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Ethiopia Garment Industry

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The sourcing for apparel retailers have never been so diverse. A lot of changes have been taking place in the global garment industry. Production is moving away from China. Vietnam and Bangladesh are being developed strongly but still the wage bomb is ticking anyway at these locations too. Ethiopia is one such nation which is absorbing this shift confidently and becoming active garment manufacturing destination. – PowerPoint PPT presentation

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Title: Ethiopia Garment Industry


1
ETHIOPIA The next powerhouse of
Apparel Sourcing
2
Country Overview
Investment Procedure in Ethiopia
1
7
Ethiopian Economy Background
Industrial Parks (IP) in Ethiopia
2
8
Ethiopian TC Sector
Logistics Scenario in Ethiopia
3
9
Garment Exports of Ethiopia
4
Strength and Weakness Analysis
10
Challenges in Production
11
Trade Relationships of Ethiopia
5
Investment A Major Source to Boost TC Industry
6
About US
12
3
Surface Area
11,04,300 square kms
Sub-Saharan Africa / East Africa
Region
4
65 international textile investment projects have
been licensed over the years for foreign investors
A shift is seen from agriculture to textile and
garment sector in last 5 years
Textile apparel industry has grown at an
average of 51 in last 5 years
Going from Fiber to Factory is comparatively easy
in Ethiopia
4
5
  • The economic developments in the textile and
    clothing sector show enormous growth in
    comparison to the starting phase back in FY
    2010-11.
  • Yarns export, grey fabric, garments and
    traditional handloom together totaled an export
    amount of just over USD 160 million in FY 2014-15
    compared to USD 60 million in FY 2010-11.
  • The Ethiopian government is eyeing to achieve TC
    exports of USD 1 billion by 2020.

5
6
Export Share
The apparel sector represents 6 of the countrys
total export value and is projected to achieve a
share of 22 by 2020
Major Market
The USA and EU are the major export destinations
for Ethiopia as, in FY 2016-17, it exported more
than 90 of TC to the these markets.
No. of Factory
At current, the textile and clothing sector
consists of around 130 medium and large scale
factories of which 37 are foreign owned.
6
7
7
8
African Growth and Opportunity Act (AGOA) enables
Ethiopia to export products to the US market with
Duty Free Quota Free privilege.
Everything But Arms (EBA) enables Ethiopia to
export products to the EU market with duty free
access.
Ethiopia enjoys the DFQF status extended by the
international markets including China, India,
Japan and Korea.
8
9
- It is a well known fact that apparel
manufacturing is shifting from China. Now the
question is, who all are capable enough to absorb
this shift?
Why Ethiopia is grabbing the Eyeballs
- Due to law and order situation, political
instabilities and poor working conditions in the
factories of some Asian countries, the big
retailers such as HM, Tesco and Primark are
finding sustainable alternatives for apparel
manufacturing. Ethiopia is grabbing the
attention.
9
10
Why to set-up Factory in Ethiopia? The answer
lies in these points
10
11
  • Chinese manufacturer Jiangsu Lianfa textile Co
    will boost 20,000 jobs but brings its own client
    base
  • Foreign investment in the Ethiopian textile and
    clothing industry has risen from 4.5 billion birr
    (US 166.5 million) in 2013/14 to 36.8 billion
    birr in 2016/17.
  • Most investors that construct factories
    themselves come from Turkey, India and Bangladesh
    but also bring their clients along.
  • Bangladesh DBL has invested US 30 million in
    Mekele
  • PVH group just started construction of large
    scale factory
  • Indian denim giant Arvind will soon start
    production of jeans in Ethiopia
  • Turkish Ayka textiles runs a factory in Ethiopia
    with 10,000 workers

11
12
12
13
  • The Ethiopian Industrial Development Zones
    Cooperation was established in 2014.
  • Initially China and India were set to construct
    Industrial Parks but, later, the government
    decided to overtake those initiatives and launch
    the Industrial Parks itself.
  • The World Bank supports the creation of
    Industrial Parks within the Competitiveness and
    Job creation Project (CJC)

Benefits for Ethiopia
  • Ethiopia is a latecomer to IP development and as
    such can profit to avoid any missteps other
    nations have made.
  • The failure in other nations of these zones is
    attributable to a number of factors which
    Ethiopia can avoid.

13
14
S. No. Industrial Park Area (in hectares of land) Developer
1. Addis Industrial Village 8.7 Government
2. Bole Lemi Industry Zone 342 Government
3. Eastern Industry Zone 200 China
4. Kilinto Industry zone 243 Government
5. Kombolcha Industry Zone 1123 Government
6. Dire Dawa Industry Zone 1051 Government
7. Mekele Industry Zone 1000 Government
8. Hawassa Industry Zone 1000 Government
9. Tigray/Amhara/Oromia/SNNP Integrated Agro Industrial Parks Government
14
15
  • It takes up to 44 days from the time a clothing
    consignment leaves the factory to when it reaches
    buyers in Europe, compared to an average 28 days
    in Bangladesh and 21 days in China.
  • The above scenario drives up costs. It costs up
    to US 1,870 to export a 40-ft container,
    compared with US 1,290 in Bangladesh and US 679
    in Vietnam, according to Reuters.
  • But, a US 4 billion electric railway between
    Addis Ababa and the Red Sea, will be inaugurated
    shortly that will reduce the transit time to the
    Port of Djibouti from 2-3 days to eight hours.

Djibouti is the closest and single Port used for
exports of Ethiopian textiles
15
16
Strengths
Weaknesses
  • Availability of abundant labor at low cost
  • Cheap electricity- up to 8 times less than other
    manufacturing nations
  • Water is free. Most garment companies use tap
    water/ground water/river water
  • Import duty is free on equipment, machinery and
    on spare parts needed to realize production
  • Limited availability of raw materials, only
    cotton is available easily in the country
  • Lack of manmade fibers and Ethiopia depends on
    imports for MMF sourcing
  • Lack of middle management and merchandisers in
    garment units
  • Inefficient production (45 maximum)

16
17
Strengths
Weaknesses
  • Backward integration possibilities with raw
    materials local cotton availability
  • Low rent and lease up to 1-2 USD per square/meter
    for factory buildings
  • All business processes controlled by government
    do not pay without receipt- to fight corruption.
  • Lack of IT and CAD/CAM in production
  • Social compliance is a big issue
  • Lack of PPE workers do not want to use personal
    protective equipment
  • Limited options for trims, accessories and
    printing equipment

17
18
18
19
19
20
  • Ethiopia has over 30 bilateral investment
    promotion and protection agreements
  • Ethiopian government invests largely in
    infrastructure
  • Ethiopian government has installed a scheme of
    incentives for business financing and trading
    terms opening an LC regularly would cost a
    company 3 during the production lead-time in
    Ethiopia
  • Ethiopian government has reduced the cost of
    freight and transport with 25 and is about to
    launch its own transportation company providing
    trucks that run to Djibouti port.

20
21
  • STAY CONNECTED FOR MORE PRESENTATIONS!
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22
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23
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