ETHIOPIATEXTILE AND CLOTHING VALUE CHAIN ROADMAP2016-2020
TEXTILE & CLOTHING VALUE CHAIN ROADMAP OF ETHIOPIA
TEXTILE & CLOTHING VALUE CHAIN ROADMAP OF ETHIOPIA
This value chain roadmap was developed on the basis of the process, methodology and technical assistance of the International Trade Centre ( ITC ) within the framework of its Trade Development Strategy programme.
ITC is the joint agency of the World Trade Organization and the United Nations. As part of the ITC mandate of fostering sustainable development through increased trade opportunities, the Export Strategy section offers a suite of trade-related strategy solutions to maximize the de-velopment payoffs from trade. ITC-facilitated trade development strategies and roadmaps are oriented to the trade objectives of a country or region and can be tailored to high-level economic goals, specific development targets or particular sectors, allowing policymakers to choose their preferred level of engagement.
The views expressed herein do not reflect the official opinion of ITC. Mention of firms, products and product brands does not imply the endorsement of ITC. This document has not been formally edited by ITC.
The International Trade Centre ( ITC )
Street address : ITC, 54-56, rue de Montbrillant, 1202 Geneva, SwitzerlandPostal address : ITC Palais des Nations 1211 Geneva, SwitzerlandTelephone : + 41- 22 730 0111Postal address : ITC, Palais des Nations, 1211 Geneva, SwitzerlandEmail : [email protected] : http :// www.intracen.org
Layout: Jesús Alés – www.sputnix.es
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ACKNOWLEDGMENTS
This value chain roadmap was elaborated as a component of the ITC Supporting Indian Trade and Investment in Africa ( SITA ) project, a south-south trade and in-vestment initiative that aims to improve the competitiveness of select value chains through the provision of partnerships by institutions and businesses from India. SITA is funded by the United Kingdom Department for International Development ( DFID ).
The formulation of the value chain roadmap was led by the Ethiopian Textile Industry Development Institute ( ETIDI ) and the Ethiopian Textile and Garment Manufacturers Association ( ETGAMA ) with the technical assistance of ITC. This document repre-sents the ambitions of the private and public sector stakeholders for the develop-ment of the sector. Stakeholders’ commitment and comprehensive collaboration have helped build consensus around a common vision that reflects the realities and limitations of the private sector, as well as of policymakers and trade-related institutions.
The document benefited particularly from the inputs and guidance provided by the members of the sector team.
Name Organization Position
Mr. Sileshi LemmaEthiopian Textile Development Institute Director General
Mr. Fassil TadesseEthiopian Textile and Garment Manufacturers Association President
Mr. Asefa AgaEthiopian Cotton Producers Ginners Exporters and Association General Secretary
Miss. Aberash Alemu South Region TVET Bureau Training Materials Supply Head
Mr. Goshu Negash Vitcon Plc General Manager
Mr. Mustefa Jemal Kombolcha Textile S.C General Manager
Mr. Addisu Fulli Welkite University Engineering College Dean
Addisu Ferede (Asst. Professor)
Ethiopian Institute of Textile and Fashion Technology Scientific Director
Mr. Eyob Beklele Desta Garment Plc General Manager
Mr. Mohammed Umer Novastar Garment Factory Plc General Manager
Mr. Kehase G/michel Federal TVET
Mr. Yared MesfinEthiopian Textile Development Institute
Cotton and Textile Marketing Directorate Director
Mr. Yitbarek TilahunEthiopian Textile Development Institute Ginning and Spinning Directorate Director
Technical support and guidance from ITC was rendered through Eric Buchot, Alexandra Golovko, Olivier Marty, Hanna Bucher, Varun Vaid, Robert Kafafian, Carla Vaca and Carlos Griffin. Assefa Yohannes and Genzeb Akele Zewdie both provided valuable support as national SITA coordinators.
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CONTENTS
EXECUTIVE SUMMARY XII
GLOBAL TRENDS 2025 – LIVING THROUGH A TRANSFORMATIVE PERIOD 17
THE ONLY CONSTANT IS CHANGE 17
TEXTILES AND APPAREL IN ETHIOPIA : AN INDUSTRY OF GREAT PROMISE 23
A SECTOR IN FULL BLOOM AND ON THE VERGE OF FULL VALUE CHAIN INTEGRATION 23
STRATEGIC ISSUES AND COMPETITIVE CONSTRAINTS 35
Supply side issues 37
Business environment issues 42
Market entry issues 45
Socio-economic and environment issues 46
STRATEGIC IMPLICATIONS FOR THE VALUE CHAIN ROADMAP 48
THE WAY FORWARD 49
THE STRATEGIC OBJECTIVES 51
LEVERAGING MARKET OPPORTUNITIES 53
INVESTMENT TARGETING FOR SUSTAINABLE EXPORT GROWTH 55
FUTURE VALUE CHAIN 58
I. Foreseen adjustments in the textile segment� 60
II. Greater value addition in the garment segment as well as market and product diversification� 61
III. Further development and integration of industrial zones� 61
IV. Enhanced support services, particularly in the areas of TVET, quality management, finance and logistics�62
MOVING TO ACTION 62
THE PLAN OF ACTION 65
REFERENCES 86
APPENDICES 89
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FIGURES
Figure 1 : Trend towards greater value addition 18
Figure 2 : Ethiopia’s T & C value chain 25
Figure 3 : Ginning outturn of selected African countries ( 2013 ) 26
Figure 4 : Cotton lint production in Ethiopia, 1940 / 41 to 2010 / 11 27
Figure 5 : Ethiopia’s T & C exports, 2001–2014 ( US $ thousands ) 33
Figure 6: Ethiopia’s trade in clothing products, 2001–2014 (US$ thousands) 33
Figure 7 : Ethiopia’s trade in textile products, 2001–2014 ( US $ thousands ) 34
Figure 8 : The way forward 49
Figure 9 : Projections of Ethiopia’s apparel export growth 50
Figure 10 : Ethiopia’s T & C future value chain 59
APPENDICESFigure 1 : Decomposition of Ethiopia’s export growth of garments and textiles, 2004–2013 96
Figure 2 : Probability of export survival, 2002–2014 96
Figure 3 : Contribution to Ethiopia’s clothing trade deficit, 2014 97
Figure 4 : Top importers of Ethiopian garments, 2001–2014 ( US $ thousands ) 97
Figure 5 : Contribution to Ethiopia’s textiles trade deficit ( 2014 ) 99
Figure 6 : Top importing markets for Ethiopian textiles, 2001–2014 ( US $ thousands ) 99
TABLES
Table 1 : Top exporters of clothing, 2003-2013 20
Table 2 : Top exporters of textiles, 2003-2013 20
Table 3 : Comparison of costs and competitive factors between Ethiopia and competitors 31
Table 4 : Ethiopia’s top 5 textile exports, 2009 and 2014 ( US $ thousands ) 35
Table 1 : Ethiopia’s top 10 exported garments, 2009–2014 ( US $ thousands ) 98
Table 2 : Top changes in market share by product 98
Table 3 : Ethiopia’s top 10 textile exports, 2009–2014 ( US $ thousands ) 100
APPENDICESTable 1 : Potential investors based in India 101
Table 2 : Potential prospects in target markets 102
Photo: Kara Newhouse, Textile Factory.
ACRONYMS
The following abbreviations are used :
ACTIF African Cotton and Textiles Industries FederationAGOA African Growth and Opportunity ActCAGR Compound Annual Growth RateCMT Cut, Make & TrimCOMESA Common Market for Eastern and Southern AfricaCSR Corporate Social ResponsibilityEAC East African CommunityECAE Ethiopian Conformity Assessment EnterpriseECPGEA Ethiopian Cotton Producers, Exporters and
Ginners AssociationEC–EQM Enterprise Competitiveness ( section of ITC ) –
Export Quality ManagementEC–SCM Enterprise Competitiveness ( section of ITC ) –
Supply Chain ManagementEIA Ethiopian Investment AgencyEIC Ethiopian Investment CommissionEIIDE Ethiopian Industrial Inputs Development EnterpriseENAO Ethiopian National Accreditation OfficeERCA Ethiopian Revenues and Customs AuthorityERP Enterprise Resource PlanningESA Ethiopian Standards AgencyETGAMA Ethiopian Textile and Garment Manufacturers
AssociationETIDI Ethiopian Textile Industry Development InstituteEU European UnionFDI Foreign Direct InvestmentFOB Free on BoardGTP Growth and Transformation PlanHR Human ResourceHS Harmonized SystemIAF International Accreditation ForumICAC International Cotton Advisory CommitteeICT Information and Communications TechnologyIIHT Indian Institute of Hardware TechnologyIL&FS Infrastructure Leasing and Financial Services
( India )ILAC International Laboratory Accreditation CooperationIPDC Industrial Parks Development CorporationISO International Organization for StandardizationIT Information TechnologyITC International Trade CentreMFA Multi-Fibre ArrangementMLA Multilateral Recognition Agreement
MLS–SCM Modular Learning System – Supply Chain Management
MoFED Ministry of Finance and Economic DevelopmentMoU Memorandum of UnderstandingMRA Mutual Recognition ArrangementMSME Micro, Small and Medium-Sized EnterpriseNID National Institute of Design ( India )NIFT National Institute of Fashion Technology ( India )NMI National Metrology Institute of EthiopiaOECD Organisation for Economic Co-operation and
DevelopmentPoA Plan of ActionPPP Public–Private PartnershipREACH Registration, Evaluation, Authorization
and Restriction of ChemicalsSADC Southern African Development CommunitySC Sector Competitiveness ( section of ITC )SITA Supporting Indian Trade and Investment
in AfricaSME Small and Medium-sized EnterpriseT & C Textile & ClothingTFPB Trade Facilitation and Policy for Business ( section
of ITC )TIS Trade Information Services ( section of ITC )TISI Trade and Investment Support InstitutionTNC Transnational CorporationTS TISI Strengthening ( section of ITC )TVET Technical and Vocational Education
and TrainingUAE United Arab EmiratesUNIDO United Nations Industrial Development
OrganizationWTO World Trade Organization
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FOREWORD
MR. SILESHI LEMMA DIRECTOR GENERAL
ETHIOPIAN TEXTILE INDUSTRY DEVELOPMENT INSTITUTE
Ethiopia is the second largest popu-list country in Africa with over 95 million people and is known as the water tower of Africa, which provides one of the best competi-
tive environmentally friendly hydro-electric power supplies in the world as
well. It is also a well recognized fact that Ethiopia is ranked at the second fastest growing economy in Sub Saharan Africa. It has registered an average 11 % annual GDP growth over the last decade. The coun-try has achieved an average annual export growth of 27.4 % over the last decade where the manufacturing Industry contributes 13 % to the GDP. The Industry has been growing on average annually 10.2 % for the same period.
The adopted Industrial Development policy of the Government of Ethiopia focuses on transforming the agricultural led economy of the country to industry based, and for that strategic sectors have already been selected and prioritized based up on the facts and findings of actual situation of the country and the global environment.
Textile Industry is considered as number one priority sector by the Government‘s Industrial Development Strategy. It is believed that the textile industry would play major role in the industry development strategy of the nation due to its advantages such as its labour intensiveness, ability to mobilize the masses up to the micro level, long chain characteristics of the sector which could pull many players along the value chain, linkage to the cotton agriculture for which Ethiopia has a big potential.
In order to improve utilizations of the potential of the sector, the government has formulated the Second Growth and Transformation Plan ( GTP II ) based on the experience we have accumulated from the first Growth and Transformation Plan ( GTP I ) in the last five years ( 2010-2014 ). The GTP II ( 2015-2019 ) is a plan that aims at obtaining 1 billion USD from the sector export at the end of 2019 and also going to serve as a spring-board to realize the vision of the nation to put the country in the first rank in light man-ufacturing in Africa and also among the top ten world exporters by the end of 2025.
On behalf of the Ethiopian government, the Ethiopian Textile Industry Development Institute and on my own, I am very much grateful to the technical assis-tance extended by SITA / ITC on the development of this Textile & Clothing Value Chain Roadmap, which was made possible by funding from UKAID / DFID. I therefore, call upon our regional and global devel-opmental partners from all over the globe to unlock their development finance and technical assistance needed to enable us to translate the roadmap in to concrete action.
Once again, please allow me to extend our appre-ciation and thank for both the private and public sector for their unreserved collective hard work put towards in the preparation of this document, which will undoubtedly enable the successful launch of yet another visible and concrete milestone in our long journey to achieve the II Growth and Transformation Plan of the sector.
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FOREWORD
MR. FASSIL TADDESSE PRESIDENT
ETHIOPIAN TEXTILE AND GARMENT MANUFACTURING ASSOCIATION
While the African economy is based on agriculture, the way forward lies in indus-trialization. There are three reasons for which the textile and clothing value chain will play a critical role in this process. First, the textile and clothing sector acts as a link between agriculture and industry: industry obtains its input from agriculture and vice versa, thereby facilitating the shift towards a market-oriented economy. Secondly, it creates massive employment, both directly and indirectly. Lastly, textile and clothing exports are an important source of hard currency, which is then used to buy technology for further development. However, such change does not simply come. There are three key players that must act in concert as facilitators:
i. The private sector must drive the economy, although it is in an infant stage in some developing countries.
ii. The government plays a critical role in creating a conducive business environ-ment and investing in infrastructure.
iii. The development partners support in the creation of a conducive market environment with incentives, until the weak private sector becomes competi-tive in efficiency and price.
Understanding this process, and having become an attractive location for inter-national investors, Ethiopia is moving forward with a clear strategic Roadmap for its Textile & Clothing sector. 60% of the country’s budget is being invested in infrastructure, and both the public and private sectors are working closely with investors to understand and meet their needs. As such, we expect the textile and clothing sector will play a key role in Ethiopia’s process of industrialization.
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EXECUTIVE SUMMARY
The goal of Ethiopia’s Textile and Clothing Value Chain Roadmap
The goal of Ethiopia’s Textile and Clothing ( T & C ) Value Chain Roadmap is to set the sector on the course of strategic development by addressing constraints in a comprehensive manner and defining concrete opportunities that can be real-ized through the specific steps detailed in its Plan of Action ( PoA ). Ethiopia’s current model has performed well, yielding strong economic and social returns. Even so, performance has fallen short of the sector’s targets and it has become clear that the industry must unite and evolve in order to leapfrog into higher growth and value addition.
The sector’s strategic orientation should follow a twofold approach. Firstly, Ethiopia can build on its current success and leverage its cost competitiveness to expand market diversification and penetration. Secondly, the sector can capture greater value by pursuing full value chain integration,
first by bridging the skill gap to increase productivity, espe-cially considering upcoming wage increases, and later by enhancing weak upstream capacities. The PoA responds to this vision by setting four strategic objectives to support its implementation.
1. Improve productivity and employment outcomes through skills development.
2. Strengthen the enabling environment to favour sector development.
3. Establish conditions to harness foreign direct investment ( FDI ) as an engine for growth in T & C.
4. Foster product and market development through the use of trade information.
5. Enable market penetration and product development through trade intelligence.
The global T & C sector has been in a constant state of change since the turn of the century, characterized by a continual evolution in the location of both the most significant producing and exporting countries and regions, and the main end markets. Demand surged in developing countries, production was consolidated in Asia, and new countries such as Viet Nam, Myanmar and Cambodia emerged as fast-growing exporters of T & C products. Buyers are looking to shift more activities to their suppliers ( while at the same time demanding larger volumes and quicker turna-round times ) ; consumers are pressuring the industry to adhere to CSR standards ; information and communications technology ( ICT ) is becoming critical to modern production and inventory management ; and man-made fibres have taken their place as the sector’s preferred material.
Ethiopia’s T & C sector has experienced a boom in export-led growth in recent years, and today the sector is characterized by strong value addition throughout the entire value chain from cotton to clothing, with high local processing of cotton lint into textile and apparel products. Ethiopia’s comparative advantages – namely its low labour cost, cheap and sustainable electricity, preferential market access, and relative proximity to important markets – have been complemented by reforms to the business environment that have reduced trade hurdles. In conjunction with attractive incentives for investors, the sector has engaged significant capital from abroad. Over the past few years exports have expanded rapidly, due in large part to the arrival of foreign investment.
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[ EXECUTIVE SUMMARY ]
Nevertheless, the sector has yet to realize its full potential : sales are heavily concentrated among a few product
categories of fairly low value addition, and market di-versification is limited. While larger companies have
succeeded in entering global value chains, small and medium-sized enterprises ( SMEs ) continue
to be relatively excluded from external trade, having experienced only a limited amount
of economic integration with larger market players. Despite the influx of FDI, much of the value chain remains underdeveloped, including accessories, materials, textiles and higher value added garment activi-ties. Productivity meanwhile continues to suffer as a result of limited skills in the workforce, weak management capacities and reliance on outdated equipment, among other issues. In addition, remaining problems in the business environment create unnec-essary cost burdens and delays.
This diagnosis lends itself to certain key considerations that the value
chain roadmap should tackle. In order to move forward, public and private
stakeholders must work together and build on the successes achieved thus far.
To this end, the continued stimulation of FDI will play a crucial role. The Government must
do more to effectively target investors and pro-mote development of underserved opportunities in
Ethiopia’s value chain. Skills development must also be a priority, particularly with a view towards increasing
productivity, quality and the capacity for value addition. Lastly, the Government must do more to remove the remaining
policy and business environment roadblocks to competitiveness.
This value chain roadmap was the result of extensive consultations with public and private sector stakeholders, leading to unprecedented levels of cooperation among sector operators. Key private sector stakeholders and leading institutions facilitated an exhaustive analysis of the sector. Market-led strategic orientations, pri-oritized by stakeholders and embedded into a detailed implementation plan, provide a clear road map that can be leveraged to address constraints to trade, maximize value addition and support regional integration. In addition, the inclusive approach ensured that all stakeholders were committed to the process and a core team of key representatives of the sector has been formalized to carry on the implementation.
The value chain roadmap provides Ethiopia with a detailed PoA to achieve growth in the sector within the next five-year period. The value chain roadmap is articulated around four strategic objectives.
Photo: ITC
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The full implementation of the value chain roadmap aims to deliver the following production, ex port-related and developmental targets by 2020 :
� More than 200 firms have acquired new equipment and related technical capacities
� Six hundred new production lines developed by Ethiopian firms in yarn, textile and apparel production
� Exports of textiles and garments to increase annually by 35 % to US $ 320 million � More than 45,000 new jobs in the T & C sector � All companies comply with international standards related to working conditions,
quality management and sustainability.
Photo: www.tidi.gov.et.
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THE VALUE CHAIN ROADMAP FOR THE NEXT FIVE YEARS
Photo: (CC BY-SA 2.0) flickr.com/photos/ustr, Ambassador Kirk tours the Almeda Textile and Apparel Factory on August 7, 2009 in Axum, Ethiopia.jpg
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GLOBAL TRENDS 2025 – LIVING THROUGH
A TRANSFORMATIVE PERIOD
THE ONLY CONSTANT IS CHANGE
While the global T & C industry has always been a fast-evolv-ing sector, the structure of the sector has been constantly redefined by the changes that have occurred in the past 15 years. These changes have been characterized by a con-tinual evolution in the location of both the most significant producing and exporting countries and regions, and the main end markets. While disjointed production was consoli-dated in Asia and China grew to dominate the market, new players including Viet Nam, Myanmar and Cambodia have recently emerged as some of the fastest-growing exporters of T & C products. Changing demographics and economic performance, meanwhile, have resulted in a proliferation of demand in new and fast-progressing markets such as South Africa, the Russian Federation, the United Arab Emirates ( UAE ), China and India.
One of the key drivers behind these transformations is the ever-changing policy environment ; while the disman-tling of the Multi-Fibre Arrangement ( MFA ) facilitated a consolidation of production in Asia, the introduction of the African Growth and Opportunity Act ( AGOA ) catalysed re-newed competitiveness in Africa. In turn, the Trans-Pacific Partnership will surely redefine the competitive landscape once again. Changes in the policy environment have been complemented by technological evolutions that have stimu-lated remarkable gains in productivity, and product diversity and quality, thereby allowing polyester and blended fabrics to take their place as preferred materials. Together with ad-vancements in logistics and supply chain management that allow for greater and more flexible speed to market, these technical improvements have contributed to the increasingly rapid rotation of collections.
For now, Western countries have retained many of the higher value added portions of the value chain, including research, design, marketing and financial services. More tangible activities, which are frequently labour-intensive, continue to be concentrated in developing markets. Yet even this has been subject to the pressures of change in recent years. Given the low profit margins in the manufacturing segment of the value chain, one of the few ways for retailers
to reduce costs, and for producers to add more value, is to shift more of the design and development work to the manu-facturing country. This has stimulated a shift in developing countries, where suppliers who were once engaged only in cut, make and trim ( CMT ) activities are being entrusted with larger portions of the value chain.
Large international retailers ( transnational companies ( TNCs ) have grown to dominate the T & C value chain. They have gained significant influence over the choice of pro-duction locations and enjoy considerable bargaining power. These companies, which are generally based in the United States of America, the European Union ( EU ) and Japan, purchase large quantities of goods. Following the elimina-tion of the MFA they have been consolidating production in fewer and fewer countries. Where they exist, foreign affiliates of TNCs often account for the majority of T & C exports from developing countries.
While acceptable price levels are a condition that poten-tial suppliers must meet, the world’s leading buyers consider a number of fast-evolving criteria to be key success fac-tors, including quality production and assurance ( product testing ) ; timely delivery ; competitive pricing ; product devel-opment capacities ; social compliance ( health and safety, workers’ rights, environment ) ; adequate distribution capaci-ties ; and vendor-managed inventory capacities.1
From a macro perspective, buyers often take care to mitigate the following risks : inflation, poor energy and wa-ter provision, wage increases, unstable currency exchange rates, weak rule of law, barriers to trade, political instability, weak intellectual property protection, difficult physical ac-cess to markets and unattractive credit environments.
This highlights the role of government in ensuring a sta-ble and attractive overall business environment.
1.– Price Waterhouse Coopers ( 2008 ). Global Sourcing : Shifting Strategies.
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Figure 1 : Trend towards greater value addition
Cut, Makeand Trim (CMT)
Assembly, payment base on a processing fee and fabric sourced and owned by the buyer.
The contractor is trusted with the whole manufacturing process (from sourcing fabric to delivering to the retail outlet (FOB).
Includes design and whole production of a garment and may include distribution to the final customer.
Coordinate supply chain, contract manufacturing or invest in production in foreign markets.
Post production capabilities, product dev., the focus is on branding, marketing, retailing and consumer research.
OriginalEquipmentManufacturing(OEM)
Original DesignManufacturing(ODM)
Full PackegeService Provider
Original BrandManufacturing(OBM)
Source : Based on Gereffi, G. and Frederick, S. ( 2010 ).2
2.– In : Gereffi, G. and Frederick, S. ( 2010 ). The Global Apparel Value Chain, Trade, and the Crisis : Challenges and Opportunities for Developing Countries. In Global Value Chains in a Postcrisis World : A Development Perspective, Cattaneo, O., Gereffi, G. and Staritz, C., eds. Washington, D.C. : World Bank, pp.157–208 ; and Staritz, Cornelia ( 2012 ). Apparel exports – still a path for industrial development? Dynamics in apparel global value chains and implications for low-income countries. Working Paper, No. 34. Austrian Foundation for Development Research.
More specific to the T & C sector, suppliers such as Ethiopia wishing to enter the global value chain must be able to adapt to the following trends and market requirements.3
Lean retailing
Retailers increasingly want to focus on sales, while trans-ferring all other supply chain activities to their suppliers. Retailers are also beginning to engage more directly with producers, removing the middlemen of the past. As such, they are requiring suppliers to act as ‘full package’ service providers. Suppliers are expected to provide more services than before, from the sourcing of materials to logistics and delivery. While the ability to provide such full package ser-vices requires integration and significant management skills, it does present an opportunity for low-cost manufacturers to capture greater value.
Speed to market
Fast fashion brands such as Zara have revolutionized supply chain management. Point-of-sale technologies now allow re-tailers to analyse trends. This analysis is then used to quickly produce and stock goods according to the latest market dynamics. This has resulted in fast turnover, where prod-ucts have short life spans and suppliers need the capacity to respond to variable orders. Upstream and downstream service providers ( and material suppliers ) must also support clothing manufacturers in their efforts to turn around and deliver finished products in such a short time frame.
3.– Information for Development Programme ( 2008 ). The Global Textile and Garments Industry : The Role of Information and Communication Technologies ( ICTs ) in Exploiting the Value Chain.
ICT
The growing role of ICT is a direct response to some of the other trends. Disaggregated production and fast fashion both require efficient and timely information sharing. ICT also allows suppliers to vertically integrate and provide full package services to lean retailers. Technologies such as computer-aided design are required for modern produc-tion. ICT can also aid communication between supplier and buyer, allowing for the automated checking of orders, stocks and prices. Enterprise resource planning integrates orders, sourcing, manufacturing, account handling and lo-gistics, thereby helping companies optimize operations. In addition, modern ICT tools can allow manufacturers to track units throughout the production line in real time, facilitating more effective monitoring.
Consumer pressures
Consumers have become increasingly concerned about the treatment of workers in the T & C sector. This has put pres-sure on the industry to begin adhering to Corporate Social Responsibility ( CSR ) programmes and codes of conduct. These schemes, which also cover suppliers and subcon-tractors, require that firms be audited in order to ensure compliance with various health, safety and environmental issues. While this results in higher costs, some United States and EU buyers have begun excluding suppliers that do not meet such criteria.
Man-made materials
The past decade has seen a marked shift away from natural fibres and towards man-made materials. In 2013 man-made fibres accounted for 70 % of fibre production worldwide,
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compared with just 55.5 %4 in 2007.5 Spurred in part by tech-nological advancements that allowed for enhanced produc-tivity, increased quality, lower costs and greater diversity, a turning point came with the financial crisis of 2008. At this time retailers turned to synthetic materials as a means of cutting costs in an effort to survive.6 The trend was re-inforced when cotton prices spiked considerably in 2011. Consumers meanwhile have also developed a preference for synthetic or blended materials. In light of these trends, it is of the utmost importance that Ethiopia expands its multi-fi-bre expertise, particularly given that Ethiopia enjoys a higher preferential margin for man-made fibres under AGOA. This will require improved sourcing practices or the development of a parallel chemical industry for the production of synthetic materials.
Another important trend is the increased volumes re-quired by retailers. Retailers are growing in size and they
4.– Food and Agriculture Organization of the United Nations and International Cotton Advisory Committee ( 2013 ). World Apparel Fiber Consumption Survey. Washington, D.C. : ICAC 5.– Leonie Barrie ( 2015 ). Man-made fibres climb to 70 % of total production. Just-Style, 14 January. Available from http : / / www.just-style.com / news / man-made-fibres-climb-to-70-of-total-production_id124084.aspx.6.– Alexandra Wexler ( 2014 ). Cotton’s crown threatened by man-made fibers. The Wall Street Journal, 25 April. Available from http : / / www.wsj.com / articles / SB10001424052702304049904579516282130809074.
require significant quantities of product. While these vol-umes used to be sourced from a variety of locations during the MFA era, retailers want to streamline their production by reducing the number of countries / suppliers they source from. Suppliers must therefore be able to meet buyer vol-ume requirements, either alone or in partnership through consolidation, if they are to enter some of the most attractive supply chains.
In light of these trends, Ethiopian stakeholders must build capacities in a strategic manner so that their enterprises are enabled to meet the rigorous demands of today’s buyers. Growth must be consumer-oriented and ICT integration will be crucial. To this end, efforts must be made to attract FDI to specific domains that require investment, technology and knowledge transfer, including online inventory management and Enterprise Resource Planning ( ERP ). While technical skills must be enhanced in order to allow for greater produc-tivity, improved managerial skills will be required to engage in complex, full package service delivery. In addition, stake-holders must increase coordination so that they can supply adequate volume through consolidation and advocate for necessary policy support. The Government, meanwhile, must be sure to address policy constraints ( particularly with regards to CSR issues ), facilitate the upgrading of logistical infrastructure, and remove other trade hurdles so that en-terprises can bring goods to market without undue delays.
RESILIENT TRADE IN THE FACE OF GLOBAL UNCERTAINTY
Global T & C exports have grown by 6 % annually since the turn of the century, despite the 2008 financial crisis. Exports of clothing fell by only 12 % in 2009, whereas total exports declined by 23 %. This resilience is one of the reasons that the sector continues to attract investment. The steady de-mand for T & C products makes it a relatively stable source of foreign exchange earnings for many countries.
