Ethiopia shows potential to become African textile, The government of Ethiopia to make its manufacturing sector globally competition has been keen on diversifying exports with priorities focused on strategic sectors like textile and garment manufacturing in the move towards industrialisation from a primarily agriculture based economy. The effort is part of the structural transformation of Ethiopia’s economy to exports of industrial outputs rather than raw agricultural products. Ethiopia’s history in textile began in 1939 when the first garment factory was established. Data shows that in recent years, the country’s textile and apparel industry have grown at an average rate of 51 per cent per year. More than 65 international textile investment projects have been licensed for foreign investors.
The growth in the textile industry is directly linked to the government’s move to set up an industrial development strategy. As a result of this effort, 124 foreign investors have expressed interest in the Ethiopian textile sector, 71 of which are from China, as reports from the Ethiopian Investment Commission indicate.
The major driving factors that contribute to the inflow of international investors to the Nation are of course, the less expensive labour and electricity. Yet, investors are also taking advantage of the Ethiopian textile and garment industry from its high quality cotton that is grown in the country as well as duty free access to US and EU markets. It is estimated that the country has three million hectares of arable land available to grow cotton, of which only less than ten per cent of this abundant resource has been utilised so far.
Moreover, the government with a commitment to the development of state-run Industrial Parks, has set up the Hawassa Industrial Park, which is exclusively dedicated to textile and garment manufacturing industries. The $250 mn US park is the only such facility on the continent, and it will eventually encompass 1.3 mn sqr mtr making it Africa’s largest manufacturing park.
Initiatives such as the Africa Growth and Opportunity Act (AGOA), Common Markets of East Africa (COMESA) and other bilateral trade agreements with Western countries offer free trade benefits and access to the global and regional market for Ethiopia, and in reverse is becoming a threat to some Asian countries. Moreover, an array of bilateral trade agreements concluded with Western countries, including the Netherlands, Belgium and Luxembourg are boosting textile markets abroad.
Besides, Swedish apparel giant H&M, International Labour Organization (ILO) and Swedish International Development Cooperation Agency (SIDA) have launched an industrial relations project aiming to improve the development of a socially sustainable textile and garment industry in Ethiopia. They are also dedicated to providing training and technology transfer in the sector, which all stand in favour of boosting Ethiopia’s textile industry. Accordingly, Ethiopia has risen as one of the most promising locations for more apparel manufacturing in Africa.