State-owned and private textile and garment factories make textiles the largest manufacturing industry in Ethiopia. The industry employs about 30,000 workers and has a share of 36% of the entire manufacturing industry. An industry-specific institute slated to become a separate Department for Textile Engineering was set up at Bahir Dar University as a result of a Government initiative to promote quality products.
The main textile products manufactured in Ethiopia are cotton and nylon fabrics, acrylic yarn, woolen and waste cotton blankets and sewing thread. The domestic potential of cotton production as a basic raw material is far more than the current installed spinning capacity demands. The availability of cheap labor is a major factor for making the industrial sector one of the strategic industries for export development.
Ethiopia's textiles and clothing industry is undergoing major development, 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. Ethiopia’s long history in textiles began in 1939 when, under Italian occupation, the first garment factory was established. The country’s current textiles industry encompasses spinning, weaving and processing.
Ethiopia has five public textile factories producing mostly work-wear garments for the domestic market. Numerous privately-owned factories produce shirts, suits, work clothes and uniforms for national and foreign 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 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 thetextile sector, with garment factories relying heavily on domestically produced cotton.
Available within Ethiopia are all essential ingredients for a competitive textile industry: raw materials, low wages and low energy costs. This gives the country a comparative advantage over other countries and regions. The Ethiopian Government is actively promoting the further modernization of the textile sector with the aim of attracting foreign investors that can penetrate the global market.
Stable Economic Environment:
2. Liberalized Economy:
3. Security of Investment:
4. Significant Tax Incentives:
5. Conducive Tax Environment:
Trainable Labor:
Land:
Land is available on a leasehold basis of up to 99 years. In response to the country’s drive to attract foreign investment, regional governments are now expected to allocate land to investors within 60 days of receiving their applications. The lease of urban and rural land varies according to location, type of investment and class of land. In the capital city of Addis Ababa, prices range from approximately $1.50-$13.25 per square foot in the Central Business Zone. The Government generally is willing to negotiate with individual
business to provide incentives to get the capital investment required.
Security:
Ethiopia is politically stable and its popular tourist destinations are safe and secure.
In recent years, the global market has become increasingly accessible to countries such as Ethiopia. New export opportunities were created through initiatives such as AGOA (the African Growth and Opportunity Act), COMESA (the Common Market of Eastern and Southern Africa) and the many bilateral trade agreements concluded with Western countries, including the Netherlands, Belgium and Luxembourg.
Ethiopia is also part of the “Everything But Arms” program that has been set up to provide access to the E.U. market for Lesser Developed Beneficiary Countries, free of duty and without quota restrictions, for all export products except arms.
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