingenuity and humility. Chid believes, and is successfully convincing others, that Africa can create wealth through ethical manufacturing — what do you need to believe in order to begin creating the impact you long to see in the world?