The booming Ethiopian textile industry
Gemechu Tussa
Textile is a one of the major areas of investment with annual market transaction of three trillion USD worldwide that accounted for two percent of the world Gross Domestic Product. The textile industry in Ethiopia has a bright prospect to the facilitate growth of the manufacturing industry. That is why the government supported investors that have been investing in the sector. Ethiopia is building its industry in a bid to become a light manufacturing hub in Africa by 2025 especially in textile and garments. The expansion of the industrial parks witnessed this argument. The country has been diversifying the textile sector in particular and the manufacturing sector in general.
According to available resources, the country has managed to grow the textile industry at an average of 51 percent only in the past five consecutive years, which is resulted from the government’s plan set up to develop the industry.
A conference focusing on Ethiopia’s Textile and Garment Industry was recently held with the theme “Towards Increasing Sustainability and Competitiveness in Ethiopia’s textile and garment industry”. It has been working to ensure the development of the textile sector.
The industry is currently growing rapidly and exports have increased substantially over the past ten years because the government has set the sector as a focus for the second Growth and Transformation Plan. It aimed to boost exports to reach one billion USD by the end of the Plan period, and to create close to 350,000 jobs.
The conference was intended to be a starting point for initiatives to catalyze sustained and sustainable development of the textile and garment sector in line with international social and environmental standards.
It aimed to help improve the competitiveness of the Ethiopian textile and garment industry as contributor to sustainable employment generation and economic development of the country, and promote awareness on the importance of social and environmental standards. It drew attention to key sustainability challenges within the Ethiopian textile and garment industry; and emphasized the importance of organizing continuous dialogue and joint action amongst stakeholders.
In a bid to make Ethiopia’s manufacturing sector globally competitive, the government has been keen on diversifying exports with priorities focused on strategic sectors like textile and garment manufacturing in the move towards industrialization 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.
In the second GTP, Ethiopia aspires to become successful in light manufacturing including textile, apparel, leather and agro processing, which he termed as key areas where Ethiopia wants to secure more support. That is why the government has been aggressively working in expanding industrial parks to facilitate the sectors development.
Developing the industrial sector contributes to diversify export. In this regard, the country targets to increase its export revenue to 12 billion USD in the next three years. The government targets to boost export revenue by 29 percent in each year of the second Growth and Transformation Plan.
The national plan also incorporated improving health situations as its major pillar. There will be a plan to improve the quality of health services. In this regard, the government will do its level best to ensure quality and equitable health services in the second Growth and Transformation Plan period.
The ultimate goal is to develop the industrial sector so that the government has planned to reduce the shares of the agricultural sector in the Gross Domestic Product to 36 percent from its current level of 40 percent its sectors in its second national plan. Therefore, investment will represent 41.3 percent of the GDP in the GTP period that lead the industrial sector to grow by over 18 percent.
Economic analysts argue that the manufacturing sector will play a major role to attain the objectives of developing exports. Besides, air transportation and tourism will contribute considerably to fetch hard currency. The manufacturing sector will also focus on light industries, while the government has planned to give special attention to heavy industries.
In Ethiopia, the agricultural sector will continue to be a major contributor to GDP in the coming years as well. It is expected to grow to 406 million quintals by the end of the second five year plan through fostering irrigation systems that will be developed over four million hectares of land.
The attempts done so far aimed at developing the agriculture sector and enable the people feed themselves, thereby, integrated it with the industry. In the first national plan there were a number of mega projects that aimed to lay basis for structural transformation. The hydro power dams, the sugar development projects as well as the booming investments are believed to facilitate the economic transformation.
The past twenty six years witnessed that the number of farmers who transformed themselves is so momentous. They managed to produce high yield crops through irrigation, water harvesting and using fertilizer. While the agricultural productivity increased from time to time, efforts to integrate it with the industry has also considered seriously its development has been showing an upward trajectory.
Due to this integrated effort of raising agricultural products and developing the industry along with the leading agricultural productivity enabled the country to reduce its poverty stricken people from time to time that poverty has fallen from 40 pre cent in 2010 to 26 per cent in 2013.
The struggle to alleviate poverty and ensure sustainable economic growth has continued. It will also continue in the future as the people have considered poverty as their arch foe. They have determined to work indigenously in order to meaningfully alleviate poverty. In doing so, the country also already identified some gaps that would have to be addressed in the second to provide more opportunities for the youth and women.