Valued at US $ 781 billion in 2013, sectoral exports cur-rently account for 4 % of international trade. The most im-portant product categories include knitted apparel ( US $ 192 billion ), woven apparel ( US $ 187 billion ), cotton fibre and tex-tiles ( US $ 55 billion ), made-ups ( US $ 50 billion ), man-made filaments and textiles ( US $ 38 billion ), and man-made staple fibre and textiles ( US $ 36 billion ).
Apparel accounts for 57 % of the global T & C sector. The largest markets for clothing imports are the United States ( 21.2 % ), Germany ( 9 % ), Japan ( 8 % ) and the United Kingdom of Great Britain and Northern Ireland ( 6.3 % ). A number of markets, including the Russian Federation, the UAE, Viet Nam, Korea, Australia and China have been growing at a very fast pace. The top 10 markets account for 65.5 % of total imports today, down from 77.3 % in 2003, highlighting the growing consumer base in developing and frontier markets.
Production has concentrated significantly over the past dec-ade : whereas the top 10 exporters accounted for 59 % of global exports in 2003, that share had grown to 73 % in 2013. This period saw China solidify its position as market leader, its share of exports having nearly doubled from 20 % in 2003 to 38.8 % today. Export growth in Bangladesh, Viet Nam and India has also been quite notable ; the former two have in fact gained relative market share with respect to China.
Clothing production has shifted steadily towards Asia, which now accounts for 65 % of world exports, compared with 32 % in 2004. This shift was stimulated by the disman-tling of the MFA, after which producers sought to consoli-date production in low-cost locations throughout Asia. In addition, international buyers have been steadily shifting greater responsibility to their suppliers. By moving away from simple CMT, larger portions of the value chain are now concentrated in supplier countries. It should be noted that despite the shift to Asia, a variety of countries still maintain competitive advantages based on factors such as proxim-ity to markets ( for example Turkey to the EU ) or access to specific markets under preferential trade agreements.
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Table 1 : Top exporters of clothing, 2003-2013 Table 2 : Top exporters of textiles, 2003-2013
No. ExportersExported
value in 2003 ( US $ )
Exported value in 2013 ( US $ )
CAGR * Share ExportersExported
value in 2003 ( US $ )
Exported value in 2013
( US $ )CAGR Share
1 China 45 757 114 165 044 601 13.7 % 38.8 % China 27 454 487 108 898 007 14.8 % 33.4 %
2 Bangladesh 5 040 792 26 258 818 17.9 % 6.2 % India 6 521 615 19 854 948 11.8 % 6.1 %
3 Italy 15 449 056 21 625 743 3.4 % 5.1 % Germany 13 973 846 16 493 995 1.7 % 5.1 %
4 Viet Nam 3 386 376 18 496 564 18.5 % 4.3 %
United States of America 11 888 902 16 080 252 3.1 % 4.9 %
5 Germany 9 127 940 18 320 287 7.2 % 4.3 % Italy 14 008 743 13 926 994 -0.1 % 4.3 %
6 India 5 916 206 15 702 657 10.3 % 3.7 %Republic of Korea 11 579 132 13 782 165 1.8 % 4.2 %
7 Turkey 9 546 445 14 961 774 4.6 % 3.5 % Turkey 5 430 513 12 560 332 8.7 % 3.9 %
8 Spain 3 384 396 11 065 848 12.6 % 2.6 %Chinese Taipei 10 052 788 10 920 608 0.8 % 3.3 %
9 France 6 580 732 10 079 791 4.4 % 2.4 % Pakistan 5 862 994 9 398 146 4.8 % 2.9 %
10 Belgium 5 167 839 8 678 581 5.3 % 2.0 % Japan 7 139 211 8 209 987 1.4 % 2.5 %
Source : International Trade Centre ( 2015 ) ( b ). *Compound Annual Growth Rate.
Textiles account for the remaining 43 % of sectoral trade. The structure of textile imports has remained fairly static over the last 10 years, and the United States and China have contin-ued to be the top two importers. Even so, a number of new markets have begun to grow in importance. These include Viet Nam, whose imports had a CAGR of 18.1 %, Bangladesh ( 15.9 % ), Indonesia ( 22.9 % ), the Russian Federation ( 15.9 % ) and the UAE. Markets meanwhile have become slightly less concentrated : the top 10 importers now account for 46.7 % of the market, down from 53.5 % in 2003.
As with apparel, the largest exporter is China, which en-joys a 29.7 % market share. The textile supplier base has also grown more concentrated : the top 10 exporters now account for 70.6 % of total exports, compared with 63 % in 2003. As textile production requires more technology and skill that the apparel segment, it is generally less flexible. It requires significant financial resources as well as time, and most developing countries are engaged in textile production
to only a limited extent. Nevertheless, a number of such countries, including China, India, Turkey and Viet Nam, have registered considerable growth over the past 10 years.
Trade statistics highlight the fact that the sector contin-ues to favour developing countries with competitive cost structures. This bodes particularly well for Ethiopia, which enjoys some of the lowest factor costs in the world. It should also be noted that while a significant portion of the market is dominated by the main exporters, smaller countries have recently succeeded in capturing greater market share. This, in conjunction with the sector’s continued growth even in times of crisis, indicates that there is ample space for rela-tively new entrants such as Ethiopia. Today, Africa contrib-utes only 2.3 % to global apparel exports, down from 3.7 % at the turn of the century. Even so, renewed interest in Africa may present Ethiopia with an opportunity to capitalize on its competitors’ diminishing advantages.
THE DECADE AHEAD
Experts indicate that these market trends are likely to contin-ue, helping to shape the sector throughout the next decade. The apparel market is expected to grow to US $ 2.1 trillion in 2025, up from US $ 1.1 trillion today. This will be driven largely by the growing consumption of T & C products in developing countries. Per capita spending on clothing will likely grow at the fastest pace in India ( 11 % ), China ( 10 % ), the Russian Federation ( 8 % ) and Brazil ( 4 % ). It should be noted that despite slower growth in developed countries, per capita spending on clothing will still be higher in the
West. Nevertheless, quicker per capita expansion, together with strong population growth, will help the developing world overtake the West as the main market for T & C products.7
The two fastest-growing markets will be China and India. This growth will be supported by the following trends in the two countries :
7.– Wazir Management Consultants ( 2013 ). The Road to 2025 : 5 Market, Trade, and Investment Trends That Will Define the Course of Textile and Apparel Industry.
[ GLOBAL TRENDS 2025 – LIVING THROUGH A TRANSFORMATIVE PERIOD ]
21
� Economic expansion and growth of disposable income � Population growth � Growing preference among Chinese consumers to buy
for fashion rather than utility � Increased exposure to organized retail and branded
clothing in India � Expansion of domestic brands � Growth of online retail.
By 2025, China will account for 27 % of the total market for apparel products, and the combined market size of China and India will surpass that of the EU and the United States.
Experts also note that the sector will require significant investment in the coming years. The T & C sector is relatively capital-intensive : the investment to turnover ratio is 1 :1 for spinning, 1 :1.5 for fabric production and 1 :4 for clothing production. Therefore an investment of $85 million ( land,
building, equipment and other fixed assets ) is required to produce a $100 million value of production at the garment stage of the value chain. Enterprises must make investments to both increase capacity and replace existing machinery.
Experts calculate that the growth in global apparel de-mand will require an additional US $ 165 billion of value of production by 2025.8 Given the investment turnover ratios, this will require US $ 142 billion of investments throughout the value chain. At the same time, the replacement / upgrading cost of current equipment is expected to be roughly $210 billion. The total investment required in the sector is therefore expected to be $350 billion.
8.– Apparel demand is expected to grow by US $ 1 trillion ( from US $ 1.1 trillion to US $ 2.1 trillion ). Given that this increase will be due to both price and volume growth, and assuming an average of 3 % price inflation, demand will grow by US $ 410 billion ( retail ) or US $ 165 billion value of production. ( Wazir Management Consultants ( 2013 ). The Road to 2025 : 5 Market, Trade, and Investment Trends That Will Define the Course of Textile and Apparel Industry, p. 22. )
Box 1 : Changing dynamics in China will lead to a US $ 100 billion trade gap
While China currently accounts for nearly 40 % of the sector’s total exports, its economy is at a crossroads in which private consumption will begin to overtake investment as the main driver of economic growth. This shift will likely result in structural changes to export-oriented sectors such as T & C.
As domestic demand for apparel grows, Chinese firms will become more oriented towards the local market, thereby reducing their ex-ports. In addition, supply-side shifts are expected to reduce garment
production. As a result of increasing costs and a greater focus towards service servitors, T & C output growth is expected to drop from 7 % to a more moderated 5 % to 6 % per year. The combination of these demand- and supply-side shifts will result in a global trade gap : worldwide clothing exports are expected to grow to US $ 1,700 billion by 2025 ( CAGR of 6.5 % ), whereas Chinese T & C exports will only grow by a CAGR of 6 %. The net result of this lag will be a US $ 108 billion market gap that represents an opportunity for other countries wishing to increase their share of the global market.
Source : Wazir Management Consultants ( 2013 ).
Box 2 : Implications for Ethiopia
Developments in the sector have a number of implications for Ethiopia as it seeks to find its place in the global value chain.
• Consumers are putting increased pressure on the T & C sector to improve social responsibility : suppliers are required to comply with CSR.
• The demand for full package services from lean retailers requires that suppliers expand their service offerings and create strategic partnerships with vendors rather than transaction-based relation-ships. This presents an opportunity for low-cost manufacturers to capture greater value.
• Firms must increase volume capacity, either internally or through consolidation / partnership agreements, to meet large and often unpredictable buyer requirements.
• Firms must increase their ability to supply the market quickly in response to fast fashion demands.
• Companies are encouraged to invest in quality, increase their product development competency, and develop their multi-fibre expertise.
• Increased management and ICT capacities will be required to satisfy buyer demands.
• So far, Asian countries have emerged as winners in global trade. In the next few years, some of them will become important markets as well. The increasing focus of China on the domestic market and value added production will result in multibillion dol-lar trade opportunities for suppliers in competing nations. Trade intelligence will be essential to tapping into these opportunities.
Photo: Jai79@pixabay, weaving.
[ TEXTILES AND APPAREL IN ETHIOPIA : AN INDUSTRY OF GREAT PROMISE ]
23
TEXTILES AND APPAREL IN ETHIOPIA : AN INDUSTRY
OF GREAT PROMISE
A COLOURFUL HISTORY
It was in the early twentieth century that Ethiopia’s cotton sector, and consequently the T & C sector, began to grow on a commercial scale. The Italians introduced the first garment factory in 1939, as well as the first modern, integrated textile mill. The sector continued to expand in line with the growing cotton production, and the 1960s saw the establishment of five large, private, integrated textile enterprises. While the socialist Government ( 1974 to 1991 ) nationalized textile and apparel companies, it also established additional enter-prises to fulfil domestic demand. Nonetheless, the sector eventually suffered under this regime : the lack of competi-tion, limited investment, and reliance on outdated technol-ogy eventually left the T & C sector significantly handicapped. Indeed, it was unable to meet international standards and was operating well below capacity.
Since the return to a market economy in 1991, the Government has identified the T & C sector as a priority for poverty reduction and economic development, given its la-bour intensity. From 2000 onward, the Government began to privatize state cotton farms and ginneries and to sell or lease state textile mills. However, it is only in the last few years that the sector has truly started to grow according to its potential.
As production costs in Asia continue to rise and Western buyers become more interested in ensuring ethical working conditions, a number of sourcing companies have turned away from Asia and towards Africa. Brands including H&M, Tesco and Primark have all begun to source from Ethiopia over the last few years as they seek to increase control of the entire supply chain from cotton to garment. They are drawn not only by low labour costs but also by the availability of raw materials and by the geographical proximity ; Europe can be reached easily via the Suez Canal, reducing delivery times by a third when compared with the Far East. In addi-tion, many companies are drawn to the perceived social responsibility of the sector in Ethiopia ; Ethiopian labour laws conform to International Labour Organization standards.9
Nowhere is Ethiopia’s potential more evident than in trade statistics since the turn of the century. Over the last decade, T & C exports have grown by a CAGR of 26 %, reaching US $ 82 million in 2014. During the same period, T & C subsector exports grew by CAGRs of 37 % and 19 % respectively.
9.– Ethiopian Textile Industry Development Institute ( 2014 ). Textile Industry Development in Ethiopia : an Overview of Facts and Opportunities.
A SECTOR IN FULL BLOOM AND ON THE VERGE OF FULL VALUE CHAIN INTEGRATION
The Ethiopian Government continues to actively engage with the T & C sector as part of its Industrial Development Strategy, with the ultimate goal of attracting investors and enhancing competitiveness in international markets. To this end, the Ethiopian Textile Industry Development Institute ( ETIDI ) was established by the Council of Ministers in 2010. In order to assist the sector in reaching the goals set by the Government five-year Growth and Transformation Plan ( GTP ) ( increase textile exports to US $ 1 billion by the end of
2015 ), ETIDI is mandated to provide investment promotion, training and consulting services ; engage in research and development ; and provide various testing and marketing support services. As such, it has become the focal point for activity in the sector and the main provider of support services.
Together with Government support, Ethiopia’s com-petitive advantages have allowed the sector to successfully attract key foreign investors and buyers including Asda,
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
24
H&M, Primark, Phillips Van Heusen, Tchibo, Tesco, Marks & Spencer, VF Corporation, and Inditex. These advantages include :
� Low labour costs ( for skilled and unskilled workers ) � Large and trainable workforce � Accessible and sustainable hydraulic energy � Lowest electricity costs in Africa � Relative proximity to Europe � Preferential market access ( AGOA, Everything But Arms,
Common Market for East and South Africa ( COMESA ) and soon the tripartite agreement for a Free Trade Area between COMESA, the East African Community ( EAC ) and the South African Development Community ( SADC ), and improved access to South Africa )
� Significant state support / incentive programmes � Availability of quality raw materials � Political stability and macroeconomic growth.
Foundations for growth
The sector produces a full range of products, from natural and man-made yarns, fibre, threads and textiles, to various garments, carpets and home textiles. Annual production is estimated to include 102,000 tons of yarn, 207 million metres of woven fabric, 50 million kg of knitted fabric, 63 million pieces of knitted garments, and 28 million pieces of woven garments. T & C production occurs in all regions of Ethiopia, although particular concentrations can be found in Oromia, Addis Ababa and, to a lesser extent, Amhara10.
The sector is an important source of income that pro-vides employment for over 450,000 people ( 2013 ), up more than 200 % from 2010 / 11. The majority ( 416,913 employees ) are employed by the textile segment. It should be noted that textile employment is predominantly rural ( 64 % of em-ployees ) and female ( 60 % ), whereas apparel is more urban ( 82 % of employees work in urban areas ) and male ( only 27 % of employees are female ).11
Large firms ( those with 50 or more employees ) consti-tute 78 % of companies in the textiles segment ( 2010 / 11 ).
10.– See Appendice – section A Main Ethiopian T & C producing areas ( in pink )11.– See Appendice Section B - Number of employees in Ethiopia’s T & C sector, 2013 and 2014
The size of apparel firms is more varied, and they include 17 large, 16 medium ( 20-49 employees ), and 7 small ( 10-19 employees ) enterprises. Even so, large firms account for the majority of employment in both segments : 98 % of employ-ment in the textile segment and 92 % of employment in the apparel segment.
Although Ethiopia has made great progress in increas-ing its production capacities, it has yet to reach a level of output that will allow it to play a major role in world markets. Productivity must be increased through capital upgrades and skills development, stimulated by FDI and its accompa-nying spillover effects. Efforts must also be made to increase value addition through product development and diversifi-cation. These improvements will all lead to greater income and employment generation, solidifying the sector’s role as a driver of sustainable economic development in Ethiopia.
On the verge of full value chain integration
Ethiopia’s T & C sector is characterized by strong value addi-tion throughout the entire value chain, from cotton to cloth-ing, with high local processing of cotton lint into textile and apparel products. The sector currently counts over 130 ac-tive enterprises that cover the entire value chain, including ginning, spinning, weaving / knitting, dyeing and printing, home textiles, and knitted / woven garment production. The sector’s enterprises range from those with only a handful of employees to those employing over 6,000 workers. The majority of enterprises are privately owned, although there are two state-owned integrated textile mills and a number of joint ventures between the state and foreign investors.
Foreign investors have contributed significantly to growth in recent years and are expected to be the drivers of growth in an Ethiopian garment boom. Figure 3 shows that foreign firms dominate the design and sewing segment. Not only are foreign projects more numerous, they are larger on av-erage, better endowed technically and better connected to international markets. As foreign investors drive high growth in Ethiopia’s garment production and exports, a major chal-lenge to sector stakeholders will be ensuring that that growth is well-linked to other segments, translating into an evolution of the value chain as a whole.
Photo: Cottco Chiredzi.
25
Figure 2 : Ethiopia’s T & C value chain
Impo
rts
Fabr
ics:
C
hina
, Ind
ia, P
akis
tan,
Tur
key,
UA
ETr
ims
Acc
esso
ries
Pack
agin
gM
achi
nery
Spa
re p
arts
Lege
ndN
atio
nal c
ompo
nent
Impo
rts*
Pri
mar
y su
ppor
t ser
vice
s
Uni
ted
Sta
tes
of A
mer
ica
Sud
an (
Nor
th+
Sou
th)
Uni
ted
Kin
gdom
Mo
stly
co
tto
n-
ba
sed
sp
inn
ing
Cut
-mak
e en
terp
rise
s(l
ow r
isk/
low
pro
fit)
Loca
l mar
ket
Yarn
s:C
hina
, Tu
rkey
(m
ain
inve
stor
in
stan
d-al
one
yarn
co
mpa
nies
)
Expo
rts
Sta
nd-a
lone
spi
nnin
g co
mpa
nies
(~
7)
Ada
ma,
Ale
mge
na, E
dget
, Eth
iopi
an S
ewin
g Th
read
Fact
ory,
Gre
en V
alle
y, S
VP T
extil
e, D
ima
Faiw
eiw
ei
Pro
duce
: ope
n-en
d, r
ing
and
com
bed
yarn
Oro
mia
, Ad
dis
<1
0%
do
me
stic
fa
bri
c
Expo
rts
Impo
rts
Fini
shed
clo
thin
g fo
r lo
cal
mar
ket,
seco
nd-h
and,
smug
gled
Chi
na, T
urke
y
Fabr
ics:
Turk
ey, C
hina
, Ita
ly,
Ger
man
y, U
nite
d S
tate
s,
Uni
ted
Kin
gdom
Gre
ige
fabr
ics:
Ita
ly, T
urke
y
Loca
l / r
etai
l mar
kets
Expo
rts*
Ger
man
y
Dep
artm
ent
stor
es
Impo
rts
Yarn
s (m
ore
impo
rts
than
na
tiona
l pr
oduc
tion)
: In
dia,
Chi
na
Han
dloo
m H
ouse
hold
s in
diff
eren
t reg
ions
: Am
hara
(G
ondo
r, W
ollo
), O
rom
ia (
Har
argh
e/D
ire D
awa)
, Sou
ther
n N
atio
ns, N
atio
nalit
ies,
and
Peo
ples
' Reg
ion,
incl
udin
g si
x fa
ctor
ies
of m
ediu
m s
ize
(exa
mpl
e: S
abah
ar)
Inpu
ts
Mac
hine
ry: C
hina
, In
dia
Cot
ton
fibre
38,0
00 to
ns li
nt(b
ough
t dire
ctly
from
co
mm
erci
al fa
rms)
Oro
mia
, Ad
dis,
Am
hara
~32
% u
tiliz
atio
n of
in
stal
led
ginn
ing
capa
city
(119
,124
tons
)
Dye
s fo
r ya
rn
Wat
er, e
lect
rici
ty,
fuel
and
aux
iliar
y ch
emic
als
Labo
ur fo
rce
Man
-mad
e fib
re:
Rep
ublic
of K
orea
, S
witz
erla
nd
Cot
ton
fibre
(Egy
pt, I
ndia
, U
gand
a, S
udan
, Pa
kist
an)
Onl
y if
no lo
cal
supp
ly a
vaila
ble
Spi
nnin
g fir
ms
pur
chas
e
loca
l lin
t in
prio
rity,
rega
rdle
ss
of
qual
ity
Dye
ing
& fi
nish
ing
Des
ign
and
sew
ing
Wea
ving
and
kni
tting
Yarn
spi
nnin
g
Indu
stri
al z
ones
(Bol
e Le
mi,
Ale
m G
ena,
Duk
em, G
elan
, Kom
bolc
ha +
Tur
key/
Chi
na/R
epub
lic o
f Kor
ea z
ones
und
er c
onst
ruct
ion)
CA
P:
10
2,0
00
to
ns
yarn
/y
UTI
LIZA
TIO
N: 7
0%
CA
P:
20
7 m
illi
on
m w
ove
n f
ab
/y a
nd
50
mil
lio
n k
g k
nitt
ed
fa
b/y
UTI
LIZA
TIO
N: 5
0% a
nd 4
5%
CA
P:
28
mil
lio
n p
iece
s w
ove
n/y
an
d 6
3 m
illi
on
pie
ces
knitt
ed
/y
UTI
LIZA
TIO
N: a
bout
70%
Ethi
opia
n C
ham
ber
of C
omm
erce
and
Sec
tora
l Ass
ocia
tions
, Add
is A
baba
Cha
mbe
r of
Com
mer
ce a
nd S
ecto
ral A
ssoc
iatio
ns
Qua
lity
man
agem
ent b
odie
s: E
thio
pian
Sta
ndar
ds A
genc
y (E
SA
), E
thio
pian
Con
form
ity A
sses
smen
t Ent
erpr
ise,
Nat
iona
l Met
rolo
gy In
stitu
te o
f Eth
iopi
a (N
MI)
and
Eth
iopi
an N
atio
nal A
ccre
dita
tion
Offi
ce (
ENA
O)
Ethi
opia
n Te
xtile
and
Gar
men
t Man
ufac
ture
rs A
ssoc
iatio
n (E
TGA
MA
)
Ethi
opia
Inve
stm
ent C
omm
issi
on (
EIC
)
Ethi
opia
n C
otto
n P
rodu
cers
, Ex
port
ers
and
Gin
ners
A
ssoc
iatio
n (E
CP
GEA
)
Uni
vers
ities
with
text
ile e
ngin
eeri
ng d
epar
tmen
ts: A
ddis
Aba
ba S
cien
ce a
nd T
echn
olog
y U
nive
rsity
(A
STU
), E
thio
pian
Inst
itute
of T
extil
e &
Fas
hion
Tec
hnol
ogy
(EiT
EX),
Eth
iopi
a Te
xtile
Indu
stry
Dev
elop
men
t Ins
titut
e
Ban
ks -
Fin
anci
al s
ervi
ces,
Tra
nspo
rtat
ion
serv
ices
Ethi
opia
n R
even
ues
and
Cus
tom
s A
utho
rity
(ER
CA
)
Min
istr
y of
Tra
de
TVET
(~
500,
of w
hich
20%
are
spe
cial
ized
in te
xtile
s an
d ga
rmen
ts)
Tech
nica
l and
mai
nten
ance
ser
vice
s –
on
the
leve
l of c
ompa
nies
; Tra
nsfo
rmat
ion
Trig
geri
ng F
acili
ty (
TTF)
Pri
vatiz
atio
n an
d Pu
blic
Ent
erpr
ises
Sup
ervi
sing
Age
ncy
Fabr
ic-p
rodu
cing
ent
erpr
ises
(~
5) E
lse
Add
is In
dust
rial
Dev
elop
men
t, N
uoya
Tex
tile
Inve
stm
ent,
J ian
gsu
Lian
fa, N
igis
t Eth
iopi
a W
eavi
ng, C
row
n W
eavi
ng T
extil
e P
LC
Inte
grat
ed fa
bric
/gar
men
t ent
erpr
ises
(~
4)D
BL
Gro
up, C
alze
doni
a, Y
irgal
em A
ddis
Tex
tile
Fact
ory
PLC
, El
tex
Text
ile a
nd G
arm
ent F
acto
ry
Sui
ts ta
ilori
ngA
mba
ssad
or G
arm
ent a
nd T
rade
PLC
Div
ersi
fied
read
y-m
ade
garm
ents
Tehu
t Kni
tting
and
Gar
men
t PLC
, Kni
t to
Fini
sh P
LC,
Asb
em In
dust
rial
PLC
, A
fric
a A
ppar
els,
Vel
ocity
, Exp
erie
nce
Clo
thin
g,
Sun
flag,
M&
M g
arm
ent,
Nov
asta
r G
arm
ent F
acto
ry P
LC, C
once
pt In
tern
atio
nal
E thi
opia
, Aka
ki G
arm
ent,
Vitc
on P
LC
Ente
rpris
e cl
assi
ficat
ions
:-
Sta
te-o
wned
- Jo
int
ventu
res:
Sta
te/F
DI
- P
riva
te F
DI
- N
on-F
DI p
riva
te
Eshe
t Eng
inee
ring
KEI
, AN
F, V
estis
Gar
men
t pro
duct
ion,
Gul
f Tex
tile,
Kar
l Int
erna
tiona
l, S
hin
TS
Com
, Shi
n TS
, Jay
Jay
Mill
s, N
ew W
ide
Gar
men
ts, A
shto
n A
ppar
el (
Atr
aco)
, M
yung
sung
, Arv
ind
Dye
ing
and
prin
ting
(3)
Uni
form
sB
M E
thio
pia
Gar
men
t and
Tex
tile
S.C
., N
azar
eth
Gar
men
t SC
, etc
.
75.8
%*
13.6
%
5.6%
3.3%
* S
hare
in v
alue
of E
thio
pia’
s ga
rmen
ts’ e
xpor
ts in
201
4
Men
noni
te E
cono
mic
Dev
elop
men
t Ass
ocia
tes
(MED
A),
Eth
iopi
an W
omen
Exp
orte
rs' A
ssoc
iatio
n (E
WEA
), O
rgan
izat
ion
for
Wom
en in
Sel
f Em
ploy
men
t (W
ISE)
(~78)
Sem
i-in
tegr
ated
mill
s (~
19)
Alm
eda,
Dire
Daw
a Te
xtile
Fac
tory
, Etu
r, Ke
bire
Ent
erpr
ises
PLC
(M
AA
Gar
men
t & T
extil
es),
S
elen
daw
a, A
rba
Min
ch T
extil
eS
pin
nin
gW
ea
vin
g/k
nitti
ng
Dye
ing
Inte
grat
ed m
ills
(~8)
Aw
assa
Tex
tile
S.C
., B
ahir
Dar
Tex
tile
S.C
, Kan
oria
Afr
ica
Text
ile, K
ombo
lcha
, Yirg
alem
Add
is T
extil
e Fa
ctor
y P
LC, A
deba
Kni
t & C
ultu
ral D
ress
es P
rodu
ctio
n, A
yka
Add
is T
extil
e an
d In
vest
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Inputs
Cotton
The most widely used input is cotton, which is supplied mainly by the local market. Ethiopia ranked thirteenth among African cotton-producing countries in 2013 / 14, and pro-duces a medium staple length cotton of 25-30 mm. Cotton production is concentrated in the Awash valley, although significant potential exists for expansion in the Omo-Gibe, Wabi Shebelle, Baro Akobo, Blue Nile and Tekeze river ba-sins.12 In total, only 123,000 hectares of land are cultivated, despite the availability of roughly 3 million suitable hectares. Seventy per cent of cotton is produced by commercial farms. Most of the cotton is grown under irrigation. The first organic cotton farm has just recently begun operations ; its output is expected to help the sector increase its penetration of the European market.13
According to the International Cotton Advisory Committee ( ICAC ), the average yield in Ethiopia is 321 kg of lint per hectare ( 2013 / 14 ). While close to the average yield in Africa, it is quite low for cotton cultivated under irrigation. The Food and Agriculture Organization ( FAO ) of the United Nations estimates that Ethiopia produced 600,000 tons of cotton seed in 2013, nearly double the levels achieved in 2010.14 Expansion of cotton cultivation is being hindered largely by two factors : ( i ) limited attractiveness of cotton
12.– Embassy of Ethiopia, Economy and Business Section ( n.d. ). Investing in Ethiopia : Textiles. Washington, D.C. : Embassy of Ethiopia.13.– Deloitte ( 2014 ). Ethiopia : a Growth Miracle, p. 10. Johannesburg : Deloitte & Touche. 14.– Food and Agriculture Organization of the United Nations ( 2015 ). Statistics database. Available from http : / / www.fao.org / statistics / en / . Accessed 7 June 2015.
when compared to other agro-speculative crops ( particular-ly considering that the average cotton yields are well below potential ) ; and ( ii ) insufficient availability of inputs ( seeds and pesticides ) for rain-fed culture, and limited access to finance for irrigated culture.
