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Ethiopia: A Look at the Garment Industry

Published date:
Saturday, 18 March 2006

The garment industry in the country has become one of the most growing industries. Many business people are engaged in the industry and have become successful. Despite its huge potential and strategic significance, the sector is still at an embryonic stage of development. That is, the performance of the sector is very low.

Ato Elias Meshesha, general manager of Spectrum Garment Industry, who has worked in the garment industry for the past thirty years and is an expert on the subject, said that garment industries in their country are still in their infancy.

"Most industries that I saw in the country are incapable of producing the quality and standard demanded by the merchandise. This is due to lack of skilled man-power, well-trained designers, and lack latest technology. And without this, it is impossible to engage in the export sector. Hence, it takes time to establish a garment industry by having the best project," he added.

According to Elias, since we have unlimited manpower and high population, we can capitalize on it. But it requires deep knowledge. The agricultural sector is seasonal while the industry is labor intensive. In addition, interest, hard work, and commitments are needed in the sector to achieve high performance.

Elias said that he was engaged in the garment industry seven years ago has and created job opportunities for 150 people. It is engaged mostly in making uniforms for different organizations and will also do unfinished products, which we deliver to other business partners for export. That is, the industry indirectly exports to the US markets. He added that within a few months, the industry will start exporting its products directly to America.

"Promoting export means reducing import. That will save foreign currency. That saving is earning. So in order to get foreign exchange earning, the country is now in the right place. Hence, infrastructures have to be built fast in order to bring about change. In addition, the sector has to hire those who have qualification and experience in order to increase the quality and standard," Elias explained.

The supply of textile is at the lower stage, which is a big challenge for the industries. According to Elias, there are at least three textile factories in the country and it is too small to satisfy the required amount for the customers.

"We asked for textile delivery three months ago and we didn't get any response. Besides, we have to register and pay for the delivery first. But when we compare this to other countries, it is poor in performance. The other countries are giving credit and also deliver the required amount of textiles immediately to those who command. As a result, establishing a garment industry in Ethiopia will not attract investors to engage in this industry. Thus, it will decrease the number of industries to be engaged in the work and also depresses export," Elias said.

"Ethiopian merchants are going to China since there are goods that they want. So if we make our products good in quality many merchants even from other countries will come and take the products. In addition, customer services, sales technique and also merchandize should be taken into consideration," he commented.

One of the well known garment industry in the country is the Adey Abeba Yarn Factory. The factory is engaged in different kinds of products that are well fitted for local as well as foreign markets.

Those in charge of planning and programme service said that the factory had earned 1.6 million birr from the export in the past six monthes. Due to the decrease in the number of clients, its revenue has declined from the previous months. According to them, it has earned two million birr the previous year.

"One of the major challenges that the factory faces is shortage of textiles. Besides, even if they export with AGOA, they pay excise tax in order to import some inputs. This has reduced our revenue, so if these things are taken into consideration, we can engage in many expansion projects," they explained.

One of the new garment industries is WOW International garment factory, located in to Akaki area. The factory has created job opportunities for 150 people. The manager of the factory, Sufan Mohamed, said that the factory is now producing men's suits and plans to produce ladies' dresses that will highly decrease dependency on imports.

According to Sufan, 90 percent of Wow's products are intended for the foreign market. The products have been the main driving force for them to produce them in high quality. The patterns of the suits are adopted from European countries that have a cavernous knowledge.

Sufan said that textiles are being imported from European countries and they are processed by foreign designers in order to protect their quality. He believes that if we produce the best qualities and standard we can compete in foreign markets.

Most of the garment industries are exporting their goods by being a member of AGOA (African Growth Opportunity act). Addis Alemayehu, representative of USAID (United States Agency for International Development), said that AGOA is a unique opportunity to access the US market through duty free and quota free terms. It is also meant to assist countries in utilizing the preferences to build capacity and competitiveness.

AGOA encourages them to realize their potential to use opportunities offered by AGOA. Furthermore, it assists Ethiopian endeavors to meet market requirements, i.e. product development, manufacturing process improvements etc.

In October 2000, Ethiopia was designated as one of the 35 sub-Saharan African countries eligible to receive AGOA benefits. Addis said that the country has earned 5.1 million dollars and has increased trade exchange from 300 to 400. It ranked 19 from the 37 African countries. This indicates, according to Addis, that Ethiopia is yet to take full and significant advantage of AGOA because it doesn't have a strategy in place to capitalize on AGOA's benefits.

The industry is a significant employer and particularly in the garment industry has a large potential for expanding employment opportunities. The industry has strong vertical linkages that have the potential to increase the development of agriculture as well as other industries and services.

Moreover, priority must be given to the textile and garment industry because the country has the necessary agro-climatic conditions to produce cotton required as a raw material for the textile industry. Besides, cotton is grown on rain-fed as well as irrigated farms that are favorable for the country to produce significantly.

Eligible enterprises can't take full advantage of AGOA because they lack information on market opportunities in USA, have low industrial capacity and base, and also have relatively low skilled and trained labor force. In addition to this, they lack proper production management skills and face a lot of bureaucratic challenges in order to benefit from the various government incentives, such as the different lines of credit.

The main reasons behind this low performance might be lack of specialized and experienced manpower, lack of management and entrepreneurial skills, inability to penetrate new markets and compete with imported products.

The quality problem is due to low quality manufactured goods and intermediaries are manifold, and extended vertically through the supply chain from inadequate raw materials to poor finishing.

The major problems responsible for the deteriorating condition of Garment Industries are mismanagement, financial constraints, impediments posed by the contraband trade and society of spare parts. Therefore creating capacity to enable the industry to be competitive in both local and export markets is important.

For the future, Ethiopia is fortunate in that it has the potential to provide the basic production factors to the textile sector. Firstly, the sector is highly dependent on cotton and sufficient quantities of this raw material are being produced in Ethiopia. However, the quality leaves much to be desired. Secondly, the sector is labor intensive and the country has a relatively large labor force, which makes it straightforward to achieve.

“ Latest AGOA Trade Data currently available on

Click here to view a sector profile of Ethiopia’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.

Other regularly updated trade statistics on include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.

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