Apart from food and shelter, textile has been identified as the most important in the hierarchy of human needs, and it is considered as important part of the industrial sector. Historically, the Ethiopian community has a culture of making clothes through spinning and weaving in a traditional way and has been for long one of the country’s traditional domestic business. And after Dire-Dawa Textile Factory Textile was established in 1939, it marked the beginning of textile industrialization in Ethiopia.
However, compared to the potential of the country, it can be said that the textile industry in Ethiopia is still in its infancy. Cognizant to this, the Ethiopian government has prioritized the textile sector as the focal area in its growth and transformation plan, which sees the manufacturing sector as the major driving force of the economy.
According to Nasreen Mohammed, Senior investment advisor at Ethiopian Investment Commission (EIC), 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 bring the necessary structural transformation to the nation’s economy in industrial outputs, creating jobs, attracting much-needed foreign currency, and above all, contributing to poverty reduction.
As a result of this, and due to the focused strategy and support of the government, Ethiopia has become globally the second largest recipient of FDI in the apparel and textile industry, according to UNCTAD. Ethiopia’s textile and garment industry witnessed rapid growth, as several domestic and multinational firms are being engaged in the production of textile and apparel for both domestic and global markets.
This 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 textiles and apparel hubs of Africa.
While the apparel industry in Ethiopia is still in its infancy, it is widely reckoned that it has the potential to lead the African textile resurgence.
There are lots of reasons that pushed investors to invest in the country. Among them are the availability of an abundant workforce at very competitive wages, competitive cost of electricity and potential for backward and forward linkage.
As to Teshome Zeleke, Investment Project Monitoring and Support expert at Ethiopian Textile Industry Development Institute (ETIDI), the Ethiopian government is now investing in textile industries and attracting foreign investors to invest in this sector.
The textile sector is labor-intensive in its nature, and Ethiopia is the second populous country in Africa with large number of young people, and a potential for a huge domestic market. Also, the country is situated in a strategic position, at the crossroad of the Middle East, Europe, and the U.S. This creates a favorable condition to expand textile factory in the country, he indicated.
According to Teshome, Ethiopian workers can be easily trained and produce products the same quality as foreign workers. Ethiopian Universities, Vocational Training College (TVET) and other institutions are also training students in the sector, which is another opportunity.
Also, the country’s strategic location with its easy access to international value chains, as well as its good climate condition and fertile soil to produce inputs like cotton, makes Ethiopia very attractive.
Besides, the fact that the price of workers is rising in developed countries brings another opportunity to the sector as investors will be forced to turn their attention to developing countries like Ethiopia.
Ethiopian Textile and Garment Manufacturers’ Association (ETGAMA) Secretary-General, Ageazi Gebreyesus said that the country has lots of investment opportunities. Ethiopia has abundant land and suitable agro-climatic conditions for the production of cotton.
In addition, the availability of newly established industrial zones and proximity to the EU, USA, Middle East, and Asia have played a significant role in the nascent sector. Duty-free access to the European Union (EU) and U.S. markets through the African Growth and Opportunity Act (AGOA) and AfCFTA.
He further stated that the country has an abundant and easily trainable workforce with low wages, and cheap and sustainable energy supply. On the other hand, the country has abundant untapped raw materials potential particularly for the production of cotton.
As mentioned earlier, although Ethiopia is well-positioned to be the next big hub for textile and apparel investment and sourcing, some issues need to be resolved, issues related to inputs like cotton. But the challenges facing the sector is easily manageable given the potential of the country and the government’s commitment to making the country the next hub of textile and apparel. And with the way things are going, Ethiopia is poised to become exactly that.
The Ethiopian Herald January 8, 2020
BY HAILE DEMEKE