Ethiopia’s 20 ginneries have a total capacity of rough-ly 330,000 bales of cotton, or 70,000 tons of lint per year. Most of these ginneries are affiliated with textile firms and their outturn is relatively low ( 37 % ). Indeed, using the same amount of cotton seed, Ethiopian ginneries produce 12 % less lint when compared with ginneries in West and Central African countries of the franc zone ( see figure 4 ). Increasing productivity at ginneries will therefore be of paramount im-portance when seeking to increase profitability in the cotton sector and expanding local production of cotton to meet T & C sector demand.
Total lint production has varied wildly over the years ( see figure 5 ), reaching a peak of 48,000 tons in 2004 / 05. In 2013, Ethiopia produced 38,000 tons of lint, making it the thirteenth-largest producer in Africa.
Despite the widespread presence of cotton cultivation and its significant potential for expansion, the entire national production is consumed locally and T & C enterprises must import a portion of their cotton requirements in order to meet demand. Cotton fibres are imported from Egypt, India, Uganda, Sudan and Pakistan when needed. Imports have risen markedly over the last few years along with mill use 15.
With regards to locally produced cotton, Ethiopia is establishing a national enterprise that will be responsible for purchasing and selling Ethiopian cotton. This entity will strengthen the linkages between cotton producers and tex-tile mills in an effort to increase domestic value addition.
15.– See Appendice section C - Cotton supply and demand in Ethiopia 1990 / 91 to 2010 / 11
Figure 3 : Ginning outturn of selected African countries ( 2013 )
Source : ITC
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Figure 4 : Cotton lint production in Ethiopia, 1940 / 41 to 2010 / 11
Source : ICAC
Other inputs
Other inputs such as dyestuffs, agrichemicals ( for cotton production ), finishing / processing chemicals, man-made fibre, wool and machinery ( mainly from China and India ) are also imported from abroad ( handlooms are however sourced domestically ).16 / 17 With regards to employment, the sector relies on domestic workers. While labour costs are low and workers are motivated and highly trainable, labour productivity remains an issue. Water, electricity and fuel are also supplied domestically.
Yarn spinning and combing
Ethiopia’s spinning enterprises produce rotor spun carded yarn, ring spun carded yarn, combed yarn and sewing thread from cotton lint purchased from domestic ginner-ies and abroad.18 Enterprises have 288,480 ring frame and 14,480 open-end spindles available, and output is estimated to be roughly 102,000 tons of cotton yarn ( representing a uti-lization rate of roughly 70 % ). Spinning firms purchase local lint regardless of quality as a result of the underutilization of ginneries. Because local lint supplies are not large enough to cover demand, additional lint is imported.
There are eight stand-alone spinning companies that produce open-end, ring and combed yarn at quantities of roughly 357.3 tons per day. In addition, 19 semi-integrated mills and eight integrated mills also engage in spinning. It should be noted that Ethiopia was the only country in Africa
16.– Embassy of Ethiopia in China ( n.d. ). Profile of the textile industry in Ethiopia. Available from http : / / www.ethiopiaemb.org.cn / bulletin / 209 / 003.html.17.– Ethiopian Textile Industry Development Institute ( 2014 ). Textile Industry Development in Ethiopia : an Overview of Facts and Opportunities.18.– Ibid.
to register an increase in mill use from 2005 / 06 onwards. While the majority of output continues through the domestic value chain, a portion ( valued at US $ 14.3 million of cotton yarn in 2014 ) is exported directly. Most of these exports are sold to China and Turkey, the latter’s enterprises being the main investors in Ethiopia’s stand-alone yarn companies.
Weaving and knitting
The T & C sector contains a heterogeneous mix of compa-nies that are active in the weaving and knitting segment of the value chain, including three home textile companies, six fabric producing companies, four integrated fabric / textile enterprises, 19 semi-integrated mills and eight integrated mills, as well as various households operating handlooms. Total production is estimated to be roughly 207 million me-tres of woven fabric and 50 million kg of knitted fabric ( 50 % and 45 % capacity utilization respectively ).19 These enter-prises produce cotton fabrics, polyester fabrics, warp and Rachel knitted fabrics, jacquard fabrics, jersey fabrics, and various home textiles.
The materials for cotton fabrics are purchased mainly from domestic spinning companies, although some foreign supply must be imported in order to meet demand. Synthetic filaments are imported from a variety of countries including China ( US $ 100 million in 2014 ), India ( US $ 12,650,000 ), Korea ( US $ 3,535,000 ), Chinese Taipei ( US $ 2,520,000 ), Indonesia ( US $ 2,490,000 ) and Turkey ( US $ 1 million ).20
19.– Ibid.20.– Data calculated from United Nations Comtrade statistics.
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Textile finishing and processing
Increasing the finishing and processing content of textiles is one of the main ways in which the T & C sector has sought to increase value addition in recent years.21 ETIDI estimates that there are roughly 16 units throughout the value chain ca-pable of processing textiles ; this includes three stand-alone dyeing and printing enterprises as well as a number of the semi-integrated and integrated textile mills. Thirteen of these units are privately owned, two are state-owned, and one is a joint venture between the Government and Turkish inves-tors. The textile processing sub-segment employs around 2,000 people.
Seven enterprises process woven fabrics and three pro-cess knit fabrics. The remainder process a combination, while a few also engage in yarn and fibre processing. In total, the segment has the following daily processing ca-pacities : fibre dyeing ( 17 tons ), yarn dyeing ( 91 tons ), knitted finishing ( 72 tons ), woven finishing ( 555,200 square metres ) and garment processing ( 24,000 pieces ). In total 49 million metres of woven fabric and 18 million kg of knitted fabric are produced per year, representing a utilization of between 48 % and 54 %.
Capacities vary along with technological complexity : while some enterprises make use of modern machinery, others use semi-automated processes. Various technolo-gies are currently being used in Ethiopia’s textile process-ing / finishing segment22. It should be noted that while some of these equipment was recently purchased, other date back to the middle of the twentieth century.
The dyes and chemicals that form the backbone of the operations are mainly imported from Japan, China, India, Pakistan, Switzerland, Turkey, Germany and Italy.23 They are purchased directly from international manufacturers ( such as CHT / BEZEMA and Rose Color Inc. ) who sell their prod-ucts from bonded warehouses in Ethiopia. This allows for re-duced delivery times and decreased risk of spoilage during storage and transportation. Agents of other manufactures are also present in the country. It has been estimated that processing units consume roughly 15 million kg of these inputs per year.
Only 10 % of the fabric used by the garment segment is local, as domestic producers are unable to produce an adequate quantity and quality of textile. The fabric that is not used by the domestic value chain is exported to Turkey, China, Italy, Germany, the United States and the United Kingdom.
21.– Ethiopian Textile industry Development Institute ( 2012 ). An abstract to Ethiopia’s textile chemical processing / finishing industry. Available from http : / / www.tidi.gov.et / An %20abstract %20to %20Ethiopia %E2 %80 %99s % 20Textile %20Chemical %20ProcessingFinishing %20Industry.html.22.– Ethiopian Textile Industry Development Institute ( 2014 ). Textile Industry Development in Ethiopia : an Overview of Facts and Opportunities.23.– Ethiopian Textile industry Development Institute ( 2012 ). An abstract to Ethiopia’s textile chemical processing / finishing industry. Available from http : / / www.tidi.gov.et / An %20abstract %20to %20Ethiopia %E2 %80 %99s % 20Textile %20Chemical %20ProcessingFinishing %20Industry.html.
Sewing and design
Ethiopia’s 78 garment factories produce 63 million pieces of knitted garments and 28 million pieces of woven garments per year ( ~70 % utilization rate ).24 The sector produces a wide range of apparel products, including casual and for-mal menswear and womenswear, military wear and other uniforms, undergarments, accessories, sportswear, home textiles, and handwoven accessories and home furnishings.
The most basic enterprises operate low risk / low profit CMT businesses. Others specialize in uniforms and suits, while still more are diversified ready-made garment compa-nies. The majority of stand-alone garment companies rely on imported fabrics from China, India, Pakistan, Turkey and the UAE. The integrated textile mills, however, use local cot-ton. These mills are able to produce goods of internationally acceptable quality ( T-shirts, trousers ). Other enterprises that use domestic fabrics include the integrated fabric / garment companies and, at times, handloom undertakings. Trims, accessories, packaging, machinery and spare parts are imported from abroad.
Handloom products tend to be exported under Ethiopian brands to the United States and EU, while the remainder is sold on the local market. Garments are exported by a variety of companies, including some of the most important Western brands ( such as H&M, Tchibo, Tesco, Carrefour, George, PVH, VF, Lewis, Zara, Old Navy and Gap ). The most important markets for garment exports include the following.
Primary suppor t services
The value chain is supported by an array of public and private institutions. Chief among them is Ethiopian Textile Industry Development Institute ( ETIDI ), which formulates and implements strategies and programmes aimed at stim-ulating the cotton, textile and apparel industries. In its the focal point for the sectoral development, ETIDI conducts market studies and disseminate trade intelligence, advises potential investors, provides trainings and technical as-sistance to enterprises ( in production, quality and human resource ( HR ) management ), provides testing and quality evaluation services, helps textile companies improve waste-water treatment, provides quality and consulting services for inputs and finally, assists in all other areas related to sectoral development and sector-specific investment promotion.
The Ethiopian Textile and Garment Manufacturers Association ( ETGAMA ) is the private sector organization that represents the interests of enterprises in the T & C sec-tor. Its goal is to foster the development of the T & C sector. Its activities include : updating members on contemporary global business trends ; conducting seminars & dialogues with Government regarding policy issues ; holding train-ings & workshops with development partners ; promoting
24.– Ethiopian Textile Industry Development Institute ( 2014 ). Textile Industry Development in Ethiopia : an Overview of Facts and Opportunities.
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member factories & their products ; providing advisory ser-vices on technical & operational concerns ; building rela-tionships between exporters & international buyers ; [and helping] members meet national & international standards.25
The Ethiopian Investment Commission ( EIC ) and its regional equivalents look to attract investors to the country, while the Privatization and Public Enterprises Supervising Agency is responsible for implementing the Government’s privatization plan and supervising public enterprises, includ-ing the remaining public T & C enterprises.
Standards and quality management in Ethiopia are gov-erned by the following institutions : Ethiopian Standards Agency ( ESA ) provides a range of services in its role as the national standards body ; Ethiopian Conformity Assessment Enterprise ( ECAE ) provides inspection, laboratory and certification services ; Ethiopian National Accreditation Office ( ENAO ) provides various training, ac-creditation and monitoring services in its role as the national accreditation body and the National Metrology Institute of Ethiopia ( NMI ) maintains national measurement standards and provides various calibration, training and consulting services.
25.– Ethiopian Textile and Garment Manufacturers Association ( 2015 ). About ETGAMA. Available from www.etgama.com / about.php.
The Ethiopian Cotton Producers, Exporters and Ginners Association ( ECPGEA ) provides advocacy, consulting and trade promotion services to its members according to de-mand. It should be noted that, in general, public–private dialogue is weak and capacities at private sector associa-tions must be enhanced in the areas of policy advocacy, marketing and management.
The sector relies on about 500 technical and vocational education and training ( TVET ) institutions ( up from 153 in 2003 ),26 of which roughly 20 % are specialized in the tex-tile and garment sector. A number of universities also have textile engineering departments, including Addis Ababa Science and Technology University, the Ethiopian Institute of Textiles and Fashion Technology, and ETIDI.
Other organizations providing key support to the sec-tor include Mennonite Economic Development Associates, the Ethiopian Women Exporters’ Association and the Organization for Women in Self Employment. Key technical consulting services are also provided by the Transformation Triggering Facility, an EU project that seeks to assist Ethiopia in its economic development.
26.– Textiles Intelligence ( 2015 ). Sourcing apparel from Kenya and Ethiopia. Textile Outlook International, No. 173, February.
Box 3 : Salient issues of the current value chain
Ethiopian enterprises are actively engaged in nearly all areas of the value chain. As such, the industrial base for further expansion and value addition exists. While some manufacturers are already produc-ing high quality goods for demanding markets, the proliferation of such production will require lagging enterprises to increase skills and technical capacities.
Full value chain integration is being hindered largely by weak upstream capacities : cotton production is insufficient to meet de-mand, with regards to both quality and quantity, while the domestic provision of other inputs such as garment accessories is limited. The weak quality and limited diversity of the domestic inputs that do exist make it difficult for garment companies to produce high
value added goods. To this end, FDI will play a key role in improving domestic provision of inputs and enhancing the ability of SMEs to produce high quality goods. It is of the utmost importance that efforts are made to direct this FDI to the portions of the value chain where capacities are currently lacking.
Full integration will also require the increased participation of sup-port institutions. In particular, sectoral associations must improve their capacity to provide services to SMEs and coordinate value chain participants. Efforts must also be made to support necessary policy reform ( for example, with regards to CSR issues ), align the TVET system with industry needs, and facilitate the provision of better consulting, banking and logistical services.
STIMULATING GROWTH THROUGH A CONDUCIVE POLICY FRAMEWORK
Industrial and development policy
The Government strives to promote pro-market policies that will facilitate sustainable economic development and poverty eradication. To this end, Ethiopia’s current indus-trial policy is formalized in the GTP 2010–2015. ( The GTP
succeeded the previous five-year Plan for Accelerated and Sustained Development to End Poverty, while the National Development Plan for the period 2015-2020 is currently un-der preparation ). The GTP established the following priorities for policy support, regulatory reform, and public and private investment : agriculture and rural development, industry, trade, mining, infrastructure, health and social development.
Within this framework, the T & C sector was identified as a priority industrial sector for development. As such, the
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Government has supported the T & C sector both directly and by fostering a more conducive business environment. In particular, ETIDI was established as the focal point for the sector. In order to support the GTP goal of increasing T & C exports to US $ 1 billion by 2015, ETIDI provides various investment promotion, training and consulting, research and development, testing, and marketing services, among oth-ers. In line with the GTP, the Government is also promoting FDI through various incentive and promotional programmes ( a more detailed discussion of FDI policy will be presented in the following section ). In addition, the GTP calls for a num-ber of large-scale infrastructure projects that are expected to enhance T & C competitiveness by drastically improving trade facilitation and logistics in the country.
The Agricultural Development Led Industrialization strategy is relevant for the cotton sector. With the objective of enhancing agricultural productivity, this strategy seeks to promote organic cotton production, foster the creation of growth corridors, and improve input provision so as to facilitate rural development. It should also be noted that the Private Enterprise Programme Ethiopia ( funded by the United Kingdom Department for International Development ) is currently formulating a national cotton development strat-egy ( 2015 – 2030 ).
Trade policy
Ethiopia is party to a relatively small number of trade agree-ments, including the Sino-Ethiopian Agreement for Trade and the Ethiopia – Sudan Trade Cooperation Agreement. While it is a member of COMESA and benefits from reduced tariff rates, it has yet to become a part of the group’s Free Trade Area. Even so, in recent years the Government has stepped up its efforts to liberalize its trade policy. To this end, it is undertaking negotiations to finalize its membership at the WTO, complete the Economic Partnership Agreement with the EU as part of the Eastern and Southern African countries, and conclude the tripartite agreement for a Free Trade Area between COMESA–EAC–SADC.
The conclusion of the tripartite agreement is particularly promising : while it must be ratified by member countries, it is expected to come into force in 2017. Once it does, it will improve Ethiopia’s access to regional markets including South Africa, which imported US $ 1.8 billion of garments in 2013. The tariffs faced by Ethiopian clothing exporters are quite high in the South African region. The agreement will therefore significantly increase Ethiopian competitiveness in a large and growing market27.
In addition to these agreements, Ethiopia has taken a number of unilateral steps towards improving its trade en-vironment. In its efforts to promote industrial production, it has withdrawn export tariffs ( with some exceptions ). Even so, import tariffs remain quite high : the ad valorem applied tariff for special woven fabrics ( HS-58 ) is 32.6 % ( 29.5 % for neighbouring countries ) and man-made filaments ( HS-54 ) is 26.1 %. Of particular importance, the import tariff on wo-ven fabrics ( HS-540769 ) is 31.5 %. In addition, tariff rates rarely differ between neighbours and the rest of the world. As a result, there is little incentive for regional integration of the supply chain.
The Ethiopian Government has made great strides in im-proving the business environment through its industrial and trade policy reforms. The T & C sector now enjoys enviable market access and a supportive policy framework. In order to fully capitalize on these advances, however, the sector must increase awareness among potential investors of the opportunities offered by Ethiopia.
27.– See Appendice section D – Tariffs faced by Ethiopian apparel exports ( Harmonized System ( HS-61 )
Box 4 : Non-reciprocal preferential market access
Roughly 21 countries ( including the EU as a single entity ) grant zero tariffs or reduced rates to least developed countries’ goods in a non-reciprocal manner. It is important to disseminate this information in a more efficient manner in order to stimulate T & C
market diversification. Several studies on non-reciprocal preferential arrangements find that limited awareness in the private sector, and sometimes even in the public sector, is one of the main reasons that preferential duties are not leveraged to their full extent.
Photo: Activedia@pixabay, sewing machine.
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Ethiopia : the new buzzword among investors
Ethiopia has gained a notable reputation in investor circles over the past few years. There is a significant buzz surround-ing the opportunities offered and investment attractiveness of the country, and Ethiopia is frequently investigated as a potential location for investment by multinational firms. In the T & C sector, this buzz has led to concrete results in the form of ever-increasing investment : in 2014, 36 T & C FDI projects were licensed in Ethiopia, with an average capital investment of US $ 140 million. These projects employ an estimated average of 2,500 people each.28
Ethiopia’s attractiveness as a destination for investment in the T & C sector is the result of several features, including low factor costs, factor availability, duty-free access to major markets, a stable Government, good law and order, and the Government’s proactive efforts to attract investment in this labour-intensive and export-oriented industry.
One promising aspect of Ethiopia for T & C investment is cotton availability. The area under cotton cultivation in
28.– Averages are for 18 projects, for which capital and jobs data has been announced and / or estimated. Source : World Bank Group project in Ethiopia.
this period was reported to be 120,000 hectares. However, Ethiopia has 3 million hectares of land suitable for cotton production ( two-thirds identified as highly suitable ). This is almost equal to the amount of land under cotton cultiva-tion in Pakistan, the fourth-largest world cotton producer. Presently only 4 % of this area is under cotton cultivation. Improvement in farm yields from current levels, coupled with the possibility of an increase of the area under cultivation, will prove extremely attractive for cotton textile value chain producers, specifically spinners.
Labour and power are two key inputs that form a sub-stantial part of product costs ( e.g. raw materials ). It is therefore important that T & C companies can access a con-tinuous supply of labour and power at competitive rates. Ethiopia, fortunately, boasts labour and power costs that are among the cheapest in the world. The prevailing wage rate in Ethiopia is approximately US $ 50 per month and the power cost is US $ 0.03 per unit. Land lease rates in Ethiopia are also kept very competitive by the Government in order to attract investors. A quick comparison between Ethiopia and its regional neighbours and other T & C exporting nations highlights Ethiopia as the most cost-competitive manufac-turing base.
Table 3 : Comparison of costs and competitive factors between Ethiopia and competitors
Estimated values Kenya EthiopiaUnited Republic
of TanzaniaIndia China Viet Nam
T & C export value ( US $ millions, 2013 ) 377 94 248 40 192 273 959 21 534
Cotton production ( thousands of 480 lb. bales ) 32 175 375 30 000 30 000 17
Cost of labour ( US $ per month ) 110–150 50–60 70 175 550 180–200
Labour skills Low–medium Low Low High Very high High
Cost of electricity ( US¢ per kilowatt hour ), estimated average 16–18 2–5 12 7–12 9–15 8
Percentage of annual sales lost to electrical outages 5.6 2.6 5.5 2.0 0.1 1.1
Cost of construction ( US $ per ft2 ) 21 40 34 18–20 15–20 20–25
Lending rates ( Annual Percentage Rates, estimated ) 14–18 8.5 19 7–13 7 6–7
Time to clear Customs, inputs + exports ( days ) 31 37 44 12 17 15
Box 5 : The need to improve the qualified labour supply
While affordable labour is plentiful for the labour-intensive T & C sector, productivity remains quite low. Even so, at least one existing investor believes that his newly trained Ethiopian workforce will achieve the same productivity levels as his Vietnamese workforce after a year of experience and training. In terms of workforce development, the Government of Ethiopia created ETIDI and empowered it to provide training and consulting services. The Government has also sponsored
a skills gap assessment as a precursor to more effective intervention. Yet more efforts are needed : in Ethiopia, workforce development is mostly company-led, which is inefficient on a macroeconomic scale, can lead to inconsistent standards across the labour pool, and takes longer to ramp up. In countries such as India, China and Bangladesh, workforce development is government-led and can be managed to produce large numbers of work-ready trainees.
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Box 6 : A safe haven in a conflicted region
Ethiopia also has a very favourable law and order environment, which is sometimes the first point of concern for international investors. According to Ashish Agarwal, CEO of Kanoria Textiles, an Indian investor in Ethiopia ‘I can walk around at 10 p.m. with dollars in one hand and passport in the other without any fear whatsoever’. It is highly unlikely international investors in competing African
countries could say the same. One of the reasons behind the safe environment is the existence of a stable and progressive Government that is working hard to attract investors. The Government is not only providing special investment incentives ( see box 9 ), but also work-ing to foster a conducive business environment.
Trainable labour is also abundant : approximately 54 million people ( out of a population of 97 million ) are of working age.29 With regards to power, while Ethiopia enjoys a ready supply of hydropower, the transmission and distribution sys-tems need improvement.
Another advantage is the comprehensive market access that Ethiopia enjoys in major T & C markets ( such as the United States, EU and Japan ) as a result of its least de-veloped country status and various trade agreements / ar-rangements ( e.g. AGOA and Everything But Arms ). Under COMESA, Ethiopia has preferential access to regional mar-kets as well. In addition, Ethiopia is expected to be a part of the Tripartite Free Trade Area between COMESA, SADC and EAC, which will see its access to regional markets expanded significantly.
Chief among the Government’s business environment re-forms have been large public investments in infrastructure and power generation ; creation of industrial zones with dedi-cated infrastructure and special incentives ; and streamlin-ing of Government procedures through clarification of the commercial code and setting up of an effective one-stop shop. Most sectoral restrictions on FDI have been lifted, and investors enjoy standard protection from expropriation as well as unrestricted repatriation of profits, although a short-age of foreign exchange can cause delays 30.
Ethiopia does not rank highly in international business rankings compared with its competitors in the T & C sector31 . Even so, the country is making steady progress on all fronts. Policymakers are open and willing to learn from international examples and adopt best practices. These efforts attracted significant investment from notable companies. While word of mouth and more active investment promotion should at-tract even more investors, the Government must also make strides to remove the remaining hurdles to trade.
29.– Source : United Nations Population Division database.30.– See Appendice section E – Incentives for sectoral development in Ethiopia31.– See Appendice Section F – International business rankings of Ethiopia and its competitors
Trade growth is impressive but falls shor t of potentialEthiopian T & C exports have grown dramatically over the past few years, expanding from US $ 8 million in 2004 to US $ 82 million in 2014 ( 10-year CAGR of 26 % ). While the sector had been growing modestly since the turn of the cen-tury, it was not until the Government’s implementation of pol-icies to support the sector in 2010 that growth truly took off. While impressive, it should be noted that this growth falls far short of Government objectives. Whereas the Government called for sectoral exports of US $ 500 million by 2013 and US $ 1 billion by 2016, current levels are only a fraction of the latter target. As illustrated in figure 6, the majority of growth was due to an expansion of apparel exports ( five-year CAGR 74 % ), followed by home textiles and carpets ( 22 % ), and tex-tiles ( 10 % ).
Ethiopia has experienced a period of enviable market and product diversification that has served to increase in-come and decrease the risk of economic shocks that would otherwise be associated with significant market concentra-tions. Whereas Ethiopia exported only a handful of products to an average of five markets in 2004, it is now exporting a wide array of goods to over 20 destinations. The largest source of growth over the past 10 years has been the intro-duction of old products to new markets.
Despite significant progress, the sector continues to face a number of challenges. Of particular note is the difficulty with which Ethiopian companies maintain export relation-ships. The probability of an Ethiopian T & C company sup-plying exports to the same market for two consecutive years is about 42 %. This drops to less than 11 % for an additional year, and approaches 0 % as the horizon is extended32.
32.– See Appendice Section G – Trade Analysis — Fig.2 Probability of export survival, 2002–2014
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Figure 5 : Ethiopia’s T & C exports, 2001–2014 ( US $ thousands )
0
20.000
40.000
60.000
80.000
100.000
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2003
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Apparel Home textiles & carpets Textiles & yarn
Source : International Trade Centre ( 2015 ) ( b ).
Clothing
Ethiopian firms exported US $ 46.1 million of clothing prod-ucts in 2014, up from US $ 2.9 million in 2009 ( five-year CAGR 74 % ). Clothing is an increasingly important source of income and foreign exchange, and exports have been steadily increasing as a share of Ethiopia’s total exports, ris-ing from 0.2 % in 2009 to 1.6 % in 2014. Even so, the country continues to be a net importer of garments ( total imports of US $ 275 million, trade balance of minus US $ 229 million ). Imports have increased dramatically over recent years in order to meet a surge in domestic demand.
Seventy-five per cent of the negative trade balance is due to the eight most-imported products, which include menswear, T-shirts, womenswear and technical wear. These product categories may represent interesting opportunities
for import substitutions, should Ethiopian firms be able to increase production capacity in line with market demand33.
The most important importing market for Ethiopian cloth-ing is Germany, which receives 76 % of the subsector’s total exports, followed by the United States ( 14 % ), Sudan ( 6 % ) and the United Kingdom ( 3 % ). Until 2010 the United States was the largest market due to the market access provided under AGOA, at which point it was overtaken by Germany. The impressive growth of exports to Germany is due to the relocation of many German-oriented Turkish firms to Ethiopia. These companies were attracted by Ethiopia’s low labour costs and preferential market access to the EU under the Everything But Arms programme34.
33.– See Appendice – Section G – Trade Analysis – Fig.3 Contribution to Ethiopia’s clothing trade deficit, 201434.– See Appendice – Section G – Trade Analysis – Fig.4 Top importers of Ethiopian garments, 2001–2014 ( US $ thousands )
Figure 6: Ethiopia’s trade in clothing products, 2001–2014 (US$ thousands)
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Source: International Trade Centre, Trade Map database <www.trademap.org>
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In 2004 there were only two countries to which Ethiopia ex-ported more than US $ 100,000 of garments, including one country that imported over US $ 1 million. In 2014 there are seven countries importing over US $ 100,000, including four that import more than US $ 1 million. Despite its success in the United States and Europe, Ethiopia is not exporting to many other developed, emerging or frontier markets, even if many of them offer Ethiopia duty-free market access as a result of its least developed country status.
Ethiopia’s most important garment exports were T-shirts ( 19 % ), Men’s underpants, pyjamas, bathrobes, etc. ( 12 % ), Women’s blouses & shirts ( 9 % ), Women’s suits, jackets, dresses, skirts, etc. ( 7 % ), Jerseys, pullovers, cardigans, etc. ( 7 % ), Women’s suits, jackets, dresses, skirts, etc., knit-ted / crocheted ( 7 % ).Growth has been impressive for all of these products, ranging from a five-year CAGR of 63 % for jerseys, pullovers, cardigans, etc., to a CAGR of 393 % for pantyhose, tights, stockings and other hosiery 35. Exports have become significantly less concentrated over the past decade as the sector diversifies its product offerings. Today, the top five products account for 55 % of total garment ex-ports, as opposed to 70 % in 2004. In addition, today there are 12 products that export more than US $ 1 million worth of goods, while in 2004 there were none 36.
Textiles
Ethiopian firms exported US $ 35.9 million of textile products in 2014 ( including home textiles ), up from US $ 14.9 million in 2009 ( five-year CAGR 19 % ). Nevertheless, the trade defi-cit has nearly tripled over the past decade ( trade deficit of US $ 235 million in 2014 ) because the rapidly expanding garment sector has relied largely on foreign inputs ( see figure 8 ).
The majority of the textiles trade deficit is due to imports of man-made filaments ( 52 % ) and home textiles ( 26 % ). The
35.– See Appendice – Section G – Trade Analysis – Table 1 Ethiopia’s top 10 garment exported garments, 2009–2014 ( US $ thousands )36.– See Appendice – Section G – Trade Analysis – Table 2 Top changes in market share by product
US $ 152 million and US $ 28 million trade deficits with China and India respectively account for 65 % and 12 % of the total trade deficit 37 .
