Ethiopia is building up its potential to become the next textile and apparel supply base for the world. Ethiopia may be able to develop the sector more quickly than other countries have in the past because of technological advancement and lesson learning. Despite challenges like an erratic energy supply, cumbersome customs procedures, lack of backward linkages and insufficient skills, Ethiopia hopes to be one of the next textile manufacturing hubs of the world with its wide and young labor pool, growing market potential, advantageous trade agreements, and strategic position.
The country has set up an institute to strengthen the overall value chain and created a conducive investment climate for the sector. The country wants investment that generates inclusive growth without generating irreversible destruction to the environment and resulting in unsustainable development. A handbook guides investors on how to incorporate sustainable practices into their investment journey. It gives concrete guidance on which social and environmental regulations investors need to comply with, where to seek support and which additional sustainability measures can be implemented.
Chinese investment in Ethiopia makes up 60 per cent of the overall FDI in the country. Chinese investment has contributed to the growth of the sector through knowledge and technology transfer, closing local companies’ capital gap and opening up new markets.
