Indian, US firms eye investments in Ethiopia

In two separate instances, textile and apparel delegations from the US and India visited Ethiopia to scout for

investment opportunities. While the US delegation was busy investigating industrial zones in different parts of the country, the India-based ShriVallabh Pittie (SVP) Group already decided on setting up a spinning mill at the industrial zone in Kombolcha, an investment worth 550 million US-dollars according to the Ethiopian News Agency.

The US delegation consisted of 40 investors, among them representatives from VF Corporation and Phillips-Van Heusen (PVH), including Mark Green, PVH’s vice president. The delegation also met the Ethiopian president Mulatu Teshome in Addis Ababa last week.

Speaking for the whole delegation, Green confirmed the interest of the US companies in investing in the Ethiopian textile and garment sector. He stressed the country’s favourable investment policy, availability of vast human resources and reliable power supply as major attractions for investors and lauded the establishment of industrial zones in different parts of the country as a sign of determination by the Ethiopian government for achieving structural change in industrial manufacturing.

President Teshome assured that the Ethiopian Government would encourage investments in the industrial sector and also pointed to the country’s cotton cultivation on more than three million hectares of land as a benefit for textile and garment manufacturers. Last but not least, the African Growth and Opportunities Act (AGOA) allows investors easy access to the US market.

Precisely these advantages – Ethiopia’s huge potential for raw cotton, the availability of labor, power and water, fast economic growth and access to the international market – is why the SVP Group chose Ethiopia for setting up their textile mill, which should be fully operational by next year. Kombolcha was chosen because of its proximity to the cotton growing regions of Metema and Humera.

According to SVP’s chairman Vinod Kumar Pittie, the new spinning mill would have a capacity to produce about 280 tons of cotton yarn per day and would create jobs for about 13,000 Ethiopians. The manufactured yarn would be produced mainly for the export market, especially the US, Germany, Italy, Sweden and Turkey.

For the current fiscal year 2013-14, the government targets export revenues of 500 million US dollars, which seems ambitious given last year’s exports of 99 million US dollars and first quarter exports reaching 29 million US dollars. However, in the first quarter, only 58 of the country’s 110 textile companies were operational. Industry experts expect production capacity to go up during the rest of the year to come closer to the target.