Welcome

to

Ethiopian Textile Industry Development Institute

TEXTILE INDUSTRY

DEVELOPMENT IN ETHIOPIA

An Overview of Facts and Opportunities

Ethiopian Textile Industry Development Institute (ETIDI)

October, 2014

The Beginning of Modernizing the Sector The first integrated mill was established in 1939 in Dire Dawa

Town by the name Dire Dawa Textile Factory, which marked

the beginning of textile industrialization.

A brief History

Textile sub-sector has long history of tradition in Ethiopian

beginning from the old times.

•People make clothes from the cotton supplied by small holder farmers

•This traditional cottage industry is inherited and continues up to now

•Making an important contribution to textile requirements.

CURRENT STATUS OF MEDIUM & LARGE LEVEL

TEXTILE INDUSTRIES

o Textile Products contributed 1.6% to the GDP (nominal) and accounted 12.4% of the Industrial output by value terms in 2010.

Annual Production capacity of Textile and Apparel Industry

102 thousands tons of yarn

207 million meter woven fabric

50 million kg of knitted fabric

63 million pcs of knitted garment and

28 million pcs of woven garment

Employed more than 48,000 workers

For the last eight years, the export performance of the sector has show an increasing trend, on average 50% per annum.

The country gains USD 111.3 Million in the last fiscal year

Number of Operational Factories as Per to the Value Chain

S. No.

Area of Operation

Number of Factories

1 Ginning 18

2 Integrated Textile Mills 20

3 Spinning 5

4 Weaving and/or Knitting 12

5 Handloom (medium size) 6

6 Dyeing and Printing 3

7 Blanket Factory 6

8 Garment Factory(knitted/woven)

60

Total 130

In the country now a days from 10s to 20s on open end

and up to 60s count ring frame have been produced with

the available technology

Total Spindle available Installed

capacity(Ton/day) Ring Frame Open End

288480 14480 260

Type of product, product range and production capacity

The Existing Technology in Spinning

Manufacturers Machines

TRUTZSCHLER Blow Room, Card, Draw Frame

ZINSER Roving and Ring frame

SCHLAFHORST Open end and winding

ORLINKON

SCHLAFHORST

a combination of zinser and

schlafhorst for roving ring open

end and winding

MURATEC Automatic Winding

RIETER Blow room up to ring and open

end

LUWA Humidification Plant

MARZOLIE From Carding up to Ring Frame

Total

Type Of Machine Make Available Number

Of Machines

Shuttle loom Hutenslay 24

Rapier weaving Somet, Picanol,dornier,

vamatex, Versamat

1,199

Air jet weaving Picanol, Dornier 211

Water jet Tsuelakoma 190

Projectile weaving Sulzer 24

Handloom ethiopia 143

Total 1791

The Existing Technology in Weaving

Type Of Machine Make Available Number

Of Machines

Single Jersey

knitting machine

Pailung, Pilotelli, Mayer,

Monarch, Weliknit, Terrot,

Orizio, Protti

175

Double jersey

knitting machine

Fukuham, Monarch, Mayer,

Terrot, Pi-lung, Norah

65

Flat bed knitting

machine

Shima-sika, Protti, Norah

28

Socks knitting

machine

536

Jacquard knitting

machine

Pailung 9

Warp knitting Mayer & ci 6

Total 813

The Existing Technology in Knitting

Type Of Machine Make Year Of Manufacture

Singing machine Ostoffsenge

Reggiani

1982-2004

Scouring-Bleaching

machine

Textim Gollera

1972-1983

Mercerizing machine Textima Gollera

Comerio

1964-1982

Continuous washing machine

Erbateck Gollera

1972-2009

Yarn dyeing machine Dilmenler

Longclose

Obeim

Galvani

Obermayer

1972-2009

The Existing Technology in Finishing

Type Of Machine Make Year Of

Manufacture

Fabric Dyeing machine Thies

Fongs

Beneks

Brazoli

Dilmenler

Sclavo

Benninger

Henerikson

Monfort

1959-2009

Drying machine Longlose

Galvani

Fongs

Omez

Goller

Unitechsantaluzia

1965-1997

The Existing Technology in Finishing

Type Of Machine Make Year Of

Manufacture

Stenter Bruckner

Monforts

Textima

1969-2004

Calendaring machine

Poltecks

Monforts

Comerioercole

1969-2008

Sanforizing/compactingmachine

Bruckner

Santeks

Tube-tex

1975-1998

Decatizing machine Speratto SPA

Beilla Shrunk

1987-2004

The Existing Technology in Finishing

Type Of Machine Make Year Of

Manufacture

Raising m/c Lafer 1987-2004

Shearing m/c Lafer 1987-2004

Printing machine Reggiani

Rijiecon

1970-2009

Curing machine salwade 1989-2009

Quality control machine Guvencelik

Simat

1964-2004

Role winding machine Menschner

Textima

1962-2007

The Existing Technology in Finishing

N

o

Name of

Company

Investor’s

Citizenship

Product

Type Status

1 Karl International India Garment Rented Shade in Bole Lemi Industry Zone and will start operation

soon

2 Gulf Textile Pakistan Garment Rented Shade in Bole Lemi Industry Zone and will start

operation soon

3 Velocity India Garment Undergoing process to start project in Mekele

4 Experience

Clothing

Pakistan Garment Undergoing process to get land in Addis Ababa

5 Dima Faiweiwei Ethio-China Spinning Operational

6 Shin TS Com Korea Garment Rented Shades in Bole Lemi Phase 2

7 Jay Jay mills India Garment Rented Shades in Bole Lemi Phase 2

8 SVP India Spinning Finalizing bank process and will soon start construction

9 Green Valley India Spinning Will soon start construction

10 New wide Garment Taiwan Garment Rented Shades in Bole Lemi Phase 2

11 Shin TS Korea Garment Rented Shades in Bole Lemi Phase 2

12 Atraco Garment Rented Shades in Bole Lemi Phase 2

13 Myungsung China Garment Rented Shades in Bole Lemi Phase 2

14 Akper Turkey Integrated Taken land in Ejere, Oromia and starting bank process

Projects Under Investment Process

OPPORTUNITIES

Textile Industry Considered as number one priority sector by the Government‘s Industrial Development Strategy.