The most important importing market for Ethiopian tex-tiles is Turkey, which receives 58 % of total exports, followed by Germany ( 14 % ), Italy ( 13 % ), China ( 11 % ) and the United States ( 2 % ). The heavy concentration in Turkey is due to significant investments in Ethiopia made by Turkish firms who are integrating this textile production into their global value chains.
Despite the increase in textile exports, recent trends have been less than enthusiastic. Market concentration has worsened : in 2004, the top five destinations imported 83 % of total textile exports, whereas today the top five import-ers account for 98 % of sales. In addition, there were eight markets in 2004 that purchased more than US $ 100,000 of textile goods from Ethiopia. In 2014, there were only seven markets in this category. It is also worrisome that exports have fluctuated significantly over recent years. Exports to Turkey and China fell by 10 % and 67 % respectively in 2014, following significant upswings in the year prior38.
Ethiopia’s most important textile exports were cotton yarn ( 39.8 % ) ; cotton fabrics ( 14.5 % ) ; bed, table, toilet and kitchen linens ( 13.6 % ) ; and special woven or tufted fabric, lace, tapestry, etc. ( 8.1 % ). Growth has been impressive for all of the top product categories, although the baseline is quite low ( see table 9 )39.
It should also be noted that exports have become slightly less concentrated over the past five years. The top five and top 10 products ( four-digit HS level ) accounted for 74 % and 91 % of textile exports respectively in 2014, as opposed to 81 % and 95 % in 2009. Even so, product concentrations re-main significant.
37.– See Appendice – Section G – Trade Analysis – Fig.5 Contribution to Ethiopia’s textiles trade deficit ( 2014 )38.– See Appendice – Section G – Trade Analysis – Fig.6 Top importing markets for Ethiopian textiles, 2001–2014 ( US $ thousands )39.– See Appendice - Section G – Trade Analysis – Table 3 Ethiopia’s top 10 textile exports, 2009–2014 ( US $ thousands )
Figure 7 : Ethiopia’s trade in textile products, 2001–2014 ( US $ thousands )
-400.000
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Source : International Trade Centre ( 2015 ) ( b ).
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Table 4 : Ethiopia’s top 5 textile exports, 2009 and 2014 ( US $ thousands )
Product label 2009 2014 Five-year CAGR Share ( % )
Total 14 957 35 975 19.2 % 100.0 %
Cotton yarn 6 187 14 334 18.3 % 39.8 %
Cotton fabrics 3 108 5 214 10.9 % 14.5 %
Bed, table, toilet and kitchen linens 55 4 894 145.4 % 13.6 %
Special woven or tufted fabric, lace, tapestry, etc. 65 2 904 113.8 % 8.1 %
Furnishing articles n.e.s., excluding 94.04 783 2 855 29.5 % 7.9 %
Source : International Trade Centre ( 2015 ) ( b ).
Trade statistics make it clear that the T & C sector has yet to find a strategy that will allow it to expand to new markets and ensure its survival in existing ones. Product and market con-centrations continue to be worrisome, and enterprises are not taking advantage of Ethiopia’s preferential market access to the fullest extent. While growth has certainly been impres-sive, it has fallen well short of the Government’s ambitious targets. The sectoral analysis sheds light on a number of is-sues that seem to be inhibiting greater competitiveness and
stronger growth. Skills are often unaligned to the demands of the industry, value addition and integration are lacking, and institutional support is limited. Although the Government has made positive strides with regards to policy, a number of issues continue to constrain the business environment. It is necessary to analyse these competitive issues in more depth, using evidence from the field. A greater analysis of these challenges will allow stakeholders to develop an effec-tive roadmap that can adequately tackle the key constraints.
STRATEGIC ISSUES AND COMPETITIVE CONSTRAINTS
Traditionally, the scope of export strategies and value chain roadmaps has been defined in terms of market entry, such as market access, trade promotion and export development. This ignores several important factors in a country’s com-petitiveness. For an export strategy to be effective it must address a wider set of constraints, including any factor that limits : the ability of firms to supply export goods and ser-vices ; the quality of the business environment ; and the de-velopment impact of the country’s trade, which is important to its sustainability. This integrated approach is illustrated by the four gears framework schematic on the right.
To increase the specificity of constraint analysis for the T & C sector, a detailed constraint overview is provided for each subsector of the industry, namely : textiles and clothing. In cases where the same constraints are shared, they will be detailed under the subheading ‘across the value chain.’
Supply-side issues affect production capacity and in-clude challenges in areas such as availability of appropriate skills and competencies, diversification capacity, technol-ogy, and low value addition in the sector’s products.
Business environment constraints are those that influ-ence transaction costs, such as regulatory environment, ad-ministrative procedures and documentation, infrastructure bottlenecks, certification costs, Internet access, and cost of support services.
Market entry constraints are essentially external to the country ( but may also be manifested internally ), such as
market access, market development, market diversification and export promotion.
Social and economic concerns include poverty reduc-tion, gender equity, youth development, environmental sus-tainability and regional integration.
Border IssuesBorder-In Issues
Border-Out IssuesDevelopment Issues
CapacityDevelopment
Cost ofDoing Business
Developinig skills
and Entrepreneurship
Capac
ity
Diversi
ficati
on
Infrastructure and
Regulatory Reform
Trad
eFa
cilita
tion
Market Accessand Policy Reform
National Promotion
and Branding Trad
e Su
ppor
t
Serv
ices
Poverty Alleviationand Gender Issues
Regional Development
and Integration
Envir
onm
enta
l
Sust
aina
bilit
y and
Clim
ate
Chan
ge
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Box 7 : Competitive constraints in the Ethiopian T & C sector
Border-in ( supply-side )
CapacityDevelopment
Developinig skills
and Entrepreneurship
Capac
ity
Diversi
ficati
on
Across the value chain
Skill gap :
• Limited availability of skilled specialists hinders productivity, quality and value addition – Inadequate TVET system impacts the development of a qualified labour supply – Insufficient in-company training hinders the development of a qualified labour supply – Weak HR management capacities reduce incentives and lead to high turnover – Other factors
• Limited availability of competent managers limits operational, systems and process efficiency – Inadequate education affects the development of necessary management skills – Inexperienced T & C managers and resistance to change – Limited access to foreign expertise
• Lack of modern information technology ( IT ) systems hinders the ability of enterprises to increase value addition and access demanding markets
• Lack of a market-driven approach within companies leads to a disconnect between the sector and foreign demand• Difficulties adhering to quality standards reduce competitiveness in international markets
Machinery : Obsolete equipment diminishes productivity and quality, and hinders value addition
Textiles Input supply :
• Limited quantity and quality of local cotton reduces competitiveness and diminishes opportunities for local value addition
– Limited quality of local cotton – Limited and unpredictable production of cotton
• Low quality of yarn diminishes profitability and reduces quality throughout the value chain• Low capacity utilization limits profitability
Clothing Input supply :
• Suboptimal sourcing practices reduce cost competitiveness and hinder product development• Limited value addition reduces competitiveness in international markets
Border ( business environment )
Cost ofDoing Business
Infrastructure and
Regulatory Reform
Trad
eFa
cilita
tion
Across the value chain
Trade facilitation issues : Inefficient Customs system leads to high costs and delays
Organization :
• Limited institutional capacity and poor sector coordination• Weak quality management infrastructure hinders compliance with market requirements
Infrastructure :
• Weak communications infrastructure diminishes the ability of companies to meet buyer requirements• Energy shortfalls reduce profitability and diminish the ability of companies to meet buyer requirements
Cost of doing business :
• Limited access to finance hinders investment in value addition• Expensive and unreliable transportation reduces the price competitiveness of Ethiopian goods in international
markets and hinders the ability of enterprises to deliver goods in a timely fashion
Border-out ( market access )
Market Accessand Policy Reform
National Promotion
and Branding Trad
e Su
ppor
t
Serv
ices
Across the value chain
Trade information :
• Limited awareness of preferential trade agreements hinders export expansion• Inadequate access to and use of trade intelligence limits growth opportunities
Trade promotion :
• Lack of a national branding strategy hinders market development• Lack of trade promotion capacities hinders the sector’s strategic development• Lack of targeted investment promotion efforts reduces the attraction of foreign capital, technology and expertise
Market access policies : Prevalence of short-term export relationships hinders the sector’s strategic development
Development issues
Poverty Alleviationand Gender Issues
Regional Development
and Integration
Envir
onm
enta
l
Sust
aina
bilit
y and
Clim
ate
Chan
ge
Across the value chain
CSR :
• Subpar working conditions have the potential to pose health and safety risks• Environmentally and socially responsible practices are not an integral part of doing business in the sector,
threatening negative social impacts and ineligibility to supply socially concerned buyers
Textiles Water pollution :
• Outdated dyeing methods pollute waterways• Rapid expansion of cotton fields may impact indigenous livelihoods and local ecosystems
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SUPPLY SIDE ISSUES
Box 8 : Supply-side constraints in Ethiopia’s T & C sector
Border-in ( supply-side )
CapacityDevelopment
Developinig skills
and Entrepreneurship
Capac
ity
Diversi
ficati
on
Across the value chain
Skill gap :
• Limited availability of skilled specialists hinders productivity, quality and value addition – Inadequate TVET system impacts the development of a qualified labour supply – Insufficient in-company training hinders the development of a qualified labour supply – Weak HR management capacities reduce incentives and lead to high turnover
• Limited availability of competent managers limits operational, systems and process efficiency – Inadequate education affects the development of necessary management skills – Inexperienced T & C managers and resistance to change – Limited access to foreign expertise
• Lack of modern IT systems hinders the ability of enterprises to increase value addition and access demanding markets• Lack of a market-driven approach within companies leads to a disconnect between the sector and foreign demand• Difficulties adhering to quality standards reduce competitiveness in international marketsMachinery : Obsolete equipment diminishes productivity and quality, and hinders value addition
Textiles Input supply :
• Limited quantity and quality of local cotton reduces competitiveness and diminishes opportunities for local value addition
– Limited quality of local cotton – Limited and unpredictable production of cotton
• Low quality of yarn diminishes profitability and reduces quality throughout the value chain• Low capacity utilization limits profitability
Clothing Input supply :
• Suboptimal sourcing practices reduce cost competitiveness and hinder product development• Limited value addition reduces competitiveness in international markets
Across the value chain
Skill gap
Limited availability of skilled specialists hinders productivity, quality and value addition
‘I do not encounter problems in finding workers for my firm. People that I recruit are also very open to the learning process. The problem that I face is that workers have not had the experience of working in modern industrial plants; they are not aware of some basics related to the functioning of this environment. I need to start from scratch, and it takes time… and money.’
Industry opinion
Ethiopia’s T & C sector suffers from a lack of sufficiently skilled technicians and specialists, despite the presence of a large labour pool in the country. The lack of skills leads directly to lower productivity and quality, which inhibit the ability of the sector to add value, meet buyer requirements and increase profitability.
While the lack of qualified operators is the key problem for the textile segment, clothing companies lack both operators and designers : the lack of operators reduces productivity and quality, and the lack of designers hinders the ability of clothing companies to move up the value chain and pro-duce more value added goods.
Not only is the lack of skills a drag on growth in and of itself, but it also diminishes the positive gains that would otherwise be achieved through capital investment : though many companies have upgraded their capacities through the purchase of new equipment, for example, they lack the staff needed to operate it. As a result, much of this equip-ment either remains idle or operates below capacity, leading to lower productivity and questionable quality. The reasons for the dearth of adequately skilled workers are numerous, and include factors that are both internal and external to the sector’s enterprises.
Inadequate TVET system impacts the development of a qualified labour supply
The T & C sector requires both skilled and semi-skilled workers, and there are a number of universities and around 100 TVET institutions specialized in T & C. Nevertheless, these institutions find it difficult to prepare students in accordance with the sector’s requirements. The TVET system has seen few notable improvements over recent years with regards to the quality of training, teachers and infrastructure. The
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links between universities and TVET institutions and industry are weak, so trainings do not adequately reflect the needs of industry. In addition, the lack of internship programmes ( and the questionable quality of those that exist ) means that students are not gaining enough practical experience. It should be noted that there are no standardized certifications for trainings in the sector. There is also a lack of available training institutes in most regions outside of Addis Ababa. In addition, the TVET system does not have enough capac-ity to provide training for a sufficient number of trainees.
In the PoA, activities 1.1.1, 1.1.7, 2.3.1 to 2.3.6, 2.3.10, 2.3.11, and 2.4.1 to 2.4.3 respond to this issue.
Insufficient in-company training hinders the development of a qualified labour supply
In the absence of an adequate TVET system, compa-nies themselves should be preparing their own specialists. Nevertheless, few companies provide adequate training. While most companies do provide at least some training for operators, the scope of such trainings is quite narrow. Not many companies have internal training schools and ap-propriate HR development facilities. Some companies have hired foreign firms to perform more appropriate trainings, but it should be noted that local owners often lack access to such expertise. This may lead to a disconnect, wherein foreign owners gain an uneven edge in their competition with local entrepreneurs. However, the need for training goes beyond technical competency : employees also re-quire behavioural training ( dress code, basic security, time management, etc. ). All of these factors together would lead to more productive employees.
In the PoA, activities 1.1.1, 1.1.2, 1.1.5, 1.1.7, 1.2.1, 1.6.1, 1.6.2, 1.7.1 to 1.7.3, 1.8.1, 2.3.4, and 2.4.1 to 2.4.3 respond to this issue.
Weak HR management capacities reduce incentives and lead to high turnover
Salaries within the sector are quite low, averaging around US $ 50 per month. Low wages, together with the lack of other financial incentives, do little to promote productivity and en-hance loyalty. In addition, the low salaries lead to high levels of absenteeism, which are estimated to be as high as 10 %. Many workers skip work in order to pursue better-paying, opportunistic side jobs, knowing that they cannot be fired as long as they are not absent for more than five days at a time.
Another issue to be considered is poor working condi-tions, including inadequate housekeeping and lighting as well as unhygienic amenities.40 In addition, employers do little to promote a sense of belonging or loyalty among staff. Festivities and other team-building exercises, as well as the introduction of benefits such as transportation, medical services, subsidized meals would go a long way towards fostering allegiance among staff.
40.– Lee, David Yuen Hoi ( 2010 ). Benchmarking of the Ethiopian Textile Industry Vision 2015, p. 124. Project No. YA / ETH / 001. UNIDO.
In addition to affecting productivity, all of these issues lead to high employee turnover. This results in a constant brain drain in which trained workers leave a company, only to be re-placed by untrained substitutes. This in turn makes compa-nies less motivated to invest in the appropriate training and prevents companies from capitalizing on acquired skill sets.
In the PoA, activities 1.1.1, 1.1.2, 1.1.5 to 1.5.3, and 1.8.1 and 1.8.2 respond to this issue.
Limited availability of competent managers limits opera-tional, systems and process efficiency
Despite the fact that, overall, mid- and high-level man-agement skills are relatively good within SMEs, there is still room for improvement. Many managers continue to make use of outdated management methods that do little to spur higher productivity, reflecting the legacy of public sector planning41.
Quality management is neglected due to limited knowl-edge among management of both modern practices and market requirements ; this limits value addition and profit-ability. Lack of manager exposure to modern technologies is also a detriment : they lack knowledge about the latest machinery, hindering the upgrading of equipment. Similarly, limited knowledge of IT hinders the uptake of more inte-grated systems that would allow for greater value addition and service provision as required by modern TNCs. Lastly, managers have a poor understanding of HR management, thereby resulting in inadequately skilled specialists, high turnover, and limited workforce loyalty.
Inadequate education affects the development of neces-sary management skills
‘I entered the textile industry recently because it seemed to be very promising. I was a farmer before, and T & C looked very attractive to me. Now I am fac-ing some problems identifying the right product for my clients, and I do not know much about machinery in textiles. I came to know that this is a crucial aspect of this industry.’
Industry opinion
As with the training of specialists and technicians, a key constraint is the lack of adequate TVET and university pro-grammes. Weak linkages with industry result in an education system that does not reflect the needs of the T & C sector. Teachers lack adequate knowledge of how Ethiopia’s T & C companies operate : such knowledge would provide valu-able insight into current processes and needs for improve-ment. In addition, teachers lack knowledge of international
41.– Ibid. : p. 112.
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best practices within the sector, hindering their ability to stimulate modern management practices in Ethiopia. In addition to sector-specific topics, management also lacks training in generic management skills such as HR manage-ment, planning, costing and pricing.
In the PoA, activities 1.1.3, 1.1.4, 1.1.6, 1.4.6, 1.4.7, 1.8.1, 1.8.2, 2.3.2, 2.3.4, and 2.3.7 to 2.3.11 respond to this issue.
Inexperienced T & C managers and resistance to changeEthiopia’s T & C sector is relatively young. As such, many
managers do not have adequate sector-specific knowledge, having frequently worked in other sectors before moving to T & C. Most industrialists do not have an industrial back-ground but instead come from areas of the economy such as agriculture. As a result, it is even more important that the education system be able to offer adequate sector-specific training. It should also be noted that many managers have a strong resistance to change. This reinforces the status quo, preserving current production and technology levels.
In the PoA, activities 1.1.3, 1.1.4 and 1.5.3 respond to this issue.
Limited access to foreign expertiseAs with specialists, there is also a gap between the ex-
pertise that can be accessed by local companies and that which can be accessed by foreign-owned companies. As a result, locally owned companies generally have weaker management in place.
In the PoA, activities 1.1.6, 1.4.6, 1.4.7, 1.4.9, 1.5.3, 1.8.1 and 1.8.4 respond to this issue.
Lack of modern IT systems hinders the ability of enterprises to increase value addition and access demanding markets 42
The increasing importance of IT capacities for T & C sup-pliers is largely the result of two trends43. Firstly, international T & C buyers are shifting more towards lean retailing and they are looking for ‘full package’ service providers assuming most of the non-sale portions of the value chain, including the sourcing of materials, design and logistics. Secondly, fast fashion has revolutionized supply chain management and modern suppliers must be able to face fast turnovers. Given Ethiopia’s proximity to Europe when compared with Asian competitors, capturing the fast fashion market is a particu-larly attractive option for sectoral development. Both of these opportunities require IT capacities that allow companies to share, analyse and use information flows, and optimize systems processes. Ethiopia’s T & C companies lack mod-ern IT capacities such as Entreprise Resources Systems.
Improvements have been hindered by the limited ex-posure of company management to these modern IT sys-tems, and the education system does little to fill the gaps.
42.– Information for Development Programme ( 2008 ). The Global Textile and Garments Industry : The Role of Information and Communication Technologies ( ICTs ) in Exploiting the Value Chain.43.– See Global Trends
Increased awareness of the costs and benefits of such sys-tems will be needed to convince managers that such sys-tems are a worthy investment. Visits to companies abroad would also expose management to best practices and mo-tivate necessary upgrades.
While external to enterprises, it must be noted that Ethiopia suffers from poor ( slow and unreliable ) connectiv-ity. In order for Ethiopian T & C companies to be considered for the most attractive contracts, IT capacities and reliability will need to be improved.
In the PoA, activities 1.2.1 and 1.8.4 respond to this issue.
Lack of a market-driven approach within companies leads to a disconnect between the sector and foreign demand 44
‘I invested in a textile plant recently with some fairly new machinery. However it seems I cannot find any buyers for my products. So at the end of the day, I often operate under capacity.’
Industry opinion
A key constraint that lies at the root of many of the sector’s problems is the lack of a market-driven approach. Instead, enterprises are production-driven. Disconnected from final buyers, SMEs are unable to align product development, supply chain management and internal skills development with the requirements of final buyers.
The reasons for this disconnect are numerous and in-clude the lack of a market-oriented mentality among man-agers. This stems largely from limited trade intelligence, as both SME and trade support network capacities for gather-ing and using such intelligence is lacking. With regards to SME capacities, market research departments are poorly developed, their personnel lack adequate expertise, and there is little contact with potential customers in the field.
In the PoA, activities 1.8.1 to 1.8.3, and 2.2.3 to 2.2.4 re-spond to this issue.
Difficulties adhering to quality standards reduce competi-tiveness in international markets
There is a lack of awareness in the private sector, and especially among SMEs, regarding international voluntary standards related to T & C. This is due largely to the young nature of the industry, which lacks adequate exposure to ex-port markets. In addition to being unfamiliar with internation-al quality standards, firms are also unaware of the benefits of compliance for exports. There is poor understanding among businesses of the importance of establishing control sys-tems within their production structures. This is particularly
44.– Ibid. : p. 107, 108.
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problematic in the spinning and weaving subsegments of the chain.
In the PoA, activities 1.3.1-1.3.5 respond to this issue.
Machinery
Obsolete equipment diminishes productivity and quality, and hinders value addition
While many companies have upgraded their equipment over the years, SMEs in particular, continue to rely on out-dated technology. Retooling should be done ideally every 10 to 15 years, particularly in the textile segment, as rapid technological advancements result in improved productivity, quality and automation, all of which provide a cost advan-tage. Nevertheless, many companies suffer from a cost and quality disadvantage vis-à-vis both domestic and foreign competitors because of a lack of upgrading. For many com-panies, particularly spinning mills, the lack of newer machin-ery leads to overstaffing. Even where equipment has been upgraded, it is often not used to its full potential. This is due to both a dearth of adequately skilled workers and the pro-liferation of basic production. Access to finance is one of the key constraints hindering necessary upgrading.
Management often finds it difficult to identify the appro-priate technology. They generally lack exposure to interna-tional best practices, are unaware of what machinery is on the market, and are unable to appropriately evaluate their needs ( it should however be noted that ETGAMA works with the Italian Association of Textile and Apparel Manufacturers and Related Industries to ensure the transfer of technologi-cal knowledge ). Another problem is the lack of maintenance planning and budgeting. In some cases spare parts cannot be purchased : the equipment is so old that suppliers have stopped producing the parts.
In the PoA, activities 1.2.1 and 1.6.1 to 1.6.3 respond to this issue.
Textiles
Input supply
Limited quantity and quality of local cotton reduces com-petitiveness and diminishes opportunities for local value addition
The ability to integrate domestic cotton into the T & C value chain represents a key opportunity for local value addition. However, local production is unable to supply an adequate quantity and quality of cotton. Where quantity is limited, the sector has no choice but to import the differ-ence. When quality is poor, textile companies have the op-tion of producing lower-quality products or importing higher quality cotton.
Importing cotton is less than ideal because it creates a number of cost and operational burdens : importing adds roughly US $ 0.30 per kilogram of ginned cotton, reducing
profitability. It also reduces the flexibility with which the lo-cal sector can operate. Since cotton is subject to lengthy transport, a textile company would be less able to respond to rapid changes in market demand. The underlying reasons for limited quantity and quality of local cotton are as follows.
Limited quality of local cottonCotton quality is affected at both the production and gin-
ning stages of the value chain. Suboptimal production and post-harvest techniques limit quality at the production stage. Indeed, the fragmented farming system makes it difficult for farmers to access knowledge and extension services that would improve such techniques. Farmers also lack access to finance that would allow them to ensure quality through the use of appropriate inputs. Ginneries meanwhile use very outdated equipment, leading to frequent spoilage of cot-ton fibre. Their skills also need to be improved, and the im-provement of TVET services for the ginning segment would be welcomed.
Both producers and ginners have little motivation to in-vest in quality due to the existence of a preferential market-ing scheme : under this scheme, spinning mills are required to buy the totality of local production before importing. While ensuring a market and price for local cotton producers, it discourages them from improving quality. Similarly, the state enterprise tasked with acting as the sole buyer of cotton is not yet fully functioning. As a result, prices are still being set without regard to quality.
In the PoA, activity 1.2.3 responds to this issue.
Limited and unpredictable production of cottonQuantity is limited first and foremost by the fact that only
4 % of cultivable Ethiopian land is being used to grow cot-ton ; investors must be motivated to invest in production. Quantity is often unreliable as well, since farmers frequently shift to other crops. Since the cost to shift from cotton to another crop ( such as sesame ) is quite low, such switches will always remain a risk.
The other reason for low quantity is the low yields achieved by the cotton sector in Ethiopia. This is a result of inadequate harvest and post-harvest practices, and the limited use of appropriate inputs such as agrichemicals and improved seed varieties. The diffusion of best practices and inputs is hindered by the fragmented farming system and the inability of extension services to adequately reach pro-ducers. The availability of inputs is also limited : the quality of seed supply is quite low ( the varieties used are weak with regards to productivity and resistance ), research is inad-equate, Bt45 cotton is not yet allowed, and there is no institu-tion responsible for cotton inputs. Even where appropriate inputs exist, farmers cannot finance them.
In the PoA, activity 1.2.2 responds to this issue.
45.– A popular genetically modified variety of cotton that combats insect pests by producing Bacillus thuringiensis toxins.
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Low quality of yarn diminishes profitability and reduces qual-ity throughout the value chain
‘I am a supply manager in a garment company. It is not that I do not want to buy local yarn. I would love to contribute to the industry. But the level of quality of available yarn is insufficient for me to ensure the final product demanded by our clients. We also require some varieties of yarn that are simply not available on the local market.’
Industry opinion
Many Ethiopian spinning companies find it difficult to pro-duce high quality yarns. Only a few companies produce >25 % Uster. The reasons for the inability to improve qual-ity are numerous. Some spinning companies do not have laboratory instruments to measure yarn quality. In addition, there is a low awareness of current international standards when it comes to yarn quality. Both worker skill levels and outdated machinery play a role in diminishing yarn quality.
The effects of the dearth in quality are numerous. Not only are the spinning companies forced to sell their yarn for lower prices, it also means that the local T & C sector finds it difficult to purchase local inputs of an acceptable quality. A textile company might be constrained to produce lower-quality fab-rics, and the garment producer will in turn sew clothes that are less competitive in international markets. The alternative for T & C producers is to import the necessary materials with all of the cost and flexibility burdens that such imports entail.
In the PoA, activities 1.2.2 and 1.2.3 respond to this issue.
Low capacity utilization limits profitabilityOverall, Ethiopia’s textile mills operate well below capaci-
ty, particularly with regards to fabric production and finishing ( yarn spinning is approximately at 70 % capacity utilization, and fabric production and finishing at ~50 % capacity utiliza-tion ). Low capacity utilization has a number of effects on the industry. First and foremost, profitability is limited. In addi-tion, reduced productivity it may be a contributing factor to low wages, thereby contributing to the host of problems that arise in conjunction with weak HR practices. Low capac-ity utilization also affects the ability of enterprises to afford technological upgrades as it diminishes their ability to pay off the loans for that old equipment.
Although capacity utilization is 35 % lower than the in-dustry average in mills that use old equipment, it is still 10 % below average in mills with new equipment. It is thus clear that obsolete machinery plays a role in diminishing capacity utilization but that it does not account for 100 % of the de-ficiency. Part of the difference is accounted for by the lack of skilled labour and inefficient management, as detailed previously in this value chain roadmap.
In the PoA, activity 1.2.2 responds to this issue.
Clothing
Input supply
Suboptimal sourcing practices reduce cost competitiveness and hinder product development
Most of the garment sector’s requirements in terms of fabrics, accessories, threads and buttons are imported from abroad. This puts Ethiopia at a price disadvantage com-pared with most of its Asian competitors, who can leverage ample domestic supply and / or import inputs more easily. It also reduces the flexibility with which Ethiopian producers can respond to buyer demands. Similarly, most Ethiopian apparel factories have little experience in sourcing their own materials. At the moment, garment producers are unaware of best practices with regards to sourcing.
While integrated mills make use of their own fabrics, Ethiopia’s stand-alone textile producers offer inadequate fabric types with regards to diversity and, at times, quality. Garment producers must look outside the country for their fabrics in order to find greater variety. With regards to other in-puts ( such as accessories ), investors have been slow to enter the segment. Foreign investors have been concerned by the single borrower’s limit,46 the limited cost competitiveness of lo-cal supplies, and the size of the domestic market, which at the moment is seen as too small to be attractive. Local investors have also been unmotivated thus far to move into the segment.
It should be noted that the Government is trying to pro-vide incentives for investors who might be interested in mov-ing into accessories production. In line with this goal, EIC has conducted feasibility studies for accessories and is ac-tively seeking investors for the segment.
In the PoA, activities 1.2.3 to 1.2.6, and 2.3.3 responds to this issue.
Limited value addition reduces competitiveness in interna-tional markets
Despite the arrival of many large, Western buyers, much of Ethiopia’s garment sector continues to be focused on the production of basic, low-cost goods. However, a number of factors are hindering such a scenario. Chief among them is the lack of adequate design skills. Such skills have thus far not been fostered by universities or TVET institutions, or within companies themselves. Enhanced curricula and part-nerships with foreign design institutions would go a long way to enhancing design capacities. Closely related is the limited use of trade intelligence – which would alert enterprises to the changing demands of sophisticated consumers – as well as the continued prevalence of a production-driven mental-ity. In order to move up the value chain, enterprises will need to leverage a greater quality and variety of inputs that are selected based on characteristics of target markets.
