Ethiopia has been working hard to expand industrial development and within that general framework, the textile sector has been identified as a priority area both by local investors and for foreign direct investment.
The country has a long history of manufacturing traditional textiles using hand-spun yarn and handlooms for weaving.
It has also been a major source of employment for both rural and urban areas. The Growth and Transformation Plan 2010–2015, earmarked the textile and garment industry as the first category under medium and large industrial development. Textiles also touch several Ethiopian sub-sectors, with the capacity to maximize cotton production, creating an even larger source of employment and being able to induce industrial modernization, as well as considerably raising foreign exchange export earnings.
The government believes the sector can lift its aggregate production value to $2.5 billion by the end of 2015. It has also set up the Textile Industry Development Institute on June 7, 2010.
The Institute has the objectives of helping the development of textile and apparel industry technologies, and enabling the industry to become competitive and develop rapidly.
Other encouragements and supports have been put in place to boost the textile industry sector and facilitate the involvement of foreign investors in the wide-ranging prospects available for development. The government wants exports to top a billion dollars by 2016.
Investors are being encouraged from various countries and major global brands to relocate factories in Ethiopia.
One reason for this is since labour has become one of the more expensive components in textile and garment in developed countries, this, like other labor-intensive industries, has found it necessary to move to developing countries to minimize costs. A number of African countries are using the opportunity as a means to enter into the global market and Ethiopia is one of the most convenient destinations.
Incentives firmly in place, include priorities for developing the textile and clothing industry across the value chain, a viable business environment and duty free market access to both United States and the European Union.
As a result, Ethiopia is now beginning to attract international buyers and investors. All the indications are that the textile and garment industry will be a wide-ranging and well-supported sector and will soon be able to provide for products labeled ‘Made in Ethiopia’ ready for the global and African markets.
A number of garment companies from Turkey, India and other counties have now registered in Ethiopia, including such western high-street stores as AYKA, HM, Primark and Asda and have started production.
Others are studying the opportunities and the potential to invest in the country’s garment and textile sector. TUSKON (Turkey), Phillips –Van Heusen (US) and Jiang Lianfa Textile (Chinese) have all paid visits to investigate the possibilities.
President Dr. Mulatu Teshome held talks in early September with a Chinese company delegation headed by Kong Xiangjun, Board Chairman of Jiangsu Lianfa Textile Company Limited. Xiangjun said their company had finalized a pre-investment assessment to build a major textile factory in Addis Ababa at a cost of over $500 million.
He said the company had decided to invest in Ethiopia after making similar pre-investment assessments in Kenya, Uganda, and Tanzania.
The factory, he said, would create more than 20,000 jobs when it goes operational. President Teshome said textile development was one of the priorities of the government would provide all necessary support for the company.
The company plans to open four vertically integrated (value chained) factories, starting with cotton production.
According to the Ethiopian Textile Industry Development Institute (TIDI) Ethiopia has more than 3 million hectares available to grow cotton but only about 6-7 % of this resource is currently utilized.
Ethiopian Embassy Kampala