Availability of more than 3.2 million hectare of land and suitable climate for cotton cultivation, but only some 6.9 % utilized so far.

Huge potential for organic cotton cultivation.

Ethiopia, known as the water tower of Africa, Provides one of the Cheapest environmentally friendly hydroelectric power supplies in the world (5 US cents/per kwh).

Low cost and easily trainable skilled labor force (wages 40USD / a month), less than Africa’s average.

OPPORTUNITIES CON’T

• Skilled labor in the sector is increasing rapidly as a result of fast growing

education and training institutions in Textile Technology; two institutes, a

couple of textile Engineering departments in different Universities and a lot

of hundreds of TVET Schools and private training institutions.

• Quota and duty free market access to the US and EU as well as COMESA

markets. In addition Ethiopia signed with more than 16 bilateral trade

agreement, which include China, India, Turkey and Russia.

• Ethiopia offers one of the largest domestic markets in Africa, given its

population size and rapid economic growth.

…OPPORTUNITIES CON’T

• Provision of infrastructure and service furnished (specialized) economic

zones. For e.g Kombolcha Textile Cluster, Dire Dawa Industrial Zone, Hawassa Industrial Zone, Gondar Industrial Zone, Mekele Industrial Zone, Jimma Industrial Zone and Addis Ababa Industrial Zone (s).

• Easy access to land on a lease fee ranging from 0 to 3USD/m2 in regional states for a lease period of 60-80 years depending on the specific investment location.

• English language is widely used in the business sector as it is the medium of instruction in secondary and tertiary schools of the country.

INCENTIVES

Aim: To encourage investment and promote the inflow of foreign capital and technology into Ethiopia (both domestic and foreign).

1. Investment Incentives

Tax holidays:-

100% Duty free importation of new or used machineries, equipments,

construction materials and vehicles (used as capital goods for the investment) as far as it is not producible locally in Ethiopia.

Duty free importation of spare part of 100% of capital investment for the first 5 years of operation.

Ownership Transfer of invested capital goods to third party enjoying similar privilege.

It is possible to hire international expatriates free from income tax as far as they stay for no more than two years.

Reconciliation of VAT for materials purchased locally during the project period is possible if declared in 6 months time.

2. Financial Incentives

Development Bank of Ethiopia (DBE) extends a 70% loan against 30% equity contribution in cash by the investor for Brand New Establishments.

DBE’s extends loan with an interest rate of 8.5% and grace period of 5

years. Co-financing, loan buyout, working capital and international loan

repayments out of Ethiopia are some of the services DBE and many of the domestic banks extend to the private sector.

… INCENTIVES CON’T

Financial Incentives:-

A one year non-collateral working capital loan scheme called Export Guarantee Scheme with 1% interest is allocated in DBE to help exporters manage their cash flow constraints. Long term non-collateral loans are also available in many banks on different loan modalities depending on export performances.

Remittance of profit and dividends out of Ethiopia is possible.

State owned logistics enterprises (Ethiopian Shipping Line, Ethiopian Airline, Dry Port Services and Maritime) provide their services at Break-Even Point(BEP).

Training of operators is given free of fee.

Above all, Ethiopia has relatively regionally stable socio-political and economic system & also Ethiopian labor law is in conformity with ILO standards.

… INCENTIVES CON’T

3. Operation incentives

Tax holidays:-

Income Tax Holiday depending on export performance.

Exemptions of Customs Tax and Duties on raw material through a set of incentive schemes called duty draw back, voucher and bonded manufacturing warehouse.

Exemption from customs duty of locally purchased raw materials on fast refund bases.

ETHIOPIAN TEXTILE INDUSTRY DEVELOPMENT INSTITUTE (ETIDI)

The Institute That Unlocks the Future of

Ethiopian Textile Industry

THE ROLE OF ETIDI

Objective:- Enabling the Ethiopian textile industry to be

competent in the global market through investment

support, production capacity building and marketing

support.

Mission :- Enabling the Ethiopian textile industry

competent in the global market by providing sustained

investment expansion, consultancy, training research and

development laboratory and marketing support and

services.

Vision :- We aspire to be a world-class institute that

enables the Ethiopian textile industry competitive in the

global market.

ETIDI is organized along the textile value Chain

SUPPORTS AND SERVICES CON’T

Capacity building(production) Training, benchmark implementation, laboratory testing and

inspection, R & D, Certification of quality standards etc.

Technical consultancy and supports by availing local and foreign experts

Support in quality assurance and certification

Market supports and Services Marketing capacity building ( training and consultation)

Logistics facilitation (transport, customs, finance, port, utility etc) value chain- input and output linkages.

Inputs facilitation (Sourcing and Supply chain)

Facilitate input supply linkage with local raw material producers and market linkage with foreign buyers

FACILITIES OF ETIDI

Fully equipped training facilities

Model spinning factory (under progress)

Model weaving and knitting factory (under progress)

Finishing facilities (under progress)

Design and Garment training classes and facilities

Modern and certified chemical and physical laboratories

Fully equipped library.

Since current machines are mostly

fitted with sophisticated electronic

devices not maintenance friendly

Problem of availability service center

Availability spare part

MAIN CHALLENGES