In the PoA, activities 1.2.4 to 1.2.6, and 2.5.1 respond to this issue.
46.– Limit of US $ 22 million imposed for each borrower.
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BUSINESS ENVIRONMENT ISSUES
Box 9 : Business environment constraints in Ethiopia’s T & C sector
Border ( business environment )
Cost ofDoing Business
Infrastructure and
Regulatory Reform
Trad
eFa
cilita
tion
Across the value chain
Trade facilitation issues :
• Inefficient Customs system leads to high costs and delaysOrganization :
• Limited institutional capacity and poor sector coordination• Weak quality management infrastructure hinders compliance with market requirementsInfrastructure :
• Weak communications infrastructure diminishes the ability of companies to meet buyer requirements• Energy shortfalls reduce profitability and diminish the ability of companies to meet buyer requirementsCost of doing business :
• Limited access to finance hinders investment in value addition• Expensive and unreliable transportation reduces the price competitiveness of Ethiopian goods in international markets
and hinders the ability of enterprises to deliver goods in a timely fashion
Across the value chain
Organization
Limited institutional capacity and poor sector coordinationInstitutional capacities, and particularly those of sector
associations, are relatively weak. These organizations lack the necessary financing and expertise to provide relevant and quality services to exporters in the areas of policy ad-vocacy, market intelligence, trade promotion and quality management, among other issues. Sectoral growth will require the private sector to advocate for necessary regula-tory reform. Improvements in market intelligence and qual-ity management will allow enterprises to produce goods in accordance with market demand. Trade promotion services will facilitate market expansion through the effective and co-ordinated promotion of Ethiopian goods.
Institutions are also unable to coordinate sector partici-pants effectively. This lack of coordination is a key roadblock to greater vertical integration, which would require enhanced communication between the different segments of the value chain. Coordination would also allow for group bargaining and the consolidation of orders in order to meet larger or-ders flexibly. A key issue will be building trust and reducing competition between associations so that they come to view each other as partners rather than competitors.
In the PoA, activities 2.1.1 to 2.1.5, 2.2.1 to 2.2.54, and 2.5.1 and 2.5.2 respond to this issue.
Weak quality management infrastructure hinders compli-ance with market requirements
While the lack of quality management in the sector is due in part to deficiencies within companies, the problem is compounded by a weak national quality management infrastructure. ENAO is responsible for accrediting all con-formity assessment bodies in Ethiopia. Nevertheless, its accreditation is only valid at the national level, as it is not
yet recognized by International Laboratory Accreditation Cooperation ( ILAC ) and the International Accreditation Forum ( IAF ). The test results of Ethiopian conformity as-sessment bodies, such as laboratories, are therefore not recognized internationally. This means that even where en-terprises are able to produce goods of adequate quality, they are unable to prove compliance without resorting to expensive foreign testing.
‘If I want to certify my production to international standards, I need to send it to another country; sometimes even to Europe. This is adding to my costs tremendously. If national laboratories were ac-credited to do the same work it would have spared me a lot of money.’
Industry opinion
Laboratory capacities are also lacking. Not only are there not enough laboratories, those that do exist have limited abilities to test inputs such as fabrics and accessories for compliance with international quality requirements. In addi-tion, there is a lack of third-party consulting services avail-able to enterprises for quality issues. Of particular note, there are limited domestic capacities for chemical and en-vironmental certification. Each time an enterprise requires a relevant audit, an expert must be brought in from Egypt. This increases the cost of compliance and reduces the ability of enterprises to act in a timely matter.
In the PoA, activities 1.3.2, 1.4.1 to 1.4.3, and 2.5.1 to 2.5.4 respond to this issue.
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Trade facilitation issues
Inefficient Customs system leads to high costs and delays77 % of the time required to trade across borders is
needed for document preparation and customs clearance and inspections47. Indeed, documentation and clearance can also add over US $ 1,000 to the cost of the trade pro-cedure. To put this in context, document preparation and Customs clearance for import costs an average of US $ 1,090 in Ethiopia. This is roughly equivalent of the US $ 1,100.40 total cost of import registered in OECD countries : by the time documents are prepared and the goods are cleared, Ethiopian companies have already spent as much money as their OECD competitors will have spent on the entire trade operation.T & C stakeholders note that Customs IT infrastruc-ture needs upgrading in order to streamline their operations. In addition, Customs officials are not familiar with textile products and classifications. For example, imported fab-rics are taxed based on fabric type. Agents, however, have trouble identifying the fibre type. Clearance therefore takes a long time and agents sometimes apply the wrong taxation. Other problems include limited knowledge of international standards for commodities, as well as some cases in which the wrong price is set for products because duty prices were not updated at the Customs post. Significant strides could be made if agents were better trained in identifying and clas-sifying T & C products.
Clearly, simplification of trade procedures and docu-mentation requirements would go a long way to reducing costs and time burdens. Creating a streamlined process ( fast track ) for reputable exporters could be another solution in the absence of such reforms.
The high cost of trade is particularly troubling : most in-puts are imported, meaning that many exporting compa-nies are hit twice with the cost burden. The length of time required for trade procedures is just as worrisome, as it re-duces the ability of the sector to respond flexibly to buyer demands. After receiving an order from a buyer, T & C com-panies in Ethiopia might have to wait 1.5 months to receive materials. Exporting once the goods are ready would take an additional 1.5 months. In total, Ethiopian companies could require up to three months of lead time due solely to trade procedures, without accounting for production.
In the PoA, activities 2.7.1 to 2.7.4 respond to this issue.
Infrastructure
Weak communications infrastructure diminishes the ability of companies to meet buyer requirements
In addition to energy supply, another infrastructure con-cern is the poor communications network. Mobile communi-cation and high speed Internet are not available in all areas of the country and service can be quite inconsistent outside
47.– See Appendice Section H : Time and cost involved in trading across borders in Ethiopia
of major urban areas. Ethiopia continues to allow its national telecom company ( Ethio Telecom ) to have a monopoly and, despite some improvements over recent years, the lack of competition has hindered progress. While the market for mobile and Internet technologies is growing rapidly, albeit from a small base, the quality of such services remains questionable : Ethio Telecom has been unable to meet the growing demand.48 In addition, fixed-line penetration is ex-tremely low, hindering the development of Internet services. Despite deficiencies, it should be noted that the Government is committed to investing heavily in the ICT sector.
Success in the modern T & C marketplace, lean retailing and fast fashion buyers, requires connected ERP systems based on reliable and modern communications networks.
In the PoA, activities 1.3.1 to 1.3.5 respond to this issue.
Energy shortfalls reduce profitability and diminish the ability of companies to meet buyer requirements
Ethiopian enterprises enjoy some of the lowest electricity costs in the world thanks to the prevalence of affordable and sustainable hydropower. Costs are especially attractive in industrial zones with the preferential ‘low voltage time of day’ tariff. Nevertheless, and despite the generation of adequate electricity, power outages are common.
While the Government is working to address this prob-lem through the modernization of the substation network, the current power outages represent a pressing challenge for the T & C sector. Blackouts result in underproduction and can also lead to failure to deliver orders and breach of con-tract, resulting in both reputational and financial damage that may be irreparable. Lastly, the outages themselves may contribute to the continued reliance on basic, low value add-ed and low-risk goods.
In the PoA, activities 3.1.1 to 3.1.3 respond to this issue.
Cost of doing business
Limited access to finance hinders investment in value addition
‘As a small enterprise owner, it is still very difficult to get a loan. There are not many affordable services available. Additionally, there are only a few people in the enterprise and none of us is a specialist in financial management. As a result, we often do what we can with whatever we have at hand.‘
Industry opinion
48.– Baron, Dominique et al ( 2010 ). The Impact of Telecommunications Services on Doing Business in Ethiopia. Addis Ababa : Addis Ababa Chamber of Commerce and Sectoral Associations.
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Ethiopia ranked 165 in the World Bank Doing Business Report 2015 for getting credit. The financial system is not well-developed, and skills within local financial institutions, particularly for performing risk and loan analyses, are lack-ing. As a result, credit is offered to T & C enterprises at un-favourable terms with stringent collateral requirements that many SMEs cannot afford.
There is also a scarcity of working capital and a short-age of foreign exchange. In addition, banks tend to be both slow and inefficient. Bank services are also quite expensive : commercial banks charge 3 % for import letters of credit and 2 % for export letters of credit ; Chinese banks, in compari-son, charge less than 1 %. In addition, the National Bank of Ethiopia charges a 1.5 % foreign exchange commission for the dollars required to purchase inputs. In total, manu-facturers looking to import materials are penalized 4.5 %. It should be noted that the Development Bank of Ethiopia does provide specific schemes for T & C companies that are more advantageous than commercial banks. Nevertheless, while a special programme for MSMEs has recently been opened, the Development Bank of Ethiopia generally caters to larger companies.
Finally, one of the key constraints for foreign investors is the single borrower’s limit. This limit ensures that no entity can borrow more than US $ 22 million. It has been imposed due to a shortage of foreign currency, as well as to combat the ‘misuse’ of borrowing in the past.
The lack of a properly functioning financial system makes it difficult for T & C SMEs to engage in adequate capi-tal upgrading and to invest in value addition. Stakeholders note that even a common fund or a simplified machinery ( or spare parts ) purchase scheme would go a long way towards improving productivity within the sector.
In the PoA, activities 2.8.1 to 2.8.6, 3.2.1 to 3.3.9, and 3.4.1 respond to this issue.
Expensive and unreliable transportation reduces the price competitiveness of Ethiopian goods in international markets and hinders the ability of enterprises to deliver goods in a timely fashion
‘Overall I am happy that I chose Ethiopia as the place for my investment. The Government has been ex-tremely welcoming and supportive. However, I have to point out that by the time I transport my production to Djibouti, the cost of transport and the fees almost annihilate my margin. This is a crucial point, and the situation must be improved for us to really benefit from all the advantages Ethiopia has to offer.’
Industry opinion
As a landlocked country, Ethiopian goods must travel long distances before reaching the port of Djibouti, from where they are shipped throughout the world. It costs about US $ 4,000 to send a container from Ethiopia to Kenya : at this cost, fabrics from Asia are more price-competitive than those from Ethiopia, despite Ethiopia’s proximity and lower labour and electricity costs. Similarly, it costs 60 % more to ship through Djibouti to the United States and EU than it does to ship from China.
There are a variety of causes for the weak logistics sys-tem. Firstly, the road infrastructure in rural areas where many textile mills are located is quite poor. As a result, transport to and from these facilities can be slow and unpredictable. Next, transport from Addis Ababa to the port of Djibouti ( ~800 km ) is artificially high : it costs roughly US $ 2,000 to send a 40-foot container on this route. For comparison, transporting a container in India over the same distance would cost one-fourth as much.
A key constraint is the lack of competition within the trucking sector, which is dominated by a state-owned en-terprise. Not only is there no competition, but there is a shortage of trucks during certain times of the year ( it should however be noted that the Government has imported more than 300 additional trucks in an effort to support export-ers ). This is further complicated by the absence of duty-free trucking in Ethiopia. Exporters are legally allowed to have only two duty-free trucks, significantly below required capacity. High fuel taxes also play a role. Furthermore, the lengthy Customs procedures and costs of export finance detailed under the previous constraint also increase final logistics costs.
The Government is building a new railway to Djibouti which is expected to reduce transport costs by 25 %. In addi-tion, a new road and rail corridor is being built in conjunction with Kenya. While it won’t be completed for a few years, it will eventually connect the two countries and allow for more cost-efficient transportation as well as competition between the ports in Kenya and Djibouti.
In the PoA, activities 2.9.1 to 2.9.3 respond to this issue.
Photo: ITC
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MARKET ENTRY ISSUES
Box 10 : Market entry constraints in Ethiopia’s T & C sector
Border-out ( market access )
Market Accessand Policy Reform
National Promotion
and Branding Trad
e Su
ppor
t
Serv
ices
Across the value chain
Trade information :
• Limited awareness of preferential trade agreements hinders export expansion• Inadequate access to and use of trade intelligence limits growth opportunitiesTrade promotion :
• Lack of a national branding strategy hinders market development• Lack of trade promotion capacities hinders the sector’s strategic development• Lack of targeted investment promotion efforts reduces the attraction of foreign capital, technology and expertise
Across the value chain
Trade information
Limited awareness of preferential trade agreements hinders export expansion
Ethiopia enjoys various preferential market access con-ditions and its goods can enter duty-free to some of the most important regional and global markets. This has been a significant factor behind the growth of the T & C sector over the past decade. Even so, stakeholders have thus far been unable to fully leverage these market access opportunities.
The key constraint is limited awareness with regards to both the opportunities offered by these markets and the requirements of entry. With regards to the former, there is a lack of trade intelligence that explains to exporters the details and benefits of existing trade agreements. With re-gards to the latter, exporters do not understand the require-ments of these markets. Moreover, even where exporters understand the requirements, they find it difficult to meet the stringent demands of preferential markets ( i.e. price compet-itiveness, delivery time, quality, etc. ). To this end, advances in trade intelligence will require that enterprises improve the competitiveness of their products in parallel.
In the PoA, activities 4.2.1 to 4.2.7, and 4.5.1 respond to this issue.
Inadequate access to and use of trade intelligence limits growth opportunities
The T & C sector has little access to reliable and timely sourc-es of trade intelligence in areas such as market characteris-tics and buyer requirements. Some information is provided by ETIDI, ETGAMA and the Chambers of Commerce, but the data is often outdated and limited in quality. Good qual-ity trade intelligence is available from the private sector but the cost is quite high.
‘European consumption habits differ from those of the United States, African or Asian countries. The structure of the marketplace, the prices, the pack-aging, the contractual arrangements, etc. are also different. We will achieve effective and profitable trading relationships only if we understand the spe-cific market requirements of each of our existing and future trading partners.’
Industry opinion
SME staff lack the skills required to engage in their own mar-ket research and analysis, while the capacities of trade and investment support institutions ( TISIs ) are similarly lacking. Institutions do not provide any market studies with buyer contact information. Another roadblock is poor coordina-tion between domestic stakeholders and commercial and ministerial representatives stationed abroad : ideally, such representatives should be able to provide up-to-date in-formation on market dynamics. Nevertheless, these repre-sentatives currently do not serve as a major source of trade intelligence.
If Ethiopia’s T & C sector is to pursue sustainable market expansion, it must increase its ability to identify and respond to requirements and trends in target markets.
In the PoA, activities 2.2.5, 2.2.6, 2.3.3, 4.1.1 to 4.1.7, 4.4.1, 4.4.2 and 4.5.1 respond to this issue.
Trade promotion
Lack of a national branding strategy hinders market development
There has thus far been little interest in developing a single brand for Ethiopian T & C products. Companies, as-sociations and the Government could all work together to promote the sector’s goods under a common theme. Such
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a strategy would have far greater impact than a collection of small, disjointed initiatives. Due to the lack of a national branding strategy, there is limited name recognition for prod-ucts ‘Made in Ethiopia’. In the absence of strategic branding efforts, the country continues to be defined in part by its historical challenges. As long as they persist, these negative associations may continue to present roadblocks to market expansion and investment promotion.
In the PoA, activities 2.6.1, 2.6.2, 4.3.5 to 4.3.7, and 4.4.3 respond to this issue.
Lack of trade promotion capacities hinders the sector’s stra-tegic development
In order to successfully enter new markets and expand in existing ones, Ethiopia’s stakeholders must engage in more effective trade promotion efforts. SMEs lack skills in the ar-eas of marketing and promotion and they find it difficult to formulate and engage in effective marketing and sales strat-egies. A key challenge in this regard is the lack of sufficiently prepared managers : university curricula do not adequately reflect the needs of industry. Managers also have limited exposure to foreign markets, a fact that is further compli-cated by the lack of trade intelligence detailed above. In the absence of such market information, managers find it difficult to formulate and implement targeted marketing and sales strategies.
Institutional and Government support is also lacking. Little in-market support is provided to SMEs in areas such as trade fair participation or buyer–seller meetings. The abil-ity of sector associations to assist in trade promotion efforts is limited by weak financial and technical capacities. The re-cently formed Ethiopian Export Promotion Agency also lacks adequate capacities ; it engages in limited and unstructured participation in trade fairs. Marketing capacities within
Government support institutions are also weak and their efforts are uncoordinated. Similarly, embassies and trade attachés do little to promote Ethiopian products abroad.
In the PoA, activities 4.3.1 to 4.3.6, and 4.4.3 and 4.5.1 respond to this issue.
Lack of targeted investment promotion efforts reduces the attraction of foreign capital, technology and expertise
FDI has long been a driver of growth for the T & C sec-tor as foreign investors continuously look to leverage cost advantages around the globe. Such investment brings not only the capital required for strategic investment, it also stimulates the transfer of technology, expertise and know-how. Although Ethiopia has succeeded in attracting FDI over recent years, the scale of investment could be increased substantially given adequate Government support.
However, the Government has limited itself largely to se-curing investment from investors who have already shown interest in Ethiopia while helping those same investors iden-tify the most attractive opportunities. There is little activity in the way of identifying and approaching foreign investors from scratch : reaching out and introducing them to the idea of Ethiopia as a target for investment.
One of the key constraints is the lack of skills in relevant agencies : staff lacks the capacities to identify, approach and engage with potential investors. Another roadblock is the limited coordination among actors within this sphere ; in addition to the EIC, each region has its own investment pro-motion agency. As such, there is little coordination among agencies. More targeted investment promotion can best be achieved if mechanisms for greater cooperation are estab-lished between all interested parties.
In the PoA, activities 4.3.1 to 4.3.6, and 4.5.1 respond to this issue.
SOCIO-ECONOMIC AND ENVIRONMENT ISSUES
Box 11 : Social and economic constraints in Ethiopia’s T & C sector
Development issues
Poverty Alleviationand Gender Issues
Regional Development
and Integration
Envir
onm
enta
l
Sust
aina
bilit
y and
Clim
ate
Chan
ge
Across the value chain
CSR :
• Subpar working conditions have the potential to pose health and safety risks• Environmentally and socially responsible practices are not an integral part of doing business in the sector, threatening
negative social impacts and ineligibility to supply socially concerned buyersTextiles Water pollution :
• Outdated dyeing methods pollute waterways• Rapid expansion of cotton fields may impact indigenous livelihoods and local ecosystems
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Across the value chain
CSR
Subpar working conditions have the potential to pose health and safety risks
Some factories continue to maintain inadequate work-ing conditions, characterized by poor lighting, a lack of cleanliness, and unhygienic cafeterias and amenities.49 While these factors have been cited as contributing to em-ployee dissatisfaction, they also represent health and safety risks. Poor lighting can lead to accidents, particularly when working with heavy machinery such as in the T & C indus-try. Unhygienic facilities may foster the spread of disease. It should also be noted that in addition to the risks posed to physical health, working under these conditions could lead to psychological malaise, reducing the general sense of well-being among staff.
In the PoA, activities 1.3.2, 1.3.3, 1.4.1, 1.4.2, and 1.4.4 to 1.4.7 respond to this issue.
Environmentally and socially responsible practices are not an integral part of doing business in the sector, threatening negative social impacts and ineligibility to supply socially concerned buyers
Few Ethiopian factories are certified under ( or aware of ) the EU’s Business Social Compliance Initiative or the United States Worldwide Responsible Accredited Production. Factory workers frequently exceed the maximum number of working hours allowed per week and are sometimes subjected to unhealthy breathing environments. Machinery used is often technologically outmoded and environmentally
49.– Lee, David Yuen Hoi ( 2010 ). Benchmarking of the Ethiopian Textile Industry Vision 2015, p. 124. Project No. YA / ETH / 001. UNIDO.
dirty. Obtaining Business Social Compliance Initiative and Worldwide Responsible Accredited Production certifications can be useful in accessing European and North American markets – which are increasingly conscious of the negative environmental and social spillovers of textile and garment production – as well as in ensuring a healthy and happy workforce. Moreover, as Ethiopian fabrics and garments represent some of the country’s major manufactured goods, the sector’s environmental and social practices will set important precedents for the country as its economy grows.
In the PoA, activities 1.3.1 to 1.3.4, and 1.4.1 to 1.4.10 respond to this issue.
Textiles
Water pollution
Outdated dyeing methods pollute waterwaysEthiopia enjoys vast water resources50 which do not ex-
ist in isolation as many of its rivers continue through other countries. As such, any misuse of water resources has im-plications not only in Ethiopia but also in neighbouring coun-tries. The textile industry consumes a considerable amount of water resources in dyeing and finishing processes. In ad-dition, outdated dyeing methods release chemical waste, including persistent organic pollutants, into the water. New methods exist that would allow textile companies to use less water and minimize pollution. Such methods include optimi-zation of the dyeing process itself and improved wastewater treatment. Stakeholders, however, do not consider the is-sues to be a major concern. In addition, they are unaware of the benefits that might come from transitioning to more sustainable processes. Not only would improvements lead to environmental preservation, they could also be leveraged as marketing tools to add value to final products. Other mar-kets have strict regulations that must be met as a condition for import : as an example, the EU market restricts the use of azo dyes for any imported T & C product.
In the PoA, activity 2.6.1 responds to this issue.
Rapid expansion of cotton fields may impact indigenous livelihoods and local ecosystems
The Government goes to great lengths to help investors locate suitable land in their efforts to attract foreign invest-ment. Sometimes the best land is located in inconvenient areas : areas of great biodiversity and areas that have been traditionally occupied by indigenous peoples. With regards to the former, land is often designated for large-scale farm-ing without an appropriate environmental impact assess-ment.51 This is especially worrisome given that even land
50.– Encyclopedia of the Earth ( 2008 ). Water profile of Ethiopia. Last updated 10 June 2012. Available from http : / / www.eoearth.org / view / article / 156941 / .51.– Mursi Online ( 2013 ). Website. Available from http : / / www.mursi.org / .
Photo: ITC
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from national parks has been turned over to farming opera-tions ( 30,000 hectares of land in Mago National Park will be used for sugar cultivation ).
With regards to indigenous rights, there have been re-ports that land has been forcibly confiscated.52 In other cases, nearby land may be used for cultivation without a proper environmental impact assessment. The dramatic changes to the land may affect the local climate, thereby affecting the ability of nearby indigenous peoples to con-tinue their traditional agropastoral lifestyle. In either case, meaningful consultations with the local community seem to be lacking and impact assessments are not undertaken. The issue has gained enough prominence that some donors have passed legislation touching on the subject.53 For ex-ample, the United States created a law requiring that funds appropriated by American directors of international financial institutions for the Lower Omo and Gambela regions must be subject to consultation with affected populations and must not be used to support evictions, directly or indirectly.
These issues are further complicated by the fact that the Lower Valley of the Omo, home to many of Ethiopia’s indigenous peoples, is a United Nations Educational and Scientific Organization world heritage site. As such, every
52.– Human Rights Watch ( 2012 ). What will happen if hunger comes? Abuses against the indigenous peoples of Ethiopia’s Lower Omo Valley, 18 June. Available from https : / / www.hrw.org / report / 2012 / 06 / 18 / what-will-happen-if-hunger-comes / abuses-against-indigenous-peoples-ethiopias-lower. 53.– Mursi Online ( 2013 ). Website. Available from http : / / www.mursi.org / .
effort should be made to ensure that impacts to its eco-systems and cultural landscape are adequately assessed and considered before the implementation of large-scale projects.
In addition to the obvious human rights and environ-mental concerns, such practices could potentially damage the reputation of Ethiopia’s T & C sector. Indeed, CSR is be-coming a core requirement for many of the most important buyers. If these buyers believe that a part of the T & C value chain regularly benefits from unethical practices, the sector’s growth potential may be imperilled as TNCs look for more socially responsible suppliers.
In the PoA, activity 2.3.3 responds to this issue.
The need for coordinated action
The analysis of competitive constraints makes it clear that the sector’s sustainable development will require an integrat-ed set of interventions that holistically address challenges across the entire value chain. Roadblocks are not limited simply to enterprise capacities or Government policy, and many challenges are the result of a combination of factors that require wide-ranging remediation. It is for this reason that a comprehensive road map becomes all the more nec-essary ; individual stakeholders, and even small groups of stakeholders, will not be able to adequately deal with the constraints on their own. It is only through strategic coopera-tion that the most effective results will be achieved.
STRATEGIC IMPLICATIONS FOR THE VALUE CHAIN ROADMAP
Since identifying the T & C sector as a priority area for devel-opment in the GTP 2010–2015, the Government has suc-ceeded in fostering a policy environment that is conducive to investment. Ethiopia’s comparative advantages, namely its low labour cost, cheap and sustainable electricity, preferen-tial market access and proximity to important markets, have been complemented by reforms to the business environ-ment that have reduced trade hurdles. In conjunction with attractive incentives for investors, the sector has engaged significant capital from abroad. Indeed, over the past few years exports have expanded rapidly due in large part to the arrival of foreign investors.
Nevertheless, Ethiopia’s T & C sector has yet to realize its full potential : sales are heavily concentrated among a few product categories of fairly low value addition, and market diversification is limited. While larger companies have suc-ceeded in entering global value chains, SMEs continue to be relatively excluded from external trade, having experienced only a limited amount of economic integration with larger market players. Despite the influx of FDI, much of the value
chain remains underdeveloped, including accessories, ma-terials, textiles and higher value added garment activities. Productivity meanwhile continues to suffer as a result of lim-ited skills in the workforce, weak management capacities and reliance on outdated equipment, among other issues. In addition, remaining problems in the business environment create unnecessary cost burdens and delays.
This diagnosis lends itself to certain key considerations that the value chain roadmap should tackle. In order to move forward, public and private stakeholders must work together and build on the successes that have been achieved thus far. To this end, the continued stimulation of FDI will play a crucial role. The Government must do more to effectively target investors and promote development of the under-served opportunities in Ethiopia’s value chain. Skills devel-opment must also be a priority, particularly with a view to increasing productivity, quality and the capacity for value addition. Lastly, the Government must do more to remove the remaining policy and business environment roadblocks to competitiveness.
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THE WAY FORWARD
Figure 8 : The way forward
The previous sections of this document delineate various aspects of the T & C value chain in Ethiopia – and examine the current state of the sector. In other words, the previous sections comprehensively answer the question ‘where are we now?’ The following sections discuss the way forward and the implementation modalities through the PoA. In doing so, the sections discuss two questions – ‘where do we want to go?’ and ‘how do we get there?’
Through the definition of broad sector targets and specific strategic objectives, the value chain roadmap sets the goals to be achieved in the following five years. The depiction of the ‘future value chain’ ( see figure 11 ), the highlighting of specific market opportunities, and the identification of target areas for investment will then outline the concrete steps required to achieve these goals. These steps are then further detailed in a structured and prioritized manner in the PoA.
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The current model on which the sector has based its growth has certainly yielded strong economic and social returns. Indeed, sectoral development has progressed despite con-strained productivity and the continued reliance on a narrow set of products and markets. Even so, there are signs that the approach must be modified in accordance with evolving global conditions. True sustainability will only be achieved through increased competitiveness and investment in great-er value addition.
The sector’s strategic orientation should follow a twofold approach. Firstly, Ethiopia can build on its current success and leverage its cost competitiveness to expand market diversification and penetration. Secondly, the sector can capture greater value by pursuing full value chain integra-tion, first by bridging the skill gap to increase productivity, especially considering upcoming wage increases, and later by enhancing weak upstream capacities.
In order to realize these goals, structural deficiencies identified as competitive constraints ( based on the four gear approach including supply-side, business environment, market entry and development issues ) will be addressed and opportunities will be leveraged. The following is a de-lineation of the sector development targets and strategic objectives to achieve them.
Indicative sector development targets
One of the main focus areas of this value chain roadmap will be to build on the current conjuncture and benefit from the growing interest of international investors in T & C in the East Africa region. FDI can lead to transformative effects in a country’s home-grown sector, as international investors are likely to possess and transfer a wide range of assets oth-erwise unavailable to local enterprises. These may include technologies, skills, management practices, operational ex-perience, economies of scale and international distribution channels.
Ethiopia’s apparel exports were worth US $ 40 million in 2013, having grown at a remarkable CAGR of 49 % from 2010. Although the growth rate will slow as the base ex-pands, apparel exports are still expected to grow by 40 % in the next five years, and then by 20 % in the following five years. At these rates, Ethiopia’s apparel exports would reach US $ 215 million by 2018 and US $ 540 million by 2023.
An additional US $ 500 million of export value through 2020 will have an impact on the entire value chain :
� Clothing : it will call for the production and export of an-other 100 million to 125 million pieces of apparel. This will require an investment of approximately US $ 135 million on garment production facilities alone, including 25,000 sewing machines, 3 million square feet of built-up area, and roughly 45,000 workers.
