Enhancing manufacturing of quality textile produce in Ethiopia
By Fekadu W.
Tigrai Online, April 23, 2018
Industry Parks Corporation (IPC) on April 12, 2018 stated that Qilinto industry park will be inaugurated in the coming June. According to the IPC, the park is being constructed at a cost of 5.5 billion Birr and 70 percent of the project had been finalized so far. The Corporation said the park is designed to accommodate manufacturers engaged in production of medical equipment and related supplies.
IPC stated that the park will be instrumental in meeting the enormous demand of the country to medical supplies, of which as much as 85 percent is being imported from abroad. In addition, it will open window of opportunities to creation of jobs and generation of foreign currency.
Similarly, Ethiopian Investment Commission had also stated that ten manufacturers had expressed interest to settle in the park and commence production. According to the commission, the park has been attracting investors due to its state of the art design and quality intended to high end manufacturing purposes.
Meanwhile, Ethiopia had managed to earn USD 68.5 million in revenue from the export of textiles and garments over the last eight months of Ethiopian fiscal year. The burgeoning income had been attributed to Ethiopia’s focusing on the textile and clothing supply chain as one of the country’s key targets for growth, as part of its aim to generate 30 billion USD from the export of garment and textile by the year 2025.
Documents witness the revenue had seen over 23 percent increase compared to revenue earned in the same period last year, but it is 50 percent below the target. Similarly, close to 13 million USD of the stated revenue was secured by 58 local companies, while foreign-owned companies generated the remainder.
Taking this very fact in to account, Ethiopia wants to diversify export including textile and garment manufacturing. It has aimed to support its export capacity there by establishing as many industrial parks as possible across the country, in a way that recognizes productivity, efficiency and conducive agro-ecology to the respective produce.
To this end, Ethiopia has planned to raise the number of its industrial parks to 15 until June 2018, as part of its efforts to boost manufacturing and export. Its aim to build as many industrial parks as possible has emanated from its vision to become the manufacturing juggernaut of east Africa and enable export to contribute 20 percent of the GDP and 50 percent of the export volume by 2025.
Ethiopian has been trying hard to scale up the capacity of textile and garment industry by prioritizing the industry as a strategic sector. Accordingly, the government has set ambitious targets for the industry in the GTP–II (2010-2015), which aims to increase the current insignificant annual earnings to one billion USD by 2016 and increase foreign direct investment by 1.6 billion USD (by building 191 new textile and garment factories).
The overall goal is to increase export from the current 20% of total garment and textile production to 80% of the total garment and textile production by 2020, so that garment and textile exports will eventually account for a total of 22% of all exports.
Matter of fact, the country registered a double-digit economic growth in the past two decades. Unfortunately, export activity including textile production was hard hit by conflicts flared up in some corners of the country. However, growth of export is expected to be sustained; attributed to many factors mainly to the development workable policies and strategies of the country that have a clear national vision aiming to achieve middle-income status by 2025.
Ethiopia’s long history of textiles manufacturing began in 1939 when, under Italian occupation, the first garment factory was established. Since then, until the past two decades, manufacturing industries in the country were suppressed to the level of cottage and handcraft industries, which were unable to meet the needs of the population for fabricated goods such as clothes, ceramics, machine tools and leather goods.
The development of Ethiopian textile and garment production has been standstill and many factories were unable to become profitable until the advent of the new regime. Since 1991, the new administration opened the sector to investors. And as a result of economic liberalization and commissioning of a comprehensive industrial policy, various reforms eyed to take a U-turn from the command economy were introduced. As a result, the country has invested a lot to develop the manufacturing sector in the past decades.
Thanks to the unlimited effort and far-sighted investment policies, now the textiles and garment industry of the country has been striding on the path of progress and many changes are being observed. Now, the textile industry is contributing a lot for the growth of export and the textile and apparel sector has managed to create over 45,000 job opportunities.
Now, the sector has been able to encompass factories specialized in spinning, weaving and processing, unlike the defunct machines that were suffering from incapacity and non-specialization. Currently, numerous privately-owned factories are producing shirts, suits, work clothes and uniforms for national and foreign markets.
Currently, Ethiopia's textiles and clothing industry is undergoing major transformation, aided by the presence of a cheap, skilled and highly-motivated workforce. This surge has been helped by the country’s impressive economic growth over the past years. Ethiopia’s enormous export potential is made possible by the wide availability of raw cotton and other natural fibers and Ethiopia’s access to domestic, regional and international markets.
The basis for the full cycle of business opportunities and the enormous growth potential for the textile industries is the local production of cotton. Large-scale production is carried out under irrigation, mainly in the Awash Valley, which has more than 50,000 hectares under cultivation. Another 45,000 hectares of high-quality cotton is being cultivated by small-scale farmers.
There still exists huge potential for the expansion of cotton cultivation in Ethiopia, especially in the Omo-Gibe, Wabi Shebelle, Baro Akobo, Blue Nile and Tekeze River basins. The production of cotton is well integrated into the textile sector, with garment factories relying heavily on domestically produced cotton. However, the production of cotton in the country is minimal and these factories are forced to import cotton from abroad and satisfy their demand.
No doubt, availability of cotton is an essential ingredient for the expansion of competitive textile industry. This gives the country a comparative advantage over other countries. Cognizant of this vast potential, Ethiopia is actively working to further modernize the textile sector; with the aim of whetting foreign investors that can penetrate in to the niche of global market.
To facilitate transformation of the sector, the government has prioritized the development of textile and garments through training and building capacity, transfer of technology and attraction of as many investors as possible and construction of quality IPs designed to this purpose. In connection to this, nation has formulated appropriate policies and strategies to support expansion of IPs and facilitate development of the sector; an integral policy direction to the achievement of a vibrant and competitive textile sector.
These days, as a means to gain ground breaking achievements, Ethiopia has been demonstrating significant commitment to expand industrial parks that would facilitate proper environment for Foreign Direct Investment (FDI). Nation believes parks are instrumental infrastructures in accelerating the growth of light industries, like textile and garment; the parks would create enabling environments to textile manufacturers(and other investors) who would otherwise spend so many times on developing essential infrastructure.
Over all, government should work towards helping the production of voluminous cotton, development of textile and garment factories (as a priority within the planned industrial development). It should also undertake tremendous activities to help improve the competitiveness of the Ethiopian textile and garment industry; as main contributor to generation of sustainable employment and enhancement of economic development of the country.
To make this happen, industries should be assisted to produce quality and standardized commodities. To speed up the growth of Ethiopia's textile industry, the matter of developing textile companies should be given prime significance to raise competitiveness, create employment and sufficient foreign currency earning, among other things.