TRALAC - Trade Law Centre

Ethiopia: Textile turnaround spins in $9.7m from exports

Tuesday, 26 August 2008

Source: Addis Fortune

For Nazareth Garment Factory, located in Adama town 100Km east of Addis Abeba, the just ended Ethiopian fiscal year [2007/08] has been a period of recovery and optimism. The factory managed to export 4,000 pieces of uniforms to the U.S. based company, Fair Glory, thus generating a monthly revenue of 100,000 dollars.

This means quite a lot for a company that had been wallowing in a debt of 6.3 million Br, when it was sold to a private company two years ago. One of four bidders, SBACo paid 8.5 million Br to the government in order to acquire the property first established in 1989, in a joint venture between the now defunct National Textiles Corporation and Daewoo, a South Korean based company.

Nazareth Garment was a company that was bleeding from a series of losses, unable to pay the salary of its 800 employees. Conceding the management to a Chinese group of managers did little to help the government change the loss. Taking over the management in March 2006, SBACo took it on a different path.

“We’ve made a turnaround, working almost round the clock,” Kassaye Mekuria (Eng), major shareholder and general manager of SBACo, told Fortune.

This turnaround is bigger than what any individual company experienced last year. The textile sector, with 50 companies under its wing, had long remained a disappointment to trade officials for its under-target performance. Yet currently, it has achieved a remarkable growth of 160pc, exporting products to the United States market, under the American trade opportunity of African Growth and Opportunity Act (AGOA).

AGOA is a legislation passed by the US Congress in 2000, in a bid to help countries in Sub-Saharan Africa get quota and duty-free access to the vast American market. It is also a law that empowers the president of the United States to evaluate each country on an annual basis as to whether or not they should be eligible for this preferential and non-reciprocal trade agreement, rating them by taking into account their human rights record and the level of openness in their economic policies.

In 2008, there are 39 African countries eligible for this trade opportunity, while Ethiopia is among the countries that have been on the list since the inception of the AGOA, although its performance has been one of the lowest.

Nevertheless, this has changed dramatically over the past six months. The exports by companies such as SBACo helped the country generate 9.7 million dollars between January to June 2008, an amount exceeding its performance for the whole year of 2007, by 800,000 dollars. This also represents a growth of 89pc in the total export of Ethiopia to the United States made during the same period, which was around 70 million dollars. This figure comprises an increase in export of bouquet filler (115pc), live plants (122pc), and fruits (1,495pc), disclosed a press statement issued last week by the United States Embassy in Addis.

This growth of export to the United States is phenomenal particularly when compared to the 25pc annual growth of the national export, which reached 1.5 billion dollars last year.

“We see great potential for Ethiopia to increase exports to the U.S. under AGOA in general and in the textile and garments sector in particular,” Addis Alemayehu, chief-of-party of USAID’s VEGA Ethiopia AGOA+Programme, said. “With many new investments in the pipeline, our programme has focused its support on the Ethiopian Textile and Garments Manufacturers Association (ETGAMA) in order to continue this robust winning streak.”

The United States Agency for International Development (USAID) funds a trade promotion plan under the name VEGA Ethiopia AGOA+ Programme; the programme, which provides targeted intervention to support Ethiopian exporters gain a foothold in the U.S. market, has been active for three years now.

“It is a partnership that is poised to deliver real results for the country as a whole,” Endalkachew Sime, secretary general of ETGAMA, said. “The support we have been receiving from the programme has been invaluable in our efforts to realize the promise which the textile and garments sector holds in becoming a major foreign currency earner for Ethiopia.”

With the help of the programme, the association has developed its website - www.etgama.org - that is designed to promote Ethiopian textile products and garment manufacturers. The support also helped the association prepare to represent Ethiopia at the Magic International Apparel Trade Show, to be hosted in Las Vegas, Nevada from August 25-27, 2008.

This could be the type of promotions that would help SBACo realise what its general manager is hoping to achieve in the coming fiscal year.

“We’re planning to double our export to the company that buys our uniforms,” Kassaye told Fortune.



“ Latest AGOA Trade Data currently available on AGOA.info


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 AGOA.info 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.