� Textiles : On the textile front, this would mean an addition-al demand of approximately 225 million metres of fabrics and 35 million to 40 million kg of yarn.
Figure 9 : Projections of Ethiopia’s apparel export growth
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Based on the logic above, the value chain roadmap aims to deliver the following production, ex port-related and devel-opmental targets by 2020 :
� More than 200 firms have acquired new equipment and related technical capacities
� Six hundred new production lines developed by Ethiopian firms in yarn, textile and apparel production
� Exports of textiles and garments to increase annually by 35 % to US $ 320 million
� More than 45,000 new jobs in the T & C sector � All companies complying with international standards
related to working conditions, quality management and sustainability.
The indicative targets have been set in collaboration with national stakeholders and international sector experts. They are based on the hypothesis that the current socioeconomic conditions and political stability, as well as the investment climate overall, will remain unchanged.
THE STRATEGIC OBJECTIVES
The strategic objectives aim to define the main thrusts that will guide the value chain roadmap design process and implementation. They represent the final goals and effects expected by the policies or the actions to be undertaken. To achieve the twofold approach of the T & C sector’s strategic orientation and related indicative targets, four strategic ob-jectives have been identified as being the cornerstones to en-hance the competitiveness of Ethiopian T & C export sector.
Strategic objective 1 : improve productivity and employment outcomes through skills development
Although Ethiopia enjoys a large workforce, it requires ex-tensive training in a wide range of areas and at different lev-els of specialization. This training, which will ensure that the industry’s growth is supported by an adequate labour sup-ply, is all the more necessary in light of upcoming, progres-sive wage increases. In particular, workers as well as line managers must be trained in the latest techniques and best practices so as to improve plant efficiency. Given the recent investment of many Ethiopian companies in new machinery, a priority will be ensuring that firms have the necessary skills to fully capitalize on these capital investments. This will re-quire increasing worker skills, while at the same time helping managers understand the functioning, as well as the pro-ductivity and diversification potential, of the new equipment.
At the managerial level, skills need to be strengthened in the areas of input sourcing, quality assurance and compliance, as well as HR management. The latter will not only allow the industry to retain quality workers but will also help it to meet the international market’s growing demand for socially re-sponsible products. Finally, specific focus needs to be given to the handloom subsector and MSMEs to ensure that they are fully integrated in overall sector growth. These issues are therefore of the utmost priority and will require immedi-ate action on a variety of fronts, including the Government, institutions and enterprises themselves.
The first strategic objective is therefore : improve pro-ductivity and employment outcomes through skills development.
The following operational objectives have been defined to achieve the first strategic objective.
1.1 Increase the level of technical and supervisory skills at T & C firms.
1.2 Improve sourcing and supply chain management performance.
1.3 Improve quality management skills in line with interna-tional standards.
1.4 Design and implement a nationwide compliance programme.
1.5 Improve HR policies, employee retention and incentives at T & C firms.
Photo: www.tidi.gov.et.
Phot
o: w
ww.dw.com, L
ow wages draw international textile companies to Ethiopia.
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1.6 Ensure maximum equipment usage within Ethiopian firms.
1.7 Develop skills specific to the handloom subsector.1.8 Develop skills specific to MSMEs.
Strategic objective 2 : strengthen the enabling environment to favour sector development.The second focus area is to ensure that the sector’s devel-opment is supported by an appropriate enabling environ-ment. The Ethiopian Government is strenuously working to support business by fostering conducive policies and conditions. Even so, much remains to be done, particu-larly with regards to improving the quality of institutional support. To this end, a priority will be aligning the offer-ings of training institutions and universities to the needs of the sector.
An effective framework for cooperation must also be established in order to ensure synergies between larger companies and SMEs. Another area for improvement is international accreditation and quality infrastructure ; Ethiopian companies must be able to certify their production to the relevant standards of their target markets. To support these changes, key regulations must be adjusted so as to streamline the sector’s functioning. Lastly, additional efforts must be made to improve Customs services, access to fi-nance, and transportation and logistics services.
Those issues will also constitute a specific pillar of this value chain roadmap, through the second strategic objec-tive : strengthen the enabling environment to favour sector development.
The following operational objectives have been defined to achieve the second strategic objective.
2.1 Reinforce sector coordination to favour workforce devel-opment and policy advocacy.
2.2 Provide high quality institutional support and business services to T & C firms.
2.3 Improve existing training and educational offerings and align them to industry’s needs.
2.4 Enable the development of skills through lead firm and cluster arrangements.
2.5 Ensure that national quality management infrastruc-ture responds to industry’s needs and international ambitions.
2.6 Improve the legal and regulatory framework relevant to the T & C industry.
2.7 Increase the capacity of the Customs service to regulate imports of T & C products.
2.8 Ensure availability of accessible financial tools for MSMEs.
2.9 Improve the efficiency and cost competitiveness of transportation and logistics.
Strategic objective 3 : establish conditions to harness FDI as an engine for growth in T & C.
Due to the growing importance of FDI, it is crucial that Ethiopian TISIs establish the conditions that will allow the sector to take advantage of the capital and skills flowing into the country. Investment is therefore another key strategic focus area of the value chain roadmap. As a prerequisite, initial efforts must be made to guarantee that the operating environment is suited to investment. A key priority will then be to ensure that a high level of institutional support is pro-vided in the areas of investor identification and attraction. To this end, stakeholders must reinforce the promotion of Ethiopia as an attractive destination for investment. Ethiopia can be promoted as more than a ‘low wage’ country, and efforts may include the showcasing of ongoing efforts in skills development and social and environmental standards compliance. Lastly, specific schemes must be developed to guarantee that SMEs are included in the global value chain.
Thus the third strategic objective of the value chain road-map : establish conditions to harness FDI as an engine for growth in T & C.
Phot
o: w
ww.dw.com, L
ow wages draw international textile companies to Ethiopia.
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The following operational objectives have been defined to achieve the third strategic objective.
3.1 Establish an internationally competitive oper-ating environment conducive to T & C sector development.3.2 Increase capacity of TISIs to identify and at-
tract appropriate investments for the sector.3.3 Further promote Ethiopia as a key desti-
nation for FDI.3.4 Increase collaboration between local
SMEs and FDIs to ensure synergies.
Strategic objective 4 : foster product and market development through the use of trade information.
The analysis of the sector makes clear that there is much scope for Ethiopian firms to
further diversify their markets and products. The first requirement is that high-end and up-
to-date trade and market access information is made available to all stakeholders. In parallel,
firm-level capacities must be increased to ensure that this information is properly analysed and used
as a basis for product development and market diversifi-cation efforts. In order to support market diversification, Ethiopian T & C products must be promoted through a vari-ety of channels, including trade fairs, side events, branding strategies, etc. Finally, handloom firms and MSMEs need to be promoted in a targeted manner ; this will begin with an assessment of the domestic and regional market opportuni-ties for their products.
The fourth strategic objective of this value chain road-map is therefore : foster product and market development through the use of trade information.
The following operational objectives have been defined to achieve the fourth strategic objective.
4.1 Ensure easy and timely access to strategic trade intel-ligence for T & C firms.
4.2 Increase firms’ capacity to understand regional and international market requirements and how to best align product development / offerings.
4.3 Expand market access and promote Ethiopia’s T & C products.
4.4 Provide targeted assistance on market information analysis to handloom firms.
4.5 Assess the Ethiopian T & C market in order to identify domestic and regional opportunities.
LEVERAGING MARKET OPPORTUNITIESAs indicated in figure 11, the most attractive course of action will be for Ethiopia to focus on exports of finished goods ( apparel and home textiles ) in order to capture greater value addition and generate the most employment.
Focusing sector development effor ts to connect with TNCsEthiopian garment producers ( except for technical wear ) will most certainly need to connect with TNCs if they aim at international markets such as Europe and the United States, or fast-growing markets such as India and China. However, it is important to keep in mind that the global T & C sector is fast-evolving and very competitive, as put forth in the first section of this value chain roadmap. It is also governed by different dynamics depending on whether we look at the textile or garment segments. TNC requirements evolve with every fashion trend, making it particularly difficult to provide recommendations on products’ development and related design. Nevertheless, the following success factors need to be taken into account by Ethiopian garment firms to be able to target TNCs successfully as a market segment.
iv. As consumers are putting increased pressure on the T & C sector to improve social responsibility, there will be an absolute need for Ethiopian firms to comply with CSR.
v. The demand for full package services from lean retailers requires that Ethiopian garment suppliers expand their ser-vice offerings and create strategic partnerships with ven-dors rather than purely transaction-based relationships.
vi. Ethiopian firms must increase volume capacity, either internally or through consolidation / partnership agree-ments, to meet large TNCs’ requirements.
vii. Ethiopian firms must increase their ability to quickly sup-ply the market in response to fast fashion demands.
viii. Companies are highly encouraged to invest in quality, increase their product development competency, and develop their multi-fibre expertise.
ix. Increased management and ICT capacities will be re-quired to satisfy buyer demands and to secure partner-ships with TNCs in the long term.
x. So far, Asian countries have emerged as winners in global trade. In the next few years, some of them will become important markets as well. The increasing focus of China on the domestic market and value added pro-duction will result in multibillion dollar trade opportunities for suppliers in competing nations. Trade intelligence will be essential to tap into these opportunities.
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All points except point ( iv ) also apply to textile and technical garment producing firms that aim to connect with TNCs. Finally, considering TNCs’ paramount focus on cost com-petitiveness, Ethiopian firms should leverage the duty-free advantages for garments that have been granted through various preferential trade agreements.
Whatever market segment is chosen by Ethiopian firms ( TNC, regional or national market peers ), the market diver-sification phase must be accompanied by a trade regime that allows for the hassle-free import of inputs ( fabrics, trims, accessories, etc. ). Upstream capacities will be developed later on.
Gaining market share in traditional growing marketsEthiopia’s T & C exports are concentrated in a few import-ing markets which rank among the largest in the world and present stable import growth. The market penetration strat-egy is less uncertain since it leverages the sector’s existing resources and current business linkages. In a growing mar-ket, simply maintaining market share will result in growth. In this way, the Ethiopian T & C sector should seek to achieve growth with its existing products in its traditional importing markets. Thus the apparel segment should focus its initial efforts on expanding its exports to TNCs or medium-sized apparel companies in its main importing country, Germany, followed by the United States, the largest world importer. Ethiopia has constantly increased its exports over the last four years in its two top destination markets and could eas-ily build on its success. Yarn spinners could also further increase their market penetration to the textile mills of its main importers, Turkey and China, the world’s biggest and fastest-growing yarn importer.
However, Ethiopia’s T & C exports’ concentration in and dependency on a few importing markets carries a risk of significant losses in the event of a drop of demand or in-crease in the level of competition. Therefore, the sector has to strengthen its market and product diversification efforts and look for opportunities.
Leveraging existing market linkages to build capacities for more value added textiles and garments
When looking to sell new products, enterprises can leverage existing market linkages and enter product categories that can be distributed either to existing TNC buyers in Germany and the United States or along the same distribution net-work, such as other overseas buying offices of mass mer-chandise stores and department stores.
At the same time, textiles enterprises can build capaci-ties to produce more value added fabrics. Cotton and woven moisture management fabrics, and synthetic and blended yarns, are products in high demand by textile mills in Turkey.
In the medium term, Ethiopia should take steps to develop upstream capacities in order to reduce import dependency and drive domestic value addition. As the Ethiopian garment sector will keep developing, local textile producers could target manufacturers in Ethiopia and in regional markets for high quality cotton fabrics.
Taking advantage of preferential market access to penetrate new large marketsMarket development options include the search for new market destinations for currently exported products, espe-cially where the country benefits from preferential market access conditions. The garment sector can thus leverage the duty-free advantage that Ethiopia has been granted for garments in many of the larger markets, in particular EU markets such as the United Kingdom, where Ethiopia is al-ready gaining market share, or Italy and France. Yarn spin-ners could also target major COMESA yarn importers such as Egypt, Mauritius and Madagascar.
It should be noted that, to do this, enterprises must be able to provide larger orders. The recent signature of the tripartite agreement between COMESA-EAC-SADC is also an opportunity to enter South Africa, the largest African gar-ment importer.
Diversifying in intermediate products in regional markets and local supply of accessories and embellishments
In the medium term, the Ethiopian T & C sector should con-sider new product and market development opportunities. With regards to its existing exported products portfolio, the sector could develop its exports of intermediate products ( yarn and fabrics ) in the regional market. The development of the garment industry in the region will increasingly require the provision of value added inputs, fabrics and embellish-ment products. However, the main focus of developing in-termediate products should be indigenizing the entire value chain. These new value added and higher quality fabrics should target Ethiopian garment manufacturers and could also be exported to new markets, in particular the regional market. Additionally, as Ethiopia’s T & C sector further de-velops with its current buyers, valued added garments will integrate locally produced accessories and embellishments.
Box 15 summarizes the product and market opportunities available to Ethiopia’s T & C sector based on consultations with international experts and feedback from leaders of the industry in the country.
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Box 12 : Ethiopia’s product and market opportunities
Existing products New productsExisting markets
Market penetration
• Apparel to TNCs or medium-sized apparel firms in Germany and the United States, and to regional buyers in Ethiopia and Sudan
• Yarn to textile mills in Turkey and China
Product development
• Woven trousers, skirts and outerwear, and knitted jerseys to TNCs in Germany and the United States, and other overseas buying offices of mass merchandise stores and department stores
• Cotton and woven moisture management fabrics, and synthetic and blended yarns to textile mills in Turkey
• High quality cotton fabrics dyed and finished to garment factories in Ethiopia and regional markets
New markets Market development
• Apparel – other large European markets ( Italy, Spain and France ) through new TNCs or medium-sized apparel firms ; and South Africa with new preferential access
• Yarn – to textile mills in major COMESA markets ( Egypt, Mauritius and Madagascar ), the Russian Federation and EU markets ( Italy and Spain )
Diversification
• Fabrics ( shirting, bottom weight and denim ) to garment firms in regional markets• Woven trousers, skirts and outerwear, knitted jerseys to other EU markets through new TNCs
or medium-sized apparel firms• Accessory / embellishment manufacturing for garment factories in Ethiopia and regional markets
INVESTMENT TARGETING FOR SUSTAINABLE EXPORT GROWTH
FDI has long been a driver of growth in the T & C sector as investors look to capture the comparative advantages of-fered by low-cost destinations. Global greenfield FDI in the T & C sector reached US $ 24 billion in 2013, an all-time high, and more than double the level achieved in 2012. Moreover, Africa is receiving a greater share of this investment as ris-ing wages in China, compliance issues in Bangladesh, and labour unrest in Cambodia, together with other factors, have accelerated a shift to new locations. Total FDI inflow to Africa in 2013 was valued at US $ 57 billion, of which US $ 1.75 bil-lion was in the T & C sector.
TARGET FDI BY COUNTRY WITH A SPECIAL FOCUS ON INDIAIn recent years the Ethiopian T & C sector has received sig-nificant FDI inflows from Chinese, Turkish and Indian inves-tors. While these countries will continue to be sources of FDI, additional investments may be attracted from Germany, France, the Republic of Korea, the United States, Italy, Bangladesh and Israel. While attracting FDI from Japan may also be possible, it will require more time given the stringent quality, technical and product development orientation of Japanese companies. It should therefore be only a medium-to-long-term objective.
Special attention needs to be paid to attracting FDI from India. India is not only one of the largest T & C producing and exporting nations, it is also a large market which is grow-ing in the double digits. T & C exports from India currently stand at approximately US $ 40 billion, whereas its domestic consumption is estimated to be US $ 75 billion ( including apparel, home textiles and technical textiles ). Continuous growth of consumers’ disposable income has ensured high demand growth.
For Indian T & C investors, Ethiopia’s low input costs and duty-free access to important markets will be the biggest attractions. Some Indian investors, including Arvind Ltd. and Kanoria Textiles, have already invested in Ethiopia, and there have been a few other major investment announcements as well. There are several other T & C companies in India willing to invest overseas in order to cater to their traditional buyer base while benefiting from foreign advantages. It will be im-portant and fruitful for Ethiopian authorities to invest time and effort to identify and reach out to potential Indian inves-tors and showcase the advantages of investing in Ethiopia.
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Box 13 : Trade as a precursor to Investment
Trade initiation is the first step towards investment. Consider an example of an Indian company buying certain inputs from East Africa for its production in India. If imports remain profitable, then with growth of its business, the company will weigh imports ( using trade intermediaries such as agents ) vis-à-vis establishing an East African affiliate to procure the material. Having its own office can reduce the bulk sourcing cost and give better supply chain control to the company. Over time, successful procurement operations in East Africa might evolve into a manufacturing facility and continue to add
other higher value functions over time, such as design, research and development, or regional sales and distribution.
In short, trade and FDI are very often part of the same continuum. As more and more Indian businesses evolve further down that continuum, trade and investment linkages between India and East Africa will strengthen and there will be greater spillovers of technol-ogy and skill in East Africa. This will help East African businesses become more efficient, improve the marketability of their products and services, and deepen their participation in global value chains.
FDI TARGETS IN SUBSEGMENTS OF THE T & C VALUE CHAINThere is broad consensus within the sector that Ethiopia’s garment sector is at the start of a significant boom, and there is immediate opportunity to invest profitably in gar-ment manufacturing and assembly for basic ( i.e., low-skill ) garments to be marketed to the EU and United States.
The boom in garment manufacturing will in turn create high demand for fabrics and yarns, which the Ethiopian manufacturing value chain is currently not positioned to ca-ter to. Enterprises that can establish yarn and manufacturing set-ups that are capable of producing export-quality goods for garment producers can meet domestic and regional de-mand by leveraging comparatively lower costs and short delivery times.
Sector experts also see an opportunity for foreign inves-tors to produce accessories and embellishments in Ethiopia, such as thread, labels, hangtags, buttons, zippers and elas-tics. These are almost completely imported, and China is historically the most important supplier for many of these products. Accessories and embellishments may represent a significant value option for domestic or foreign investors in Ethiopia. Such products generally require low technological and capital investments.
The most promising short- and medium-term oppor-tunities for private investment are listed below. They are promising because both cost data and the experiences of existing investors suggest that investment projects with similar products and target markets could operate not only profitably and securely, but more so than if the project were in a competing location.
� Garment manufacturing – CMT and FOB ( and original design manufacturers in the medium term )Products : T-shirts, shirts, uniforms, jeans and other simi-lar products with low design variationTarget investors : companies that are qualified suppliers to low- and mid-range retailers and brand apparel com-panies from the United States, the EU, China, India and the Republic of Korea
� Fabric manufacturingProducts : high quality cotton fabrics, dyed and finishedTarget companies : Turkey, India, China, domestic firms
� Accessory / embellishment manufacturingProducts : thread, labels, hangtags, buttons, zippers, elasticsTarget investors : companies from China, which domi-nate global production but are losing their price advan-tage as labour costs in China rise
� Sector infrastructureProducts : engineering, construction and management of private industrial zones, water purification facilitiesTarget investors : firms that have built and / or managed zones and related facilities for T & C clusters in China, Viet Nam and India. The Government of Ethiopia for possible PPPs.Target markets : Ethiopia investors and Industrial Parks Development Corporation ( IPDC ) ( through the Ministry of Industry )
� Trucking and logistics providersTarget investors : domestic firmsNote : liberalization of the sector would almost certainly attract quick investment from a number of investors and have the knock-on effect of strengthening T & C competi-tiveness
Photo: fl ickr.com
/photos/ustr, Am
bassador Kirk tours the Almeda Textile and Apparel Factory on August 7, 2009 in Axum, Ethiopia.
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ATTRACTING NEW INVESTORS AND DEVELOPING INVESTMENT AFTERCARE PROGRAMMES
Beyond creating a favourable business environment for the T & C sector, the Government of Ethiopia must broadcast the advantages of doing business in Ethiopia to those compa-nies considering international expansion. Some companies will invest without any government information or assistance, some will not invest under any circumstances, and some are in between those two extremes, where they might be persuaded to choose Ethiopia over other locations if the right information and assistance is provided to them at the right time.
Identifying investors in this last group, securing meet-ings with them, and persuasively making the case for one’s country over others is known as investor targeting, and it is arguably the most difficult function for the typical investment promoter to perform. One of the main reasons for this is the difficulty in identifying high-potential investors. Before each investor is approached, the investment promoter should take the time to ‘qualify’ the investor. This means research-ing the company to see that its products and markets correspond to Ethiopia’s strengths and that it is at a strategic and financial point where international ex-pansion is likely. To this end, the following types of investors can be targeted.
Existing investors
In developed economies, reinvestment from existing investors is recognized as the largest source of new FDI. Moreover, significant reinvestment is the only path to large-scale sectoral develop-ment and economic diversification. Reinvestments represent growing commitments from foreign investors to doing business in a country, often increasing production volume or mov-ing the company into new value chain segments. This can bring levels of local sourcing, exports, technology, worker skills and general value added, which first-time investors might not. Furthermore, from the perspective of an investment-promoting institution, it is much less expensive to court the community of existing investors than to find new investors among the scattered global pool of companies with no demonstrated interest in the promoter’s country.
In Ethiopia, to date, Government relationships with investors have tended to be developed very little beyond the issuance of permits, certificates and licences, or the provision of industrial park space and services. Recognizing
this and seeking to better maximize benefits from existing investors, the Ethiopian Government has committed to im-plementing a programme of investor aftercare through EIC and IPDC. Still under development as part of a World Bank project, this programme of investor aftercare would involve a range of investor services and business environment ad-vocacy designed to achieve the objectives summarized in ‘the aftercare provider’s C.R.E.E.D.’, or :
� Conversion of announced investments into operational projects, minimizing the number of investors who cancel investment plans because of unexpected problems dur-ing the start-up process ;
� Retention of existing investment projects, by assisting their smooth operation and ensuring investor satisfaction with their experiences in the country ;
� Expansion of existing investment projects, by produc-tion volume, number of employees and number of local facilities ;
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� Embedding of projects more deeply in the local econo-my, through greater use of domestic inputs and labour and / or greater sales to a domestic market ;
� Diversification into new product lines, value chain seg-ments and business lines, which typically entails higher value addition, new technologies and new worker skills.
These would be accomplished through a system of account management, whereby an EIC or IPDC staff member – de-pending on the location of the project – would be assigned to take primary responsibility for the customer service and long-term success of each investor, directing a programme of regular company visitation, ongoing problem-solving, in-vestor surveys, investor seminars and networking events, and participation in a planned public-private forum for busi-ness environment reform.
At the core of every activity employed in the delivery of aftercare is a relationship-building initiative. An investment facilitator transitioning into the position of aftercare provider must stop thinking of his work as transaction-based, where each investor coming into the office represents a bureau-cratic problem to be solved and then forgotten. Rather, he must become an account manager, providing tailored sup-port at every stage of the life of a business and proactively
finding ways to help the investor achieve long-term goals and identify new opportunities.
Investors having expressed interest in the sector
This category of investor is the low-hanging fruit ; companies that have been in contact with the Ethiopian Government at their own initiative. EIC, IPDC, ETGAMA, privately managed industrial parks, the Ethiopian Chamber of Commerce and Sectoral Associations, and the Addis Ababa Chamber of Commerce and Sectoral Associations are among the stake-holders that have likely received many inquiries from inter-ested investors. These should be consolidated by this value chain roadmap’s implementing team for direct follow-up or for tracking of the stakeholder’s follow-up, as appropriate.
Potential investors
Before potential investors can be ‘qualified,’ investment pro-moters need a ‘long list’ of investors in each of the countries where they think they might have success in targeting inves-tors. See the example from India in Appendice F - List of potential investors based in India.
FUTURE VALUE CHAIN
Unlocking the potential of the T & C sector will require trans-formations throughout the value chain. These adjustments, as reflected in the future value chain schematic ( figure 11 ), will be the result of the targeted efforts detailed in the PoA that address the constraints identified in the four gears anal-ysis. The future value chain will be characterized by :
1. Greater use of domestic inputs, including raw materials ( cotton, dyes and chemicals ) and intermediary inputs ( fabrics, accessories and packaging materials )
2. Greater value addition in the garment segment as well as market and product diversification
3. Further development and integration of industrial zones4. Enhanced support services, particularly in the areas of
TVET, quality management, finance and logistics.
Of the value chain segments depicted in figure 11, FDI in garment manufacturing will be the sector’s main engine of growth over the next several years. Realizing a future value chain with the four aforementioned characteristics depends heavily on the ability of sector stakeholders to :
� Create linkages between garment FDI and domestic sup-pliers
� Nimbly address the infrastructural, bureaucratic and lo-gistical constraints which harm Ethiopia’s competitive-ness vis-à-vis other destinations for garment FDI
� Proactively develop the workforce needed for this highly labour-intensive industry.
FDI in support services and industrial zone development would follow closely. As domestic supply of yarn and thread improves, and power-and water-related constraints are al-leviated, a greater proportion of FDI may flow to integrated textile mills, thereby further reinforcing the national value chain from spinning onward.
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Figure 10 : Ethiopia’s T & C future value chain
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rise
s
Loca
l m
arke
t
Yarn
s:C
hina
, Tur
key,
maj
or C
OM
ESA
mar
kets
( E
gypt
, Mau
ritiu
s an
d M
adag
asca
r), R
ussi
an
F ede
ratio
n an
d E U
mar
kets
(Ita
ly a
nd S
pain
)
Expo
rts
Sta
nd-a
lone
spi
nnin
g co
mpa
nies
Pro
duce
: ope
n-en
d, r
ing
and
com
bed
yarn
50%
dom
estic
fabr
ic
Expo
rts
Impo
rts
Fini
shed
clo
thin
gIm
port
is s
tron
gly
regu
late
d
Fabri
cs:
Turk
ey, C
hina
, Ita
ly, G
erm
any,
U
nite
d S
tate
s, U
nite
d K
ingd
om,
r egi
onal
mar
kets
Gre
ige
fabr
ics:
Ital
y, T
urke
y
Loca
l / r
etai
l mar
kets
Ger
man
y
Dep
artm
ent
stor
es
Impo
rts
Yarn
s (m
ore
impo
rts
than
na
tiona
l pro
duct
ion)
: In
dia,
Chi
na
Han
dloo
mB
ette
r st
ruct
ured
and
con
nect
ed to
oth
er te
xtile
pro
duce
rs
Dye
ing
& fi
nish
ing
Des
ign
and
sew
ing
Wea
ving
and
kni
tting
Yarn
spi
nnin
g
Indu
stri
al z
ones
Engi
neer
ing,
con
stru
ctio
n an
d m
anag
emen
t of p
riva
te in
dust
rial
zon
es, w
ater
pur
ifica
tion
faci
litie
s an
d be
tter
elec
tric
ity d
istr
ibut
ion
(Bol
e Le
mi,
Ale
m G
ena,
Duk
em, G
elan
, Kom
bolc
ha +
Tur
key/
Chi
na/R
epub
lic o
f Kor
ea z
ones
und
er c
onst
ruct
ion)
Fabr
ic m
anuf
actu
ring
Inte
grat
ed fa
bric
/gar
men
t ent
erpr
ises
Sui
ts ta
ilori
ng
Div
ersi
fied
read
y-m
ade
garm
ents
Dye
ing
and
prin
ting:
in
trodu
ce m
ass
dyei
ng o
f yar
n an
d fa
bric
Uni
form
s
Inte
grat
ed m
ills
Mas
s m
erch
andi
se
chai
ns
Spe
cial
ty
stor
es
Dep
artm
ent
stor
es
Mas
s m
erch
andi
se
chai
ns
Spe
cial
ty
stor
es
Dep
artm
ent
stor
esM
ass
mer
chan
dise
ch
ains
Spe
cial
ty
stor
es
Fact
ory
outle
ts, o
ff-pr
ice
or m
ail o
rder
s
Fact
ory
outle
ts, o
ff-pr
ice
or m
ail o
rder
s
Fact
ory
outle
ts, o
ff-pr
ice
or m
ail o
rder
s
Hom
e te
xtile
sN
atio
nal
ente
rpri
se to
pu
rcha
se a
nd
sell
cotto
n
Sp
inn
ing
Dye
ing
Se
win
gW
ea
vin
g/k
nitti
ng
Gar
men
t man
ufac
turi
ng–
CM
T an
d FO
B (
and
orig
inal
des
ign
man
ufac
ture
rs in
the
med
ium
term
)
Free
impo
rt
o f in
puts
(f
abri
cs, t
rim
s,
acce
ssor
ies,
etc
.)
