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Chinese textile and apparel firms intensify investments in Ethiopia

Ethiopia keeps gaining momentum as a new sourcing country as a recent step by ten large Chinese companies - half of them textile and garment manufacturers - has shown: They have decided to invest in the East African nation in the first half of the current Ethiopian budget year. One of them, textile manufacturer and distributor Jiangsu Sunshine Group, has even committed almost one billion US dollars.

The investment dynamic follows a move by the Ethiopian Investment Commission (EIC) to start according priority to large, effective companies that can offer more and quick employment. In addition, the EIC is increasing its efforts to attract foreign direct investment (FDI) given a slight decrease to 1.2 billion US dollars in the first six months of the current fiscal year and in view of reaching its target for the whole fiscal year, which is 3.5 million US dollars according to EIC's commissioner Fitsum Arega.

The country is giving attention to export-oriented operations and those with a capacity to create more jobs, thus focusing on attracting companies in manufacturing industries such as textile and garments, leather and leather products. China is leading on both accounts, closely followed by India: of the 124 foreign investors who expressed a keen interest in the past three months, 71 were from China.

Some of the world's lowest wages, a trainable workforce, ongoing infrastructure developments, a fast-growing economy, government support and a favourable investment climate are some of the key factors that motivate especially textile and garment companies to invest in Ethiopia; some even wonder if it will be the next Bangladesh. Fact is that the Ethiopian textile and garment sector is facing boom times and companies like Ayka Textile from Turkey, British retail giant Tesco and Swedish fast fashion chain H&M discovered Ethiopia a few years ago and continue investing, with H&M supporting 4,000 factory jobs. In 2015, Ethiopia also joined the Cotton made in Africa initiative.

“We recommend any investor worldwide to invest in Ethiopia because of its economic, political and social stability, which is enthused by incredible government commitment and incentives towards the textile sector,” said Osman Basoglu, general manager of Etur Textile Plc, a part of the Yuskel Group, on EIC's website.

Regarding the recent unrest in the states of Oromia and Amhara, Fitsum Arega said that the government extended more than 100 million birr (4.4 million US dollars) in financial support for affected horticulture companies. It will also grant a one-year grace period and duty-free privilege to companies whose property was damaged. He noted that no foreign investor withdrew or halted its operation as a consequence of the recent unrest.

The country is currently gearing up for the 5th Africa Business Forum, a bi-annual meeting and a chance for international investors to connect with clients from across industries and from around the world and with their African customers and partners. Established in 2014, this year's Africa Business Forum will take place in Addis Ababa on 1st March 2017.

Photo: Ayka Textile