Ethiopia’s government wants to diversify exports from agricultural product to strategic sectors like textile and garment manufacturing.Ethiopia has long history in textiles and garment and based on the recent data, in the last five to six years, the textile, and apparel industry has shown rapid growth.
The growth in the textile industry is linked to the government’s move to set up an industrial development strategy. This step prioritize designing incentives and policies to attract investment in view of worldwide competition has played a big role in the development of their economic status.
Ethiopia’s textile and garment industry witnessing rapid growth, as a number of domestic and multinational companies are being involved in the production of textile and apparel for domestic and global markets. In the path to industrialize Ethiopia, the sector is given prominent position in boosting export, creating job opportunities, and as a model to other sectors as well.
Addis Ababa chamber of Commerce and Sectoral Associations (AACCSA) Getachew Regassa told The Ethiopian Herald that the primary role of the chamber is facilitating trade and investment. Beyond that the chamber is doing its level best in linking and searching for global market linkage to strengthen local business partners and connecting them with the concerned bodies to create conducive business environment for trade and investment.
The country is diversifying its export destinations and trade partners. The export destination of the country shows fluctuation from time to time. This may have its own adverse impact on trade and export performance of the country.
About 36 percent of Ethiopia’s products are exported to Asian countries China, India, United Arab Emirate and Saudi Arabia are among the main trade partners of the country while 31.7 percent of them were exported to European countries, Belgium and Netherland. Netherland alone receives 22 percent of Ethiopian products mainly horticulture. The remaining 21 percent were exported to African countries, Getachew said.
Most of the foreign diplomacy is based on business and this will help the country to improve the export performance. The chamber is doing its level best in linking the importer and exporter through different means trade fair and business to business.
The commercial activity in the country is increasing from time to time. Business delegation from different parts of the world are participating in Ethiopia with an interest to work with Ethiopians and currently almost one foreign business delegation comes to the country weekly on average, Getachew pointed out.
Ethiopia is exporting most of the products without adding value. The export items are focused on coffee and sesame. Concerning creating market linkage with coffee trade there is no this much market problem with the products. The statistics showed that the country export performance is declining from time to time. The reason behind the declined performance is due to fluctuation of global market, he said.
In order to search for global market the chamber is participating in global business activities and preparing domestic bazar and exhibition. In a year around 44 local exhibitions are prepared which is said to be high in its number. Thousands of foreign companies participate in the event yearly Getachew says.
As to him the chamber is supporting local business delegations to connect them with foreign trade partners by organizing and sending them to different countries of the world. In a month at least one local business delegation is sent to foreign countries to acquire experience and knowledge from abroad.
Beyond acquiring experience such kinds of activity will helps to improve the export performance of the country. The main problem which hinders export performance is lack adequate supply timely. The yearly average export performance of the country is expected to be 3$USD billion Getachew says.
Communication Affairs Director at Ethiopian Textile Industry Development Institute Bantihun Gesese told The Ethiopian Herald that, the recent surge in Ethiopia’s textile and apparel production and export to the global markets shows that the country has the potential to become one of the leading textile and apparel hubs of Africa.
As one of the key industrial sectors, the textile and garment has been prioritized by the government to increase foreign currency earnings and job creations. The sector has created hundred thousand of job opportunities nationwide. The country’s suitable natures for cotton production, expansion of cheap electric power, rapid infrastructural facility development, expansion of industrial parks, availability of high man power and special support from government trap investors to engage in the sector, Bantihun stated.
Another reason for Ethiopia’s emergence on the textile and clothing sector is the railway line connected to a port in neighboring Djibouti, located on the Horn of Africa on the Gulf of Aden, which will speed the transport of goods from the landlocked country’s industrial areas.
As a whole, Ethiopia has been a very attractive destination for the investors because of easy access to land with minimal lease period, strong export performance in textile and garment and being member to African countries through different organizations like Common Market for Eastern and Southern Africa (COMESA), IGAD and others.
The government of Ethiopia is doing its level best apart from ease of doing business. Especially the current diplomatic approach is among the best ways to enhance the economic development of the country. Diplomacy activity is among the effort to make the country hub of investment in the continent.
In addition the government is making investment incentive to support business sectors. Due to focused strategy and support of the government, in recent years, Ethiopia has grown spectacularly as a sourcing destination for apparel in recent years attracting most of the FDI in the sector.
The sector has become a top priority for Ethiopia as part of its goal to become a middle-income country by 2025. The key objective is to make the sector globally competitive and to bring the necessary structural transformation to the nation’s economy to export industrial outputs, create thousands of jobs, attract and the needed foreign currency.
While registering rapid growth in the sector, there are challenges facing the sector. Among the challenges facing the sector lack of marketing is also a concern for the textile industry in Ethiopia. In addition there are also restrictions in technology and lack of efficient systems using basic technology tools is a hampering factor too hence, the textile industry in Ethiopia has much room for development.
An improved political and economic environment that includes industrial upgrading and customs advancement is sure to make the Ethiopian business environment more inviting for international players.Challenge facing the sector are management culture is not developed well, there is also skill gap, market linkage, technical capability, electric power outage, getting accessory, foreign currency shortage and among other were hindering the export performance.
Ethiopian government has been building industrial parks in different cities of the country that are believed to enhance the textile investment and productivity of the country, which ultimately help to increase foreign exchange. The country has a target to generate over $USD 250 million in export from the textile and garment sector by 2019/2020 and establish a foundation for further growth of the strategic heavy industries which finally enable Ethiopia to become an industrialized country by 2025 in GTP II.
According to the World Investment Report, Ethiopia is one of the top performing African countries in FDI flow, especially in textile sector. As the way forward, Ethiopian government has been building industrial parks at different cities of the country to enhance the textile investment and productivity of the country.
Export performance shows increment from time to time and this year alone the country secured $USD153.5 million from textile and garment which is planned to export $USD240 million. The institute has planned to export worth’s 254 million. There are over 200 small and medium factory nationwide.
The Ethiopian Herald September 21, 2019
BY HAILE DEMEKE