Dut
y-fre
e ad
vant
ages
fo
r ga
rmen
ts
Acc
esso
ry/e
mbe
llish
men
t m
anuf
actu
ring
(at
leas
t one
ac
cess
orie
s’ p
rodu
ctio
n):
thre
ads,
lab
els,
han
gta
gs,
butt
ons,
zip
pers
, el
asti
cs:
Ken
ya,
Chi
na,
Indi
a, T
urke
y
Expo
rts
Truc
king
and
l o
gist
ics
prov
ider
sTa
rget
inve
stor
s:do
mes
tic fi
rms
Oth
er la
rge
Euro
pean
mar
kets
(Ita
ly, S
pain
and
Fra
nce)
Gar
men
ts
expo
rts
Han
dloo
m e
xpor
ts
(und
er E
thio
pian
br
and:
U
nite
d S
tate
s, E
U)
Ethi
opia
n C
ham
ber
of C
omm
erce
and
Sec
tora
l Ass
ocia
tions
, Add
is A
baba
Cha
mbe
r of
Com
mer
ce a
nd S
ecto
ral A
ssoc
iatio
ns
Qua
lity
man
agem
ent b
odie
s: E
thio
pian
Sta
ndar
ds A
genc
y (E
SA
), E
thio
pian
Con
form
ity A
sses
smen
t Ent
erpr
ise,
Nat
iona
l Met
rolo
gy In
stitu
te o
f Eth
iopi
a (N
MI)
and
Eth
iopi
an N
atio
nal A
ccre
dita
tion
Offi
ce (
ENA
O)
Ethi
opia
n Te
xtile
and
Gar
men
t Man
ufac
ture
rs A
ssoc
iatio
n (E
TGA
MA
)
Ethi
opia
Inve
stm
ent C
omm
issi
on (
EIC
)
Ethi
opia
n C
otto
n P
rodu
cers
Ex
port
ers
and
Gin
ners
A
ssoc
iatio
n (E
CP
GEA
)
Uni
vers
ities
that
hav
e te
xtile
eng
inee
ring
dep
artm
ents
: Add
is A
baba
Sci
ence
and
Tec
hnol
ogy
Uni
vers
ity (
AS
TU),
Eth
iopi
an In
stitu
te o
f Tex
tile
& F
ashi
on T
echn
olog
y (E
iTEX
), E
thio
pia
Text
ile In
dust
ry D
evel
opm
ent I
nstit
ute
Tran
spor
tatio
n se
rvic
es -
Incr
ease
the
num
ber
of p
orts
: Nor
th K
enya
por
t and
Por
t Sud
an
Ethi
opia
n R
even
ues
and
Cus
tom
s A
utho
rity
(ER
CA
)
Min
istr
y of
Tra
de
TVET
: ca
paci
tate
TVE
T st
ruct
ure
with
the
requ
ired
trai
ning
Tech
nica
l and
mai
nten
ance
ser
vice
s –
on
the
leve
l of c
ompa
nies
; Tra
nsfo
rmat
ion
Trig
geri
ng F
acili
ty (
TTF)
, Ind
ustr
ial P
arks
Dev
elop
men
t Cor
pora
tion
(IP
DC
)
Ban
ks -
Fin
anci
al s
ervi
ces:
cre
dit g
uara
ntee
trus
t fun
d
Pri
vatiz
atio
n an
d Pu
blic
Ent
erpr
ises
Sup
ervi
sing
Age
ncy
Men
noni
te E
cono
mic
Dev
elop
men
t Ass
ocia
tes
(MED
A),
Eth
iopi
an W
omen
Exp
orte
rs' A
ssoc
iatio
n (E
WEA
), O
rgan
izat
ion
for
Wom
en in
Sel
f Em
ploy
men
t (W
ISE)
Ethi
opia
n Te
xtile
Indu
stry
Dev
elop
men
t Ins
titut
e (E
TID
I)
Min
istr
y of
Agr
icul
ture
Inpu
ts
Mac
hine
ry
Cot
ton
fibre
Incr
ease
d lin
t pro
duct
ion
a nd
ginn
ing
capa
city
Wat
er, e
lect
rici
ty,
fuel
and
aux
iliar
y ch
emic
als
Labo
ur fo
rce
Man
-mad
e fib
re
Cot
ton
fibre
Few
er q
uant
ities
Fabr
ic m
anuf
actu
ring
: hig
h qu
ality
cot
ton
fabr
ics,
dye
d an
d fin
ishe
d. T
arge
t co
mpa
nies
: Tur
key,
Indi
a, C
hina
, dom
estic
firm
s. M
arke
ts: G
arm
ent f
acto
ries
in
Ethi
opia
, reg
iona
l mar
kets
Gar
men
t man
ufac
turi
ng–
CM
T an
d FO
B (
and
orig
inal
des
ign
man
ufac
ture
rs in
the
med
ium
term
): T
-shi
rts,
men
’s d
ress
shi
rts,
uni
form
s, je
ans,
men
’s s
uits
, and
ot
her
sim
ple
prod
ucts
with
littl
e de
sign
var
iatio
n
Impro
ved s
ocia
l and e
nvi
ronm
enta
l co
mplia
nce
as
wel
l as
HR
managem
ent
in f
irm
s
Impro
ved
farm
ing p
ract
ices
Trai
ning
cen
tre
in
each
Indu
stria
l zo
ne
ENA
O to
bec
ome
mem
ber
of In
tern
atio
nal L
abor
ator
y A
ccre
dita
tion
Coo
pera
tion
Mut
ual R
ecog
nitio
n A
rran
gem
ent a
nd In
tern
atio
nal
Acc
redi
tatio
n Fo
rum
Mul
tilat
eral
Rec
ogni
tion
Agr
eem
ent
P&
P p
artn
ersh
ip p
latfo
rm o
n ed
ucat
ion
Sup
port
inst
itutio
ns: T
&C
con
sulti
ng s
ervi
ces,
Indi
an tr
aini
ng s
uppo
rt in
stitu
tions
: NIF
T, N
ID, I
IHT,
etc
.
Pack
agin
g:
intro
duce
loca
l pa
ckag
ing
mat
eria
l m
anuf
actu
ring
co
mpa
nies
that
w
ould
pro
duce
pap
er
cone
s, p
aper
tube
s,
cart
ons,
etc
.
Dye
s an
d ch
emic
als:
lo
cally
pro
duce
som
e of
th
e au
xilia
ries
requ
ired
for
dyes
, and
pro
duct
ion
of
n atu
ral d
yes
from
flow
ers
for
hand
loom
Lege
nd:
Nat
iona
l com
pone
ntIm
port
sEx
port
s
UTIL
IZATIO
N:
90
%U
TIL
IZATIO
N:
70
%U
TIL
IZATIO
N:
abou
t 9
0%
UTIL
IZATIO
N:
70
%
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
60
a
b c
d
e
I. FORESEEN ADJUSTMENTS IN THE TEXTILE SEGMENT
a. Overall compliance to CSR is achieved through better HR management practices and implementation of envi-ronmental standards
b. Diversification of yarn exporters is realized to major COMESA markets, the Russian Federation and the EU
c. Fabrics exports to regional markets are increasedd. Half of domestic fabric demand for the clothing industry
is provided by local textile firmse. Stand-alone dyeing and printing plants are created, act-
ing as service providers to fabric producers
II. GREATER VALUE ADDITION IN THE GARMENT SEGMENT AS WELL AS MARKET AND PRODUCT DIVERSIFICATION a. Accessories and embellishment manufacturing and
exports are developedb. Finished clothes imports are strongly regulatedc. Duty-free advantages for garments are set upd. Free on Board ( FOB ) garments manufacturing and
original design manufacturers are introduced into the value chain
e. Packaging manufacturing and companies producing paper cones, paper tubes, cartons etc. are created
a b
c
d
e
[ THE WAY FORWARD ]
61
III. FURTHER DEVELOPMENT AND INTEGRATION OF INDUSTRIAL ZONESa. Fabric manufacturing ( high quality cotton fabrics, dyed
and finished ) has grown in quality and quantity in the
framework of industrial zones due to cost advantages provided
b. CMT and FOB garment manufacturing and original de-sign manufacturers are present in Industrial zones
c. Training centres of excellence are established in each Industrial zone
a b
c
IV. ENHANCED SUPPORT SERVICES, PARTICULARLY IN THE AREAS OF TVET, QUALITY MANAGEMENT, FINANCE AND LOGISTICSa. Public–private partnership ( PPP ) platform on education
( TVET and university education ) is launchedb. ENAO becomes a member of the ILAC Mutual
Recognition Arrangement ( MRA ) and the IAF Multilateral Recognition Agreement ( MLA )
c. TVET institutions are equipped with the required training machinery, second-hand and miniature models ( through agreements with major machinery providers )
d. New T & C consulting services are developed and partnerships with Indian training support institutions are brought into Ethiopia : National Institute of Fashion Technology ( India ) ( NIFT ), National Institute of Design ( India ) ( NID ), Indian Institute of Hardware Technology ( IIHT ), etc.
e. Transportation services are improved : increased number of ports ( North Kenya Port and Port Sudan )
f. Financial services to T & C enterprises are improved : a credit guarantee trust fund is created
Ethiopian Chamber of Commerce and Sectoral Associations, Addis Ababa Chamber of Commerce and Sectoral Associations
Quality management bodies: Ethiopian Standards Agency (ESA), Ethiopian Conformity Assessment Enterprise, National Metrology Institute of Ethiopia (NMI)
and Ethiopian National Accreditation Office (ENAO)
Ethiopian Textile and Garment Manufacturers Association (ETGAMA)
Ethiopia Investment Commission (EIC)
Ethiopian Cotton Producers
Exporters and Ginners
Association (ECPGEA)
Universities that have textile engineering departments: Addis Ababa Science and Technology University (ASTU), Ethiopian Institute of Textile & Fashion Technology (EiTEX), Ethiopia Textile Industry Development Institute
Transportation services - Increase the number of ports: North Kenya port and Port Sudan
Ethiopian Revenues and Customs Authority (ERCA)
Ministry of Trade
TVET : capacitate TVET structure with the required training
Technical and maintenance services – on the level of companies; Transformation Triggering Facility (TTF), Industrial Parks Development Corporation (IPDC)
Banks - Financial services: credit guarantee trust fund
Privatization and Public Enterprises Supervising Agency
Mennonite Economic Development Associates (MEDA), Ethiopian Women Exporters' Association (EWEA), Organization for Women in Self Employment (WISE)
Ethiopian Textile Industry Development Institute (ETIDI)
FeMSEDA (Ethiopian entreprise development and handicrafts)
Ministry of Agriculture
ENAO to become member
of International Laboratory
Accreditation Cooperation Mutual
Recognition Arrangement and
International Accreditation Forum
Multilateral Recognition
Agreement
P&P partnership platform on education
Support institutions: T&C consulting services, Indian training support institutions: NIFT, NID, IIHT, etc.
Primary support services
a b
c
d
e
f
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
62
MOVING TO ACTION
The development of the future value chain for the T & C sec-tor is a 5 year project defined through a consultative process between public and private sector stakeholders in Ethiopia.
Achieving the strategic objectives and realizing the future value chain of the T & C sector in Ethiopia depends heavily
on the ability of sector stakeholders to start implementing and coordinating the activities defined in the Value Chain Roadmap’s Plan of Action. For this reason, a list of key pri-ority activities has been identified in order to kick-start the implementation of T & C Value Chain Roadmap.
The plan of priority actions to kick start implementation
Activity Target measures Leading national institution and possible implementing partners
Strategic objective 1 : Improve productivity and employment outcomes through skills development
1.1 Increase the level of technical and supervisory skills at T & C firms.1.1.1 Conduct a skills gap and needs assessment study covering the entire value chain from workers up to managers, and develop course curricula, assessment standards and infrastructure requirements for training programmes. The skills gap assessment should also factor in learnings from leading T & C manufacturing nations. Build this analysis on the 10-year skills development plan and gap assessment study carried out by Adama Science and Technology University and ETIDI.
• Reports indicating specific numbers to be trained for various activities
• Course curriculum for each area, based on skills gap assessment, assessment standards for certification agency, and identification of ways to train ( on-job, theory, mix )
ETIDI, ETGAMA, Adama Science and Technology University, Federal TVET Agency, TVET centres responsible for curriculum development under regional departments, Ministry of Education, regional support from African Cotton and Textiles Industries Federation ( ACTIF )
1.5 Improve HR policies, employee retention and incentives at T & C firms.1.5.1 Support companies in developing HR policies and practices – after comprehensive review of appli-cable local laws, international compliance standards and global best practices – leveraging the experience from other successful countries, which can help Ethiopian firms recruit, develop and retain a productive workforce.Foster the development of HR departments within companies to encompass a wider scope of services, in-cluding learning and development.
• At least 40 companies ( of which 20 are SMEs ) trained per year on HR practices
ETIDI, ETGAMA, regional support from ACTIF in terms of benchmarkingEthiopian HR professional associa-tions
1.6. Ensure maximum equipment usage within Ethiopian firms.1.6.1 Conduct training, involving machinery suppliers’ representatives, at firm level for middle-level and high-level managers on :
• Knowledge of existing equipment and their advantages in order to ensure proper identification and purchase of equipment within companies
• Understanding the potential of newly purchased equipment and the training requirements for operators to ensure its full-capacity functioning
• Modern budgetary practices that account for regular equipment upgrading.Machinery suppliers should not be involved to ensure that the data is unbiased. This should be done by :
a. Using industry experience-sharing platformsb. Institutionalizing technology comparison studies through universities or technical experts.
• One hundred and sixty company technical machinery supply managers trained per year
ETIDI, ETGAMA, regional support from ACTIF, Ministry of Education and Ministry of Industry,universities
Strategic Objective 2 : Strengthen the enabling environment to favour sector development2.1. Reinforce sector coordination to favour workforce development and policy advocacy2.1.1 Set up a high-level PPP platform to represent the interests of the industry and to ensure alignment between ETIDI, ETGAMA, public universities and vocational schools, with a view to upgrading the quality and capacity of the T & C training and educational offering. The partnership platform should comprise representa-tives of lead firms / foreign buyers / retailers.
• High-level PPP set up, comprised of ETIDI, ETGAMA, universities and TVET institutions
Ministry of Industry, ETIDI and ET-GAMA
2.3 Improve existing training and educational offerings and align to industry’s needs2.3.1 Reinforce existing TVET offering targeting both textile and clothing companies. Specific technical areas requiring skill reinforcement are :
• Spinning operations for ring spinning, open end and airjet• Weaving and weaving preparatory operations for major shuttleless technologies – airjet and rapier• Knitting operations• Fibre / yarn / fabric dyeing and finishing processes• Garment manufacturing operations• List of skills to be completed based on the assessment study.
In each of these areas, create highly specific short-term courses ( one to three weeks ), adapted to the time constraints of employees. For more specialized training, a higher period of four to six weeks may be re-quired. The timeline should be decided while developing the courses.
• At least two new courses created and available in each field within the five- year period
PPP, ETIDI, ETGAMA
[ THE WAY FORWARD ]
63
Activity Target measures Leading national institution and possible implementing partners
Strategic objective 3 : Establish conditions to harness FDI as an engine for growth in T & C3.4 Increase collaboration between local SMEs and FDIs to ensure synergies3.4.1 Support the implementation of the existing programme ( of the Ethiopia Chamber, the Addis Ababa Chamber ) to help establish linkages between new international investors and local suppliers in a more sys-tematic manner, taking into account the SMEs’ perspective. E.g. Ensure that foreign-owned firms in industrial zones begin to provide more systematic and organized in-house training, opened to local firms.
• Assist in finding new local suppliers• Facilitate transfer of knowledge from investors ( includes product technology, process technology and
organizational managerial know-how and assistance, etc. )• Provide training on pertinent issues to enhance meaningful relations between investors and local SMEs
( includes cooperative learning among suppliers ; internal training to affiliates ; in-plant training ; etc. ).
• Exchange mechanism established within at least four Industrial zones using the training centres created ( linked with activity 2.3.4 )
ETIDI, IPDC and ETGAMA
Strategic Objective 4 : Foster product and market development through the use of trade information 4.1 Ensure easy and timely access to strategic trade intelligence for T & C firms.4.1.1 Create a strategic monitoring cell, hosted at ETIDI, then co-shared with ETGAMA, to gather up-to-date and T & C-specific trade information, and to detect early signals on targeted markets and products. The web-site of ETIDI can be used to host the monitoring cell and connected to the Ethiopia Chamber of Commerce website.This implies supporting ETIDI and ETGAMA to subscribe to important textile journals and websites to be able to update its members with latest market information. These include : http : / / www.emergingtextiles.com / ; www.fibretofashion.com ; www.cotlook.com
• One monitoring cell set up in ETIDI• Recommendation report on
implementation of the competitive intelligence system
ETIDI,co-responsibility with ETGAMA and ECPGEA
4.2 Increase firms’ capacity to understand regional and international market requirements and how to best align product development / offerings4.2.3 Provide training on the contemporary trends of fashion design ( e.g. colour palettes silhouettes, etc. ), as well as the role and importance of fashion designers.
• At least two training institutions acquire knowledge and competences to replicate trainings
• Minimum of 10 companies trained per year
ETIDI, ETGAMA,regional support from ACTIF
Photo: www.tidi.gov.et,
THE PLAN OF ACTION
The PoA contains a detailed list of activities organized by operational objec-tives and strategic objectives. The PoA serves as an exhaustive framework for the implementation of the Value Chain Roadmap.
Photo: pixabay, Phil Shettig.
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
66
Stra
tegi
c ob
ject
ive
1 : Im
prov
e pr
oduc
tivity
and
em
ploy
men
t out
com
es th
roug
h sk
ills
deve
lopm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l in
stitu
tion
and
poss
ible
impl
emen
ting
partn
ers
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
inte
rnat
iona
l par
tner
s
1617
1819
20
1.1
Increa
se th
e lev
el of
tech
nical
and
supe
rviso
ry sk
ills a
t T &
C fir
ms.
1.1.
1 Co
nduc
t a sk
ills g
ap an
d ne
eds a
sses
smen
t stu
dy co
verin
g th
e ent
ire va
lue c
hain
from
wor
kers
up to
man
ager
s, an
d de
velo
p co
urse
curri
cula,
asse
ssm
ent s
tanda
rds a
nd in
frastr
uctu
re req
uirem
ents
for t
rainin
g pr
ogram
mes
( link
ed w
ith ac
tiviti
es 2
.1.2
and
2.1.
3 ).
The s
kills
gap
asse
ssm
ent s
houl
d als
o fac
tor i
n lea
rning
s fro
m le
ading
T & C
man
ufac
turin
g na
tions
.Bu
ild th
is an
alysis
on
the 1
0-ye
ar sk
ills d
evelo
pmen
t plan
and
gap
asse
ssm
ent s
tudy
carri
ed o
ut b
y Ad
ama S
cienc
e and
Tech
nolo
gy U
niver
sity a
nd E
TIDI.
1X
• Re
ports
indi
catin
g sp
ecifi
c nu
mbe
rs to
be t
raine
d fo
r vari
ous
activ
ities
•
Cour
se cu
rricu
lum
for e
ach
area,
base
d on
skill
s gap
asse
ssm
ent,
asse
ssm
ent s
tanda
rds f
or
certi
ficati
on ag
ency
, and
id
entif
icatio
n of
way
s to
train
( on-
job,
theo
ry, m
ix )
ETID
I, ET
GAM
A, A
dam
a Sc
ience
and
Tech
nol-
ogy U
niver
sity,
Fede
ral TV
ET A
genc
y,TV
ET ce
ntres
resp
on-
sible
for c
urric
ulum
de
velo
pmen
t und
er re
-gi
onal
depa
rtmen
ts,M
inistr
y of E
duca
tion,
regio
nal s
uppo
rt fro
m
Afric
an C
otto
n an
d Te
x-til
es In
dustr
ies F
eder
a-tio
n ( A
CTIF
)
Inter
natio
nal t
rainin
g ag
encie
s suc
h as
Waz
ir an
d Inf
rastru
cture
Leas
ing
and
Finan
cial S
ervic
es
( IL&F
S ) fr
om In
dia
1.1.
2 Pr
ovid
e tec
hnica
l trai
nings
to T
& C m
achin
e ope
rator
s on-
site a
nd in
selec
ted tr
aining
cent
res to
inc
rease
pro
ducti
vity a
nd q
ualit
y of s
kills.
Train
ing to
wor
kers
: fou
r to
six w
eeks
.Sp
ecifi
c foc
us ar
eas r
equir
ed ar
e :
• Sh
ift w
orke
rs / m
achin
e ope
rator
s fro
m sp
inning
up
to g
armen
ting
• Lin
e lea
ders
and
prod
uctio
n flo
w su
pervi
sors
• M
iddl
e man
ager
s•
Patte
rn m
aker
s and
com
puter
-aid
ed d
esig
n op
erato
rs •
Quali
ty ins
pecto
rs •
Lab
techn
ician
s •
Fash
ion
desig
ners
• M
ercha
ndize
rs•
Indus
trial
engi
neer
s•
Elec
tronic
s / el
ectri
cian
skill
s•
Mec
hanic
s•
Prac
tices
on
mac
hiner
y main
tenan
ce.
1X
• Te
n th
ousa
nd w
orke
rs pe
r yea
r in
seve
n tra
ining
loca
tions
• At
leas
t 5,0
00 em
ploy
ees t
raine
d pe
r yea
r und
er o
ther
categ
ories
( to
be r
efine
d ba
sed
on th
e skil
l ga
p as
sess
men
t und
er ac
tivity
1.
1.1 )
ETID
I, ET
GAM
A, re
gion
-al
supp
ort f
rom
ACT
IFTV
ET in
stitu
tions
/ un
i-ve
rsitie
s
Inter
natio
nal t
rainin
g ag
encie
s suc
h as
Waz
ir an
d IL&
FS fr
om In
dia
1.1.
3 Pr
ovid
e on-
the-
job
man
ager
ial tr
aining
to li
ne m
anag
ers w
ho h
ave s
uper
visor
y rol
es, t
o en
sure
work
flows
expe
ditio
usly
along
the l
ine. T
rainin
g to
supe
rviso
rs : t
wo to
four
wee
ks.
2X
• On
e tho
usan
d lin
e sup
ervis
ors
per y
ear i
n m
ultip
le lo
catio
ns
( inclu
ding
train
ing w
ithin
facto
ry an
d, fo
r som
e, in
a trai
ning
cent
re )
ETID
I, ET
GAM
A, re
-gi
onal
supp
ort f
rom
AC
TIF,
Kaize
n Ins
titut
e,TV
ET in
stitu
tions
/ un
i-ve
rsitie
s,pu
blic–
priva
te pl
atfor
m
Inter
natio
nal t
rainin
g ag
encie
s suc
h as
Waz
ir an
d IL&
FS fr
om In
dia
1.1.
4 Tra
in pr
oduc
tion
flow
supe
rviso
rs to
bes
t ove
rsee t
he p
ace o
f the
wor
k and
ensu
re sto
ppag
es ar
e m
inim
ized,
mon
itor p
rodu
ction
leve
ls, tr
ain n
ew w
orke
rs, an
d m
anag
e con
stant
pro
blem
solvi
ng. T
rain-
ing m
anag
ers :
two
week
s ( to
be l
inked
with
activ
ity 1
.3.3
).
2X
• On
e hun
dred
and
sixty
man
ager
s pe
r yea
r in
mul
tiple
loca
tions
( in
cludi
ng tr
aining
with
in fac
tory
and,
for s
ome,
in a t
rainin
g ce
ntre
)
ETID
I, ET
GAM
A, re
-gi
onal
supp
ort f
rom
AC
TIF,
Kaize
n Ins
titut
e,TV
ET in
stitu
tions
/ un
i-ve
rsitie
s
Unive
rsitie
s,e.g
. Add
is Ab
aba,
Bahir
Da
r, W
ollo
;int
erna
tiona
l trai
ning
agen
cies s
uch
as W
azir
and
IL&FS
from
Indi
a
[ THE PLAN OF ACTION ]
67
Stra
tegi
c ob
ject
ive
1 : Im
prov
e pr
oduc
tivity
and
em
ploy
men
t out
com
es th
roug
h sk
ills
deve
lopm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l in
stitu
tion
and
poss
ible
impl
emen
ting
partn
ers
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
inte
rnat
iona
l par
tner
s
1617
1819
20
1.1
Increa
se th
e lev
el of
tech
nical
and
supe
rviso
ry sk
ills a
t T &
C fir
ms.
1.1.
5 Su
ppor
t firm
s to
prov
ide s
ystem
atic t
rainin
g / i
nduc
tion
proc
ess t
o ne
w op
erato
rs an
d de
velo
p tra
ining
man
uals
on m
anuf
actu
ring
oper
ation
s – pr
oduc
tion,
qua
lity,
main
tenan
ce an
d ho
usek
eepi
ng –
for o
perat
ors.
2X
• Pu
blish
ed h
andb
ooks
with
sta
ndard
ope
rating
pro
cedu
re fo
r ea
ch ac
tivity
• Tra
in 40
com
panie
s per
year
to
deve
lop
proc
ess a
nd tr
aining
m
anua
ls•
Traini
ng o
f trai
ners
unde
r ex
chan
ge p
rogr
amm
e in
one y
ear
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m
ACTIF
Inter
natio
nal t
rainin
g ag
encie
s suc
h as
Waz
ir an
d IL&
FS fr
om In
dia
1.1.
6 Sh
owca
se to
oth
ers t
he le
vel o
f effo
rt m
ade b
y suc
cess
ful c
ompa
nies i
n sk
ills d
evelo
pmen
t, an
d ho
w th
eir p
rodu
ctivit
y lev
els an
d co
st eff
icien
cy h
ave i
mpr
oved
as a
resul
t. 2
X•
At le
ast f
ive su
cces
s sto
ries
show
case
d th
roug
h ET
GAM
A an
d ET
IDI
ETGA
MA
and
ETID
I
1.1.
7 M
onito
ring
and
evalu
ation
of t
he tr
aining
pro
gram
mes
bas
ed o
n th
e skil
ls ga
p as
sess
men
t ( un
-de
r 1.1
.1 ) c
reate
a lab
our d
ataba
se to
refle
ct th
e cur
rent s
ituati
on id
entif
ied in
the s
tudy
( sho
wing
num
-be
rs of
wor
kers
at ea
ch le
vel o
f spe
cializ
ation
), an
d m
onito
r evo
lutio
n an
d qu
antif
y trai
ned
empl
oyee
s in
each
categ
ory.
2X
• On
e mon
itorin
g da
tabas
e crea
ted
and
man
aged
by E
TIDI,
with
ET
GAM
A’s i
nput
s
Mini
stry o
f Lab
our a
nd
Socia
l Affa
irs, E
TIDI,
ETGA
MA
1.1.
8 So
licit
large
-sca
le inv
estm
ents
and
world
-clas
s man
agem
ent t
o va
stly r
amp
up th
e cou
ntry’
s ca-
pacit
y for
garm
ent w
orke
r trai
ning
that
is bo
th te
chnic
ally e
xcell
ent a
nd so
cially
resp
onsib
le.Fu
rther
buil
d on
the S
wedf
und
/ H&M
pro
ject i
n Et
hiopi
a to
build
the t
rainin
g pr
ogram
mes
requ
ired,
lia
ising
with
oth
er fi
nanc
ial an
d tec
hnica
l par
tner
s exp
erien
ced
in lar
ge g
armen
t wor
ker t
rainin
g ini
tia-
tives
in A
sia an
d / o
r Afri
ca. T
his w
ill li
kely
inclu
de p
rivate
inve
stors,
dev
elopm
ent a
genc
ies o
f majo
r ga
rmen
t-pro
ducin
g co
untri
es, s
tate-
run
vent
ure c
apita
l firm
s ( su
ch as
Swe
dfun
d ), c
onsu
ltanc
ies,
inter
natio
nal o
rgan
izatio
ns, a
nd n
on-g
over
nmen
t org
aniza
tions
( Ben
efits
for B
usine
ss an
d W
orke
rs pr
o-gr
amm
e in
India
and
Bang
lades
h is
an ex
ampl
e of s
uch
a larg
e-sc
ale p
rojec
t, rea
ching
ove
r 350
,000
wo
rkers
).
2X
• At
leas
t one
larg
e-sc
ale
inves
tmen
t pro
gram
me i
nitiat
ed,
invol
ving
indus
try-w
ide t
rainin
g
ETID
I and
ETG
AMA
1.2
Impr
ove
sour
cing
and
supp
ly ch
ain
man
agem
ent
perfo
rman
ce.
1.2.
