Ethiopia, known as the “Roof of Africa”, seems to have become the “darling” of many international textile and garment industries in 2014. Indian Textile Group invested US$550 million to open Africa’s largest textile and garment factory in Ethiopia; Turkish Textile The company plans to invest US$175 million to build a factory in Ethiopia; international clothing retail giant Hennes and Mauritz (H&M) and British retail giant Tesco are also planning to open branches in Ethiopia.
According to statistics from the Ethiopian Textile Industry Association (TIDI), in the first six months of the 2013~2014 fiscal year (starting July 2013), Ethiopia exported $60 million in textiles and clothing. Compared with the same period in the previous fiscal year, Exports increased by US$15 million. Volta Information Center, a mainstream website organization in Ethiopia, stated that Ethiopia’s textile and clothing industry is currently experiencing explosive growth and this industry will become one of the most important industries in Ethiopia.
The advantages of production conditions are favored by international textile companies
In recent years, many international manufacturers have set up product processing bases in Asia, such as Bangladesh, Vietnam, etc. However, with the increase in wage levels and labor costs in Asia, some manufacturers have requirements for the conditions of production sites. They are also becoming more and more strict, and they are beginning to look for cheaper labor markets as production bases. According to a report by the German Fashion Association, among African countries, Morocco and Tunisia are known as clothing production countries, mainly producing “discount” (relatively cheap) clothing. Other African countries such as Ghana, Kenya, etc., the development of the textile and clothing industry It is relatively lacking. As the second most populous country in Africa, Ethiopia has many production advantages. Thomas Ballweg, purchasing and technical consultant of the German Fashion Association, believes that on the one hand, Ethiopia has sufficient labor and low production costs; on the other hand, Ethiopia has the convenience of being close to the Suez Canal. , products can be shipped to the nearest European countries. Compared with Far Eastern countries, the time to transport products from Ethiopia will be greatly shortened, saving about 1/3 of the logistics and transportation time.
Thanks to the favorable policy environment, low labor costs, convenient transportation conditions, etc., some world-renowned textile companies are seeking to invest and set up factories in Ethiopia. In May this year, India’s Shrivallabh Pittie Textile Group will invest US$550 million to build Africa’s largest textile factory, SVP Textile Company, in Kombolcha, Ethiopia, and the Ethiopian Development Bank will provide financing support. A delegation of apparel industry investors from the United States visited Ethiopia to examine Ethiopia’s investment prospects. The head of the delegation, Vice Chairman of Phillips-VanHeusen (PVH) Group, said that he was very impressed with Ethiopia’s efforts to create an attractive investment environment. , impressed by the efforts made to promote industrialization. Turkish textile company Akber also plans to invest US$175 million to build a factory in Ethiopia, and other well-known clothing manufacturers are also considering whether to set up factories in Ethiopia. A report from the Volta Information Center shows that in the first nine months of this fiscal year, Ethiopia’s garment and textile industry has received US$84 million in investment. In addition, Swedish international clothing retail giant Hennes and Mauritz (H&M) and British retail giant Tesco are also planning to open branches in Ethiopia.
The Ethiopian government has formulated an “Economic Development Plan”. It is expected that by 2016, Ethiopia’s annual economic growth rate will be maintained at about 7% to 8%. At the same time, the Ethiopian government also places special emphasis on strengthening the development of the textile industry and strongly welcomes large clothing manufacturers like H&M to build factories in Ethiopia. According to a supplier of H&M, H&M hopes to reach 1 million pieces of clothing processing orders in Ethiopia every month, and a company spokesperson confirmed that Ethiopian manufacturers have begun to be included in H&M’s clothing supply system.
The import of raw materials is encouraged by national policies
Recently, Minister Abtew of the Ethiopian Ministry of Industry said that since the implementation of this fiscal year, due to the continuous expansion of enterprise production capacity and strong domestic market demand, Ethiopian industrial production enterprises have been troubled by insufficient supply of raw materials. For this reason, the industrial The Ministry of Industry and Information Technology has actively taken countermeasures to actively expand the import of raw materials for industrial production. In particular, leather and textile companies that suffer from raw material constraints will receive strong support from the Ministry of Industry. At the same time, the Ministry of Industry will also actively respond to the problem of insufficient domestic power supply to meet the production needs of industrial enterprises. Minister Abtew said that Ethiopia’s domestic market demand is currently expanding. In the past six months, 60% of the products produced by textile and leather companies have supplied the domestic market. Currently, according to official sources, there are 60 garment manufacturing companies and 15 textile companies in Ethiopia. Sisay Gemechu, the country’s Minister of Industry, has announced the country’s plan to build an industrial park for the textile and leather industry.
The determination to develop Ethiopia’s textile and garment industry can be seen from the investment promotion projects formulated by the country’s government. Textile and garment production is the country’s government’s first investment promotion project, which includes: first, strengthening garment processing and manufacturing to promote an increase in export orders. Second, take advantage of the abundant cotton available in local and neighboring countries for spinning production. Third, introduce weaving production projects to alleviate the local tension in urgent need of fabrics.
The person in charge of the Ethiopian Leather Industry Development Institute (LIDI) said that in the past nine months, Ethiopian leather industry exportsForeign exchange totaled US$99.89 million, a year-on-year increase of 11%. Therefore, leather product processing is also an investment project established by the country’s government. Including: men’s and women’s leather shoes production, leather bag production and leather gloves production projects.
Infrastructure construction has received financial support from multiple parties
Whether the infrastructure is complete is an important consideration for many international textile companies when choosing to set up factory bases. The relatively backward infrastructure conditions in Africa are also one of the reasons that restrict the development of its textile industry. As a member of the African Union, Ethiopia, in April this year, the Arab Bank for Economic Development in Africa (BADEA) decided to provide it with a loan of US$10 million to support the construction of Ethiopian road projects. In May, Standard Bank of South Africa will open a representative office in Ethiopia as a platform to enter Ethiopia. At the same time, the World Bank agreed to provide Ethiopia with a loan of US$380 million to improve local urban infrastructure and public services and promote sustainable development.
In addition to receiving economic assistance from international organizations and institutions such as the African Union, Ethiopia continues to create and improve construction, including funds, logistics, infrastructure, public services, etc., for the development of the textile and apparel industry. In addition to creating various favorable conditions, the Ethiopian Textile Industry Association also proposed a development plan for the textile industry in the “Economic Growth and Transformation Plan” stage formulated and implemented by the country from 2010 to 2011 to 2014 to 2015. The association stated that during the implementation of the economic transformation plan phase, Ethiopia plans to achieve US$1 billion in textile and apparel exports by 2016.
