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Ethiopia Textile Industry - Outlook
Contribution to Ethiopian Economy
Industry Outlook
The Ethiopian textile – and apparel industry has huge potential and has grown an
average of 51% over the last 5-6 years. Half of Ethiopian textile- and apparel
companies are SME’s of 500-1000 workers that are able to handle small run
orders for Dutch and European mid segmented fashion retailers.
With 70% of apparel products being exported to the European Union, this market
has preference for the Ethiopian government leading to an investment friendly
environment with a large variety of incentive schemes.
Ethiopia Textile Industry - Outlook
Trade Data
•Government incentives
•Strength of supply chain
•Skilled and trained work-force
•Domestic and international demand
Growing FDI and demand from domestic and international market are the key factors in driving growth for the Ethiopian Textiles sector. Besides, Ethiopia has various government
incentives for manufacturing sector which attracts investments in the textile industry. All the factors mentioned above combines with strong supply chain, low wages and well trained
Human capital creates an unrivalled offering for textile industry.
Ethiopia Textile Industry - Incentives
Incentives for Manufacturing
The Ethiopian tax law allows for a duty free importation of raw materials and
machinery, equipment for manufacturers.
Custom duty exemption (100% exemption from payment of custom duty imported
capital good and 15% on imported spare parts)
Exemption from income tax (for new investment and those investors establish in
regional areas like Gambella, Benishangul/Gumuz, Afar etc.)
The Industrial Parks Development Corporation (IPDC) Board has set a new plan for
local investors in Hawassa Park in 2016. The plan includes exemption of 30%
income tax, 10% dividend tax if the companies use their profits for expansion
purposes, and wage tax on foreign trainers hired by the local companies for 10
years. Investors will benefit from tax free train transportation of products to
Djibouti and permission to use 10% of their export earnings.
Ethiopia Textile Industry – Supply Chain
Local Manufacturing Hubs
Ethiopia has a well-established supply chain and ancillary
production network, the country has several companies that
are focussed in manufacturing and producing different types
of apparels, packaging, exporting, etc along the textile supply
chain.
Maa Garment & Textile Factory, which has 1,488 workers and is a supplier to
companies like H&M, Asos, George at Asda, Calzedonia, Primark and Tesco, plans to
increase its knit capacity from 9.6 tons to 20 tons per day and to build a new plant
for woven items.
DBL Group from Bangladesh, the vertically integrated knit garments manufacturer
and exporter with an annual turnover of more than US$250m, is investing some
US$100m in a garment, knitting and dyeing factory in Mekele.
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