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Ethiopia

Textile
Industry
Ethiopia Textile Industry - Outlook
Contribution to Ethiopian Economy

• Textile exports- over 123 million USD in 2015.


• Average growth of 51% over the last 5-6 years
• Revenue from the sector- 456 million USD
• 60,000 employed persons
• Number of medium and large size textile factories- 150
• Contributes 6% of the country’s total export value

Industry Outlook
The Ethiopian textile – and apparel industry has huge potential and has grown an
average of 51% over the last 5-6 years. Half of Ethiopian textile- and apparel
companies are SME’s of 500-1000 workers that are able to handle small run
orders for Dutch and European mid segmented fashion retailers.

With 70% of apparel products being exported to the European Union, this market
has preference for the Ethiopian government leading to an investment friendly
environment with a large variety of incentive schemes.
Ethiopia Textile Industry - Outlook
Trade Data

Exports Top Export Destinations


USD 123 Million (2015) • Germany
Imports • USA
USD 521 Million (2015) • UK
Products • Italy
Articles of apparel and clothing • Spain
accessories, etc

MNCs operating in Ethiopia

1. Jiangsu Lianfa textile Co (China) 5. H &M (Sweden)


2. DBL (Bangladesh) 6. Phillips Van Heusen (US)
3. Arvind Denim (India) 7. Tesco (UK)
4. Ayka Textiles (Turkey) 8. Primark (Ireland)

Key Growth Drivers of the Industry

•Government incentives
•Strength of supply chain
•Skilled and trained work-force
•Domestic and international demand

Growing FDI and demand from domestic and international market are the key factors in driving growth for the Ethiopian Textiles sector. Besides, Ethiopia has various government
incentives for manufacturing sector which attracts investments in the textile industry. All the factors mentioned above combines with strong supply chain, low wages and well trained
Human capital creates an unrivalled offering for textile industry.
Ethiopia Textile Industry - Incentives
Incentives for Manufacturing

The Ethiopian tax law allows for a duty free importation of raw materials and
machinery, equipment for manufacturers.

Custom duty exemption (100% exemption from payment of custom duty imported
capital good and 15% on imported spare parts)

Exemption from income tax (for new investment and those investors establish in
regional areas like Gambella, Benishangul/Gumuz, Afar etc.)

The Industrial Parks Development Corporation (IPDC) Board has set a new plan for
local investors in Hawassa Park in 2016. The plan includes exemption of 30%
income tax, 10% dividend tax if the companies use their profits for expansion
purposes, and wage tax on foreign trainers hired by the local companies for 10
years. Investors will benefit from tax free train transportation of products to
Djibouti and permission to use 10% of their export earnings.
Ethiopia Textile Industry – Supply Chain
Local Manufacturing Hubs
Ethiopia has a well-established supply chain and ancillary
production network, the country has several companies that
are focussed in manufacturing and producing different types
of apparels, packaging, exporting, etc along the textile supply
chain.

Some of the Textile companies in Ethiopia are:


•Adam Spinning Factory
•Edget Yarn Sewing Thread Sh.Co.
•Ethiopian Sewing Thread Factory S.C
•Awassa Textile S.C
•Almeda Textile P.L.C
•Kombolcha Textile S.C
•Tehute Kintting And Garment Factory

Region Wise Product Systems

Addis Ababa Adama Adwa Town Kebelle

Knitting, Sewing, Spinning,


Ginning, Knitting, quality checking, Sewing, Knitting, Production and Quality checking, production and
Weaving, Manufacturing and
production, manufacturing of packaging of different textile manufacturing, sewing, ginning,
Packaging of products, exporting,
different textile products, etc products, dyeing, exports, etc dyeing, packaging, etc
etc
Ethiopia Textile Industry – Investments
Investments Announced in the Textile Sector
China will invest USD350 million in Ethiopia’s Textile Industry in 2016. China is
planning to set up a plant in the industrial park of the city of Adama. The factory
will produce 10 million meters of worsted wool fabrics and 1.5 million finished
parts.

Maa Garment & Textile Factory, which has 1,488 workers and is a supplier to
companies like H&M, Asos, George at Asda, Calzedonia, Primark and Tesco, plans to
increase its knit capacity from 9.6 tons to 20 tons per day and to build a new plant
for woven items.

DBL Group from Bangladesh, the vertically integrated knit garments manufacturer
and exporter with an annual turnover of more than US$250m, is investing some
US$100m in a garment, knitting and dyeing factory in Mekele.

According to Murtoza Mamum Al-Azim of Atelier Sourcing, a member of DBL


Group, the factory will be operational in the second half of 2016. Initial
employment is estimated at 5,000-6,000 workers, and the group will make
additional investments in the coming two years. Among DBL's customers are H&M,
KiK, Lidl, Esprit, Puma, George and Walmart.

Business development manager Dinuka Wickramanayake says that a factory


employing 3,000 workers is scheduled to start in Ethiopia in January 2018. It should
produce 1.75m pieces of clothing per month. Foundation Garment is a supplier to
companies like H&M, PVH and Victoria's Secret
B3Globe Customized Industry Analysis
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Scope of Our Customized Industry Analysis


• Market Definition. • Import & Export scenarios
• Industry Classification • Local Market Operators
• Current Industry Outlook • Product Segment wise Producers & Importers
• Industry Size – Global/ National/Regional, • Overseas markets
• Contribution to GDP National/Global. • Top Product segments for Export
• Industry growth past 3-5 years • Top Export markets for respective product segments.
• Growth Forecast for 3-5 years. • Number of companies participating in the industry National/Global.
• Market Drivers • Market Segmentation
• Key drivers • Product Wise.
• Restrains • Distribution Channel wise.
• Opportunities • Consumer Segmentation.
• Key Drivers of historical demand • Competitor Segmentation.
• Applicability of Key drivers in Demand Forecasting. • Porter’s Five Forces Analysis
• Key drivers of future demand and reasonability of the assumptions • Entry Barriers,
• Industry Structure, Industry Life cycle stage. • Government policies, incentives & Subsidies for the Industry – National/State
• Current Business models In the Industry. Level/Country Level
• Business Models likely to do well in future. • Applicable Taxation & legal laws
• National / Global Factors that affect the Industry (PESTEL-analysis). • Industry Value chain analysis.
• Overall capacity in the market. • Supply chain, Logistics framework analysis
• Production • Funding avenues for Industry Growth
• Procurement • M&A activities in the industry – Global/National.
• Value Chain Analysis
• Demand supply Gap.
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