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ETHIOPIA: The Next Hub For Apparel Sourcing?

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Page 1: ETHIOPIA: The Next Hub For Apparel Sourcing?
Page 2: ETHIOPIA: The Next Hub For Apparel Sourcing?

Country Overview

• Ethiopia is country with a diverse mixture of many ethnicities and linguistic backgrounds. It is the second most populated country in the Sub-Saharan Africa region and one of the fastest growing economies globally. Despite the global economic crisis, Ethiopian economy recorded an annual economic growth of around 10% over the past few years, owing to their infrastructure and mining projects.

• The value of exports and imports together form 37% of the country’s GDP. The Ethiopian economy is a transitioning economy dominated by a large public sector. Ethiopian government is taking steps to move towards a market economy by privatizing many state-owned businesses. Being a predominantly agricultural country, country’s more than 80% population

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Investment Environment

• Political stability: The country has a stable political environment and the government is also actively incentivizing private sector investments. Under the “Growth and Transformation Plan”, the government is offering attractive tax holidays and duty-free packages for investments.

• Labor Cost and Availability: 40% of the country’s huge population (around 85 million) is below the age of 15, which offers a rich labor market. Moreover, Ethiopia has one of the lowest minimum wages in Africa. Also, the standards of spoken and written English are good in the country. Ethiopian wages for garment workers is below $60 monthly. The work-permit costs for foreign workers are also 1/10th of what its neighbor Kenya offers.

• Large market size: Ethiopia’s domestic market is huge, it being the second most populous Sub-Saharan country. Ethiopia also enjoys the geographic advantage to being located on the crossroads between Africa, Middle East and Asia which gives it a preferred access to many big international markets.

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Other potential sub-Saharan African Countries as Apparel Sourcing Hub

• As per UN projections, the sub-Saharan African region will see the highest growth in the working-population over the next 20 years. So, by 2035, the regions working population is expected to be as big as 900 million, which is around what China has today.

• Within the Sub-Saharan African countries Ethiopia, Kenya, Uganda and Tanzania has garnered the highest interest of apparel buyers. Governments in these countries are taking vigorous steps towards development of their domestic textile and apparel countries. Amongst these, where on one side, Ethiopia offers cost advantages, whereas, Kenya boasts its higher productivity.

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