Turkish textile group, Tesco and H&M invest in Ethiopia

Ayka Addis Textile & Investment Group, a subsidiary of Istanbul-based Ayka Textile, is planning to invest one billion Ethiopian birr (31 million pounds) in an expansion of its current RMG production unit in Alem Gena, 19 kilometers away from Addis Ababa. The expansion will create an additional 13,000 jobs,

thus tripling employment, and take production capacity up to 100 percent. The company is also expecting exports to triple to 150 million US dollars from currently 56 million US dollars (2012/13).

“The expansion project will increase our present garment production capacity by 50 perccent, when the first

phase of expansion is finalised and by 100 percent when the second phase of expansion is finalised in 14 months. Once finalised, the project will create job opportunities for 13,000 people,” confirmed Ayka CEO Amare Teklemariam when speaking to Fortune.

Expansion to take place in two phases

The expansion will take place in two phases and the first one will begin this month itself. Ayka has already received 3.6 hectare of land from the Kolfe Keranio District for its first phase and is in the final stages of leasing an extra 2.6 hectare according to Teklemariam. Of the total project cost of 962.5 million birr (29.9 million pounds), 221.3 million birr (6.88 million pounds) will be spent on building and civil work, to be carried out by Ayka’s own construction wing; 623.2 million birr (19.37 million pounds) on machinery and equipment. The remainder will be used as working capital, so Teklemariam.

In view of the global competition, ready-made garment manufacturer and exporter Ayka Textile, founded in 1988, decided on Ethiopia for its vertical expansion and made an initial investment of 140 million US dollars in 2010 when the Ayka Addis Group was founded.

The company currently employs 7,500 permanent and 100 temporary workers in five plants in Alem Gena, which operate at 80 to 90 percent capacity and have the capacity to spin 40 tons of cotton, knit 38 tons of thread, dye 50 tons of cloth and produce 80,000 pieces of garments. The company exports its garments mainly to Germany.

According to the Ethiopian Textile Industries Development Institute (ETIDI), ten new additional factories with a combined production capacity of 100 tons a day are expected to start production this fiscal year (2013/14) and an additional three new projects in the next fiscal year (2014/15).

Tesco and H&M sponsor training for Ethiopian garment workers

Industry giants Tesco and H&M are currently sponsoring training courses for Ethiopian garment and textile workers, a move that shows Ethiopia’s growing importance as a sourcing base for international brands and retailers.

"They are here transferring knowledge and skill to many of our textile and garment companies," confirmed Bantihun Gessesse, communications director at ETIDI. Having learned their lesson in Bangladesh and other Asian garment-producing nations, the companies also invest in safety from day one.

"The business objective is first to improve quality and safety and finally make clothes in Ethiopia. They are now engaged in training on employee and working hour management, quality of products, growth in productivity, as well as environmental protection," said Gessesse. He confirmed the growing demand for Ethiopian textiles and garments in Western markets, citing Germany as an example with 47 percent of the national production being exported to Germany in 2013. Over the last eight months, Ethiopia has earned 75.28 million US dollars from textile export and is aiming for 317 million US dollars for the whole year.

Photos: Ayka Textile