TRALAC - Trade Law Centre

Uganda: Government to Start More Factories

Sunday, 22 August 2004

Source: Addis Fortune (Addis Ababa)

The Adey Abeba Thread and Yarn Company is set to export two containers of trousers and shorts to the US market under the tariff free privilege of the African Growth Opportunities Act (AGOA). The one-year contract signed between Adey Abeba and PUFI, an Israeli multinational based in New York and Ankara means the products can be transacted through PUFI.

Adey Abeba Yarn Factory was established in 1961 by Israelis known as the Lazaraddis. Until 1998, when the government privatised some of the textile factories, Adey Abeba had remained under state control since the previous regime nationalized it. In 2000, a Turkish investor, Atila Tidrim, bought one of the textile factories that produced blankets and yarn when the government divided them to sell on share for 13.6 million dollar.

Atila ran the textile company for three years but only paid 1.5 million dollars of the 13.6 million dollars due and the government took over the property and gave it out for the Adey Abeba Yarn Ver Company to manage it. Since the government seized the Company from Atila, and later contracted it to Ver Company, more than 18.5 million Br budget for 2004 has been approved.

With the approved budget, the factory imported raw materials from Italy and the US and it has been able to produce the exportable goods. The factory have been exporting to the US since February 1996, Asrat Aduye told Fortune. "Since February, we have exported four times to the US and Italy and earned 148,000 dollar," said Asrat.

More than 80pc of the products are meant for export market and include vests, t-shirts, and shorts. Since importing the necessary raw materials from Turkey, the factory has made ready 4,500 sweaters for export.

Two containers of trousers, shorts and sweaters will be exported to the US in the coming weeks. To determine their prices the cost of labour, according to their sizes, must be sorted, Asrat explained.

According to Asrat, the machines in the factory do not have the required quality to produce efficiently and meet the market demand. He further asserted that to improve the efficiency, "We are planning to replace the near obsolete machines in the factory for which more than one-million dollars have been allocated."

"There are 23 machines in the factory which have a capacity to produce 10,000 t-shirts per day, however, there are only six which fit the standard and produce qualitatively," Asrat said. "Once the new machines replace the age-ridden ones, our capacity to produce t-shirts will increase to 15,000 per day. More importantly the needed quality and standard in the export market can be met," added Asrat.

The Adey Abeba Textile Factory, found along Debre-Zeit road in Kaliti, has five different factories on its premises. Two of the factories are producing yarns and another produces blankets. The remaining two factories engage in sewing textiles for the local market and in knitting to produce ready-made t-shirts. The factory employs 2,218 people.

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