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The rise of Ethiopia as the next textile haven

"Ethiopia, the drought-afflicted, landlocked country of 100 million on the Horn of Africa is transforming itself into the lowest rung on the supply chain that pours out fast fashion and five-for-$12.99 tube socks. It is luring companies by tax incentives, state-of-the-art infrastructural investments, and ultracheap labour. Western world who was once outsourcing production to, particularly China and Sri Lanka, are now ramping up production here for Guess, Levi’s, H&M, and other labels. It’s a win-win scenario for both – industrialists as well as the government."

THE RISE OF ETHIOPIA

Ethiopia, the drought-afflicted, landlocked country of 100 million on the Horn of Africa is transforming itself into the lowest rung on the supply chain that pours out fast fashion and five-for-$12.99 tube socks. It is luring companies by tax incentives, state-of-the-art infrastructural investments, and ultracheap labour. Western world who was once outsourcing production to, particularly China and Sri Lanka, are now ramping up production here for Guess, Levi’s, H&M, and other labels. It’s a win-win scenario for both – industrialists as well as the government. The recent inauguration of the Hawassa Industrial Park further intensified its positioning. Since 2014, Ethiopia has opened four giant, publicly owned industrial parks; it plans eight more by 2020.

Emerging strong supplier to brands

Hawassa Industrial Park

The industrialists who set up shop here are exempt from income tax for their first five years of business and absolved from duties or taxes on the import of capital goods and construction supplies. Ethiopia can offer such subsidies because it gets lots and lots of money from China: $10.7 billion in loans from 2010 to 2015, according to the China-Africa Research Initiative at the Johns Hopkins University School of Advanced International Studies. Right now, most of the money is being spent on lucrative contracts for Chinese companies that, with help from Ethiopian labor, are building dams, roads, and cellular networks. This infrastructure, the Ethiopian Government says, will allow the country to join the global middle class. Belachew Mekuria, Ethiopian Investment Commission, stated that the plan is to create a total of 2 million jobs in manufacturing by the end of 2025.

Raghav Pattar, VP, Indochine International, says barely six months since the Hawassa Industrial Park opened, and already he has 1,400 locals at work. Pattar is planning to employ 20,000 Ethiopians by 2019. Twenty-four months ago, the land on which the factory is developed was farm fields. Which country can change in 24 months, Pattar asks. He feels, the government is determined towards enhancing industrialisation. Workers toiled 24 hours, day and night, to build the place. And there is no corruption. Hawassa Industrial Park did come up quite fast, thanks to a state-owned Chinese construction company that banged out 56 identical hangar-size, red-and-gray metal sheds devoted to textile production in nine months, for $250 million, according to the Ethiopian Investment Commission. Belay Hailemichael, park manager, helps companies in getting import & export licenses and executive visas and processes prospective workers.

 
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