Ethiopia apparel manufacturing on a fast track
The Ethiopian garment industry currently employs around 37,000 workers. Several major players in the apparel industry source large volumes of basic items, such as T-shirts and trousers, from the up-and-coming nation.
Acknowledging the government’s investment-friendly policy, and the variety of incentive schemes, the European Union receives 70% of the country’s apparel exports, with as much as 60% going to Germany. In contrast, only 10% of the country’s apparel exports are destined for the US.
Despite the huge increase in exports over recent years, Ethiopia still only accounts for a mere 0.01% of total global apparel exports. But this is set to change in the near future.
Significant progress in five years
Yarns, grey fabric, garments and traditional handloom exports totaled just over US$160 million in 2014/2015 – this is US$100 million more than five years earlier. And the Ethiopian textile and apparel industry has grown 51% on average over this short period of time.
In terms of Foreign Direct Investments (FDI), foreign investors have received licenses for 65 international textile projects. Retailers like H&M, Primark and Tesco established offices in the country in 2012, and are now buying finished clothing products from Ethiopian manufacturers.
Textile and apparel FDIs have grown significantly since the establishment of Ayka Addis, a subsidiary of Turkish textile giant Ayka Textiles, in 2010 for US$140 million. Other investors are also present, notably from Bangladesh and India. Bangladeshi group DBL is currently constructing a US$30 million vertically-integrated garment factory. In fact, at present 37 out of the 130 medium and large apparel factories are foreign owned.
Ethiopia: Massive future potential
Upstream, only 5 to 6% of the country's 2.6 million hectares suited for cotton is used by the textile industry. In the coming years, foreign investors are expected to tap into this opportunity.
Downstream, the Ethiopian government continues efforts to boost apparel manufacturing in the country. They recently built the US$250 million Bole Lemmi industrial park on the outskirts of Addis Ababa, exclusively for foreign investors in the garment industry.