1 Pr
ovid
e ove
rall t
rainin
g to
firm
s on
quali
ty inp
ut so
urcin
g, fi
nanc
ial m
anag
emen
t and
supp
ly ch
ain o
ptim
izatio
n.To
incr
ease
the a
waren
ess o
f ent
erpr
ises o
n th
e nee
d to
sour
ce h
igh
quali
ty inp
uts,
com
plem
ent t
rain-
ings b
y org
anizi
ng fa
ce to
face
mee
tings
with
Japa
nese
com
panie
s ( du
e to
their
hig
h qu
ality
requir
e-m
ents
– to
be s
uppo
rted
by th
e Jap
an In
terna
tiona
l Coo
perat
ion
Agen
cy ) a
nd A
mer
ican
com
panie
s to
see t
he le
vel o
f qua
lity r
equir
ed b
y sou
rcing
firm
s.
2X
• Th
ree to
four
T & C
custo
mer
wo
rksho
ps p
er ye
ar•
One h
undr
ed an
d six
ty co
mpa
ny
man
ager
s trai
ned
per y
ear
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m
ACTIF
,Et
hiopi
an In
dustr
ial In
-pu
ts De
velo
pmen
tEn
terpr
ise ( E
IIDE )
Japa
n Int
erna
tiona
l Co
oper
ation
Age
ncy,
Supp
ortin
g Ind
ian Tr
ade
and
Inves
tmen
t in
Afric
a ( S
ITA ) /
Sec
tor C
ompe
ti-tiv
enes
s ( SC
) ( se
ction
of
ITC ) –
Enter
prise
Com
-pe
titive
ness
( EC )
( sec
tion
of IT
C ) –
Sup
ply C
hain
Man
agem
ent (
SCM
), lo
-ca
l ins
titut
ions
, inc
ludi
ng
BCaD
Con
sulti
ng ( E
thio
-pi
a Mod
ular
Learn
ing
Syste
m –
Sup
ply C
hain
Man
agem
ent (
MLS
–SC
M ) p
artn
er )
1.2.
2 En
sure
that
exter
nal p
rivate
secto
r sup
port
on so
urcin
g is
avail
able
to en
terpr
ises :
• Inv
olve
sour
cing
com
panie
s / tr
ader
s in
the s
ourc
ing o
f T &
C pr
oduc
ts ( a
nd lo
gisti
cs ) f
or th
ose f
irms
that
do n
ot h
ave t
his ca
pacit
y int
erna
lly ye
t – ge
t ass
istan
ce fr
om lo
cal o
r reg
iona
l priv
ate tr
ader
s and
rep
licate
it in
the g
armen
t sec
tor,
invol
ving
leadi
ng fi
rms (
pilo
t in
leath
er in
dustr
y with
FeM
SEDA
) ;•
Prom
ote d
evelo
pmen
t of E
thio
pian
sour
cing
com
panie
s ( in
cludi
ng re
achin
g ou
t to
the k
ey p
layer
s in
the s
ourc
ing in
dustr
y to
bring
them
into
Eth
iopi
a ).
2X
• At
leas
t 10
com
panie
s with
out
sour
cing
divis
ions
conn
ected
wi
th so
urcin
g co
mpa
nies /
tra
ders
• At
the e
nd o
f five
years
, at
least
two
new
T & C
sour
cing
com
panie
s in
Ethio
pia
ETID
I, reg
iona
l sup
port
from
ACT
IFPil
ot in
leath
er in
dustr
y wi
th F
eMSE
DA
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
68
Stra
tegi
c ob
ject
ive
1 : Im
prov
e pr
oduc
tivity
and
em
ploy
men
t out
com
es th
roug
h sk
ills
deve
lopm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l in
stitu
tion
and
poss
ible
impl
emen
ting
partn
ers
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
inte
rnat
iona
l par
tner
s
1617
1819
20
1.2
Impr
ove
sour
cing
and
supp
ly ch
ain
man
agem
ent
perfo
rman
ce.
1.2.
3 Co
ach
com
panie
s on
how
to p
ut in
to p
ractic
e the
mos
t suit
able
syste
ms a
nd p
roce
sses
for m
an-
aging
ope
ratio
ns an
d inv
ento
ry ( e
.g. s
ourc
ing an
d pl
annin
g fo
r con
stant
avail
abili
ty of
inpu
ts us
ed in
pr
oduc
tion
such
as ra
w m
ateria
ls, sp
are p
arts,
dye
s and
chem
icals )
.
1X
• On
e hun
dred
and
sixty
com
pany
m
anag
ers t
raine
d pe
r yea
r•
Twen
ty SM
Es co
ache
d pe
r yea
r on
inve
ntor
y man
agem
ent
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m
ACTIF
, EIID
E
SITA
/ EC
–SCM
, loc
al in-
stitu
tions
, inc
ludi
ng B
CaD
Cons
ultin
g ( E
thio
pia
MLS
–SCM
par
tner
)
1.2.
4 Pr
ovid
e con
sulti
ng ad
vice t
hrou
gh in
terna
tiona
l exp
erts
to se
lected
pro
gres
sive a
nd co
mm
itted
co
mpa
nies t
o he
lp th
em im
plem
ent l
ean
man
agem
ent,
logi
stics
man
agem
ent a
nd o
ther
tech
nique
s for
pr
oduc
tivity
and
quali
ty im
prov
emen
t.
2X
• At
leas
t 40
com
panie
s ( of
whic
h 20
are S
MEs
) trai
ned
per y
ear o
n lea
n / l
ogist
ics im
plem
entat
ions
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m
ACTIF
, EIID
E
SITA
/ SC
/ EC
–SCM
, W
azir,
loca
l ins
titut
ions
, inc
ludi
ng B
CaD
Cons
ult-
ing ( E
thio
pia M
LS–S
CM
partn
er )
1.2.
5 Co
ach
com
panie
s to
impl
emen
t cos
t-effi
cient
and
buye
r-orie
nted
sour
cing
strate
gies
and
tech-
nique
s ( al
so en
surin
g th
at res
pons
ible
staff
have
fina
ncial
skill
s rela
ted to
pur
chas
ing in
puts
and
coor-
dina
ting
prod
uctio
n sc
hedu
les ).
1X
• At
leas
t 40
com
panie
s ( of
wh
ich 2
0 are
SM
Es ) t
raine
d pe
r yea
r in
sour
cing
strate
gy
impl
emen
tatio
ns
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m
ACTIF
, EIID
E
SITA
/ SC
1.2.
6 Ex
plor
e new
sour
cing
mark
ets fo
r inp
uts (
yarn
s, fab
rics a
nd ac
cess
ories
), id
entif
ying
poten
tial
supp
liers
and
facili
tating
long
-term
relat
ions
hip b
uildi
ng.
2X
• Lin
kage
s dev
elope
d wi
th 1
0 ne
w su
pplie
rs fro
m d
iffere
nt so
urcin
g de
stina
tions
•
Ten
per c
ent r
educ
tion
in co
sts
of se
lected
inpu
ts, o
r im
prov
ed
deliv
ery t
ime
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m
ACTIF
, EIID
E
SITA
/ SC
1.3
Impr
ove
quali
ty m
anag
e-m
ent s
kills
in lin
e wi
th in
terna
tiona
l sta
ndard
s.
1.3.
1 Pr
omot
e the
adop
tion
of in
strum
ents
relate
d to
qua
lity a
ssur
ance
and
stand
ards (
such
as E
COTE
-CO
, Kaiz
en, I
SO, s
ocial
resp
onsib
ility
and
envir
onm
ental
/ en
ergy s
tanda
rds )
and
servi
ces i
n su
ppor
t to
enter
prise
s.
• Gu
ide :
‘Exp
ortin
g clo
thing
and
textil
es to
targ
et m
arkets
’ •
Guid
e : ‘M
anag
ing q
ualit
y in
Ethio
pia :
a di
recto
ry of
servi
ces’
2X
• Gu
ide :
‘Exp
ortin
g clo
thing
and
textil
es to
targ
et m
arkets
’ mad
e av
ailab
le•
Guid
e : ‘M
anag
ing q
ualit
y in
Ethio
pia :
a di
recto
ry of
servi
ces’
mad
e ava
ilabl
e
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m
ACTIF
,ESA
( inc
ludi
ng
ECAE
, NM
I, an
d EN
AO )
SITA
/ EC
–Exp
ort Q
ualit
y M
anag
emen
t ( EQ
M )
1.3.
2 Co
nduc
t sen
sitiza
tion
works
hops
on
man
dato
ry an
d vo
lunt
ary re
quire
men
ts in
targe
t mark
ets
( Indi
a, reg
ion,
EU )
for S
MEs
and
TISIs.
This
woul
d co
ver i
nter
natio
nal a
nd o
ther
requ
irem
ents,
buy
ers’
requir
emen
ts, la
belli
ng, p
acka
ging
, clo
thing
size
, and
the R
egist
ratio
n, E
valu
ation
, Aut
horiz
ation
and
Restr
ictio
n of
Che
mica
ls ( R
EACH
) reg
ulati
on :
• Br
eako
ut se
ssio
ns to
iden
tify t
he q
ualit
y-rel
ated
need
s of p
artic
ipati
ng S
MEs
( and
TISI
s )•
Ident
ifica
tion
of a
way f
orwa
rd fo
r a p
ool o
f ent
erpr
ises (
ISO
9001
, ISO
140
01, I
SO 5
0001
, pr
oduc
tivity
impr
ovem
ent,
5S, b
asic
quali
ty to
ols,
lean
man
ufac
turin
g, p
acka
ging
, lab
elling
)•
Ident
ifica
tion
of a
way f
orwa
rd fo
r TIS
Is ( la
bs, c
ertif
icatio
n bo
dies
, ins
pecti
on b
odies
, con
sulta
ncy
com
panie
s ).
2X
• At
leas
t 40
com
panie
s ( of
whic
h 20
are S
MEs
) per
year
sens
itize
d on
man
dato
ry an
d vo
lunt
ary
requir
emen
ts in
targe
t mark
ets•
Ten
TISIs
sens
itize
d on
man
dato
ry an
d vo
lunt
ary re
quire
men
ts in
targe
t mark
ets
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m
ACTIF
, ESA
, ESA
( in
cludi
ng E
CAE,
NM
I, an
d EN
AO )
SITA
/ EC
–EQM
1.3.
3 Co
nduc
t cap
acity
-buil
ding
for a
poo
l of s
electe
d SM
Es to
com
ply w
ith m
anda
tory
and
volu
ntary
req
uirem
ents
and
impl
emen
t req
uired
certi
ficati
on sc
hem
es ( I
SO 9
001,
ISO
1400
1, IS
O 50
001,
pro
-du
ctivit
y im
prov
emen
t, 5S
, bas
ic qu
ality
tool
s, lea
n m
anuf
actu
ring,
pac
kagi
ng, l
abell
ing ).
1X
• At
leas
t 40
com
panie
s ( of
whic
h 20
are S
MEs
) per
year
coac
hed
to im
plem
ent a
ppro
priat
e ce
rtific
ation
sche
mes
and
man
agem
ent t
ools
per y
ear
• Tra
ining
mate
rials
avail
able
ESA
and
ETID
I ( in
-clu
ding
EC
AE, N
MI,
and
ENAO
)
SITA
/ EC
–EQM
1.3.
4 Tra
ining
on
unde
rstan
ding
, and
guid
ance
on
impl
emen
tatio
n of,
the R
EACH
regu
latio
n.2
X•
One w
orks
hop
for p
erso
nnel
from
fo
ur re
levan
t reg
ulato
ry bo
dies
, SM
Es an
d rel
evan
t stak
ehol
ders
• Ro
ad m
ap to
impl
emen
t REA
CH
regul
ation
ESA
and
ETID
I ( in
cludi
ng E
CAE,
NM
I, an
d EN
AO )
SITA
/ EC
–EQM
1.3.
5 In
orde
r to
ensu
re th
e sus
taina
bilit
y of t
he ce
rtific
ation
; esta
blish
par
tner
ship
s with
buy
ers t
o pr
o-m
ote t
he ce
rtific
ation
pro
cess
amon
g Et
hiopi
an co
mpa
nies.
2X
• At
leas
t one
buy
er in
volve
dET
IDI,
ETGA
MA,
ESA
[ THE PLAN OF ACTION ]
69
Stra
tegi
c ob
ject
ive
1 : Im
prov
e pr
oduc
tivity
and
em
ploy
men
t out
com
es th
roug
h sk
ills
deve
lopm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l inst
itutio
n an
d po
ssib
le im
plem
entin
g pa
rtner
s
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
inte
rnat
iona
l par
tner
s
1617
1819
20
1.4
Desig
n an
d im
plem
ent a
na-
tionw
ide c
ompl
i-an
ce p
rogr
amm
e.
1.4.
1 De
velo
p a r
eferen
ce b
ook o
n ex
isting
socia
l and
envir
onm
ental
guid
eline
s app
lied
in th
e T &
C se
ctor i
n Et
hiopi
a, inc
ludi
ng th
e mon
itorin
g an
d rep
ortin
g m
echa
nism
s in
plac
e 1
X•
Refer
ence
boo
k on
exist
ing so
cial
and
envir
onm
ental
guid
eline
s cr
eated
with
impl
emen
table
recom
men
datio
n ba
sed
on g
loba
l pr
actis
e
ETID
I as l
eadi
ng in
stitu
tion
Mini
stry o
f Lab
our a
nd S
ocial
Af
fairs
; ETG
AMA ;
Con
feder
a-tio
n of
Eth
iopi
an Tr
ade U
nions
, ; Na
tiona
l Fed
erati
on o
f Tex
-til
e, Le
ather
and
Garm
ent I
ndus
try Tr
ade U
nions
;M
inistr
y of T
rade
1.4.
2 Es
tablis
h an
advis
ory c
omm
ittee
com
pose
d of
buy
ers,
empl
oyer
s’ an
d wo
rkers’
org
aniza
-tio
ns, T
ISIs,
and
othe
r rele
vant
stak
ehol
ders
and
agree
on
impl
emen
tatio
n of
glo
bal c
ompl
iance
sta
ndard
s and
mod
alitie
s in
the c
ount
ry an
d fo
r the
clot
hing
and
textil
e sec
tors,
inclu
ding
mon
itor-
ing an
d rep
ortin
g.
2X
• Co
mm
ittee
on
com
plian
ce
prog
ramm
e set
up
1.4.
3 Es
tablis
h m
odali
ties f
or b
uyer
and
enter
prise
enga
gem
ent i
n im
plem
entat
ion,
mon
itorin
g,
repor
ting
and
taking
corre
ctive
actio
ns re
lated
to co
mpl
iance
.2
X•
Over
all te
rms o
f refe
rence
draf
ted o
n bu
yer a
nd en
terpr
ise im
plem
entat
ion
• Inv
olve
men
t of i
ndivi
dual
buye
rs de
fined
thro
ugh
respe
ctive
term
s of
refere
nce (
at le
ast t
wo )
1.4.
4 Ag
ree o
n an
d sig
n a c
ount
rywid
e com
plian
ce fr
amew
ork f
or th
e T &
C ind
ustry
in E
thio
pia.
1X
• Co
untry
wide
com
plian
ce fr
amew
ork
signe
d1.
4.5
Wor
k with
buy
ers t
o bu
ild co
mpl
iance
buy
-in th
roug
h bu
ilding
trus
t and
own
ersh
ip w
ith m
an-
agem
ent a
nd w
orke
rs –
estab
lish
a wor
king
team
( man
agem
ent a
nd w
orke
rs ) a
t the
enter
prise
leve
l to
pro
mot
e com
plian
ce.
2X
• At
leas
t 20
worki
ng te
ams
estab
lishe
d in
Ethio
pian
com
panie
s
1.4.
6 Tra
in wo
rkers,
empl
oyer
s and
oth
er st
akeh
olde
rs on
the a
gree
d-up
on co
mpl
iance
fram
ewor
k fo
r the
T & C
indu
stry i
n Et
hiopi
a, inc
ludi
ng so
cial a
nd en
viron
men
tal st
anda
rds a
nd th
eir im
plica
-tio
ns fo
r attr
actin
g FD
I and
glo
bal b
uyer
s.
2X
• At
leas
t 2,0
00 w
orke
rs an
d 50
m
anag
ers t
raine
d pe
r yea
r ( fro
m
parti
cipati
ng co
mpa
nies )
1.4.
7 Tra
in em
ploy
ers a
nd w
orke
rs on
the l
ink b
etwee
n co
mpl
iance
and
impr
oved
wor
king
cond
i-tio
ns fo
r qua
lity,
prod
uctiv
ity, c
leane
r pro
ducti
on an
d HR
man
agem
ent.
2X
• At
leas
t 2,0
00 w
orke
rs an
d 50
m
anag
ers t
raine
d pe
r yea
r ( fro
m
parti
cipati
ng co
mpa
nies )
1.4.
8 Ag
ree w
ith b
uyer
s on
an ap
prop
riate
verif
icatio
n sy
stem
for t
he co
untry
, inc
ludi
ng th
e use
of
accr
edite
d Et
hiopi
an se
rvice
pro
vider
s ( se
lect a
nd tr
ain ad
visor
y ser
vice p
rovid
ers t
o ca
rry o
ut
facto
ry-lev
el as
sess
men
ts, m
onito
ring
and
repor
ting
( ser
vice c
ould
be i
nteg
rated
with
in a T
ISI o
r es
tablis
hed
using
the I
nter
natio
nal L
abou
r Org
aniza
tion
Bette
r Wor
k pro
gram
me a
ppro
ach )
).
2X
• Al
l mod
alitie
s of a
verif
icatio
n sy
stem
dev
elope
d•
Verif
icatio
n sy
stem
impl
emen
ted
1.4.
9 Tra
in ad
visor
y ser
vice p
rovid
ers o
n ho
w to
follo
w up
and
work
with
com
panie
s to
impr
ove o
n co
mpl
iance
gap
s. 2
X•
At le
ast f
ive co
nsul
tancy
firm
s tra
ined
per y
ear
1.4.
10 E
stabl
ish a
syste
m to
regu
larly
publ
ish h
ighl
ight
s abo
ut ef
forts
to ad
here
to g
loba
l soc
ial
and
envir
onm
ental
prin
ciples
bein
g un
derta
ken,
via v
ariou
s out
lets a
nd in
colla
borat
ion
with
buy
-er
s and
inve
stmen
t pro
mot
ion
agen
cies,
to b
uild
glob
al tra
nspa
rency
abou
t the
coun
try’s
effor
t to
adhe
re to
glo
bal s
ocial
and
envir
onm
ental
prin
ciples
.
2X
• Ce
ntral
ized
com
mun
icatio
n sy
stem
on
com
plian
ce es
tablis
hed
Mini
stry o
f Lab
our a
nd S
ocial
Af
fairs
; ETG
AMA ;
Con
feder
ation
of
Eth
iopi
an Tr
ade U
nions
, ETID
I as
a pa
rtner
; Nati
onal
Fede
ra-tio
n of
Texti
le, Le
ather
and
Garm
ent I
ndus
try Tr
ade U
nions
;M
inistr
y of T
rade,
EIC
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
70
Stra
tegi
c ob
ject
ive
1 : Im
prov
e pr
oduc
tivity
and
em
ploy
men
t out
com
es th
roug
h sk
ills
deve
lopm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l inst
itutio
n an
d po
ssib
le im
plem
entin
g pa
rtner
s
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
inte
rnat
iona
l par
tner
s
1617
1819
20
1.5
Impr
ove H
R po
licies
, em
-pl
oyee
reten
tion
and
incen
tives
at
T & C
firm
s.
1.5.
1 Su
ppor
t com
panie
s in
deve
lopi
ng H
R po
licies
and
prac
tices
–aft
er co
mpr
ehen
sive r
eview
of
appl
icabl
e loc
al law
s, int
erna
tiona
l com
plian
ce st
anda
rds a
nd g
loba
l bes
t prac
tices
– le
verag
ing
the e
xper
ience
from
oth
er su
cces
sful c
ount
ries,
which
can
help
Eth
iopi
an fi
rms r
ecru
it, d
evelo
p an
d ret
ain a
prod
uctiv
e wor
kforc
e.Fo
ster t
he d
evelo
pmen
t of H
R de
partm
ents
with
in co
mpa
nies t
o en
com
pass
a wi
der s
cope
of s
er-vic
es, i
nclu
ding
learn
ing an
d de
velo
pmen
t.
1x
• At
leas
t 40
com
panie
s ( of
whic
h 20
are
SM
Es ) t
raine
d pe
r yea
r on
HR
prac
tices
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m A
CTIF
in ter
ms o
f ben
chm
arking
Ethio
pian
HR
prof
essio
nal a
s-so
ciatio
ns
1.5.
2 Su
ppor
t firm
s to
crea
te a p
rope
r wor
king
envir
onm
ent,
incen
tivizi
ng w
orke
rs to
gain
skill
s and
de
velo
p in
T & C
secto
r com
panie
s :
• Tra
in rec
ruiti
ng st
aff to
iden
tify p
rope
r sof
t skil
ls se
ts du
ring
inter
views
( for
all t
ypes
of r
oles
–
from
ope
rator
s to
man
ager
s )•
Estab
lish
a col
labor
ation
with
Kaiz
en In
stitu
te to
tran
sfer i
deas
on
com
pany
corp
orate
subc
ultu
re m
anag
emen
t•
Increa
se ca
reer g
rowt
h op
portu
nities
for o
perat
ors (
and
incen
tivize
thro
ugh
mer
it-ba
sed
salar
y gr
owth
)•
Reco
gnize
well
-per
form
ing w
orke
rs an
d pr
ovid
e the
m w
ith a
traine
r’s ro
le•
Ensu
re tra
nspa
rency
of t
he co
mpa
ny’s
func
tionin
g an
d m
erito
crac
y cul
ture
• Es
tablis
h a r
egul
ar int
erac
tion
mec
hanis
m b
etwee
n m
anag
emen
t and
wor
kers
• Re
quire
grea
ter d
edica
tion
to tr
aining
new
com
ers a
nd in
terns
• Co
nnec
t the
com
pany
subc
ultu
re to
the n
ation
al br
and
‘Mad
e in
Ethio
pia’
in or
der t
o cr
eate
a se
nse o
f prid
e am
ong
worke
rs.
2x
• At
leas
t 40
com
panie
s ( of
whic
h 20
are S
MEs
) trai
ned
per y
ear /
per
categ
ory
• At
leas
t 160
recr
uiting
staff
train
ed
per y
ear
• M
emor
andu
m o
f Un
derst
andi
ng( M
oU ) w
ith K
aizen
sig
ned
• At
leas
t 10
com
panie
s esta
blish
an
inter
actio
n m
echa
nism
per
year
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m A
CTIF
in ter
ms o
f ben
chm
arking
Ethio
pian
HR
prof
essio
nal a
s-so
ciatio
ns
1.5.
3 Tra
in m
anag
ers o
n th
e dev
elopm
ent o
f a co
mpa
ny su
bcul
ture
in th
eir fi
rms t
o ret
ain w
orke
rs’
intere
st in
caree
r dev
elopm
ent,
and
impr
ove w
orkin
g co
nditi
ons.
Traini
ng o
f mid
-leve
l man
ager
s wi
ll als
o fo
cus o
n pr
oper
floo
r man
agem
ent t
echn
ique
s and
requ
ired
soft
skill
s.
2x
• On
e hun
dred
and
sixty
com
pany
m
anag
ers t
raine
d pe
r yea
rET
IDI,
ETGA
MA
and
Natio
nal
Texti
le Un
iversi
ties
1.5.
4 Pr
omot
e skil
l dev
elopm
ent c
ontra
cts b
etwee
n em
ploy
ers a
nd w
orke
rs wh
ereby
empl
oyee
s rec
eive a
dvan
ced
traini
ng fr
om fi
rms i
n ex
chan
ge fo
r com
mitm
ents
to st
ay w
ith th
ose f
irms f
or an
ag
reed
perio
d, th
ereby
ince
ntivi
zing
empl
oyer
inve
stmen
t in
labou
r.
2x
• At
leas
t 15
com
panie
s ado
pt su
ch
sche
mes
per
year
ETID
I, ET
GAM
A
1.6
Ensu
re m
axi-
mum
equip
men
t us
age w
ithin
Ethio
pian
firm
s.
1.6.
1 Co
nduc
t trai
ning,
invo
lving
mac
hiner
y sup
plier
s’ rep
resen
tative
s, at
firm
leve
l for
mid
dle-
level
and
high-
level
man
ager
s on :
• Kn
owled
ge o
f exis
ting
equip
men
t and
their
adva
ntag
es in
ord
er to
ensu
re pr
oper
iden
tifica
tion
and
purc
hase
of e
quip
men
t with
in co
mpa
nies
• Un
derst
andi
ng th
e pot
entia
l of n
ewly
purc
hase
d eq
uipm
ent a
nd th
e trai
ning
requir
emen
ts fo
r op
erato
rs to
ensu
re its
full-
capa
city f
uncti
oning
•
Mod
ern
budg
etary
prac
tices
that
acco
unt f
or re
gular
equip
men
t upg
rading
.M
achin
ery s
uppl
iers s
houl
d no
t be i
nvol
ved
to en
sure
that
the d
ata is
unb
iased
. This
shou
ld b
e do
ne b
y :
a. U
sing
indus
try ex
perie
nce-
shari
ng p
latfo
rms
b. In
stitu
tiona
lizing
tech
nolo
gy co
mpa
rison
stud
ies th
roug
h un
iversi
ties o
r tec
hnica
l exp
erts.
1x
• On
e hun
dred
and
sixty
com
pany
tec
hnica
l mac
hiner
y sup
ply
man
ager
s trai
ned
per y
ear
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m A
CTIF,
M
inistr
y of E
duca
tion
and
Mini
s-try
of I
ndus
try,
unive
rsitie
s
Inter
natio
nal t
rainin
g ag
encie
s suc
h as
Waz
ir an
d IL&
FS fr
om In
dia
( coo
rdina
tion
with
ma-
chine
ry su
pplie
rs )
1.6.
2 Pr
ovid
e sys
temati
c on-
site t
rainin
g to
com
panie
s’ op
erato
rs on
the u
se o
f new
ly pu
rcha
sed
mac
hiner
y and
bes
t prac
tices
in it
s han
dling
( e.g
. bes
t prac
tices
in p
roce
ss co
ntro
l and
mac
hine
main
tenan
ce ).
2x
• Te
n th
ousa
nd w
orke
rs pe
r yea
r in
seve
n tra
ining
loca
tions
ETID
I, M
inistr
y of I
ndus
try,
Mini
stry o
f Edu
catio
n an
d un
i-ve
rsitie
s
[ THE PLAN OF ACTION ]
71
Stra
tegi
c ob
ject
ive
1 : Im
prov
e pr
oduc
tivity
and
em
ploy
men
t out
com
es th
roug
h sk
ills
deve
lopm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l inst
itutio
n an
d po
ssib
le im
plem
entin
g pa
rtner
s
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
inte
rnat
iona
l par
tner
s
1617
1819
20
1.6
Ensu
re m
axi-
mum
equip
men
t us
age w
ithin
Ethio
pian
firm
s.
1.6.
3 En
able
exch
ange
pro
gram
mes
for t
echn
ical s
taff w
ith in
terna
tiona
l com
panie
s ( an
d lea
ding
Et
hiopi
an fi
rms )
, mac
hiner
y sup
plier
s and
inter
natio
nal t
rainin
g ins
titut
es ( f
orem
en, f
itter
s, jo
bber
s, se
wing
tech
nician
s, de
signe
rs, et
c. ).
2x
• At
leas
t five
exch
ange
pro
gram
mes
ca
rried
out
targ
eting
30
com
panie
sET
IDI,
Mini
stry o
f Ind
ustry
, M
inistr
y of E
duca
tion
and
uni-
versi
ties
Waz
ir ( c
oord
inatio
n wi
th
instit
utes
) ; No
rther
n Ind
ia Te
xtile
Rese
arch
Asso
ciatio
n an
d So
uth
India
Texti
le Re
searc
h As
socia
tion
for f
orem
en,
fitter
s and
jobb
ers ;
Na-
tiona
l Ins
titut
e of F
ash-
ion
Tech
nolo
gy ( I
ndia )
( N
IFT ) ;
Pearl
Aca
dem
y an
d Ap
parel
Train
ing &
De
sign
Cent
re( In
dia )
for
desig
ners
1.7
Deve
lop
skill
s spe
cific
to
the h
andl
oom
su
bsec
tor.
1.7.
1 Le
arn fr
om In
dia’s
rich
han
dloo
m w
oven
cultu
re :
• Or
ganiz
e skil
ls up
grad
ing tr
aining
for s
electe
d Et
hiopi
an w
eave
rs in
India
• Es
tablis
h lin
ks b
etwee
n ha
ndlo
om p
rodu
cers
and
Indian
train
ing in
stitu
tions
( pos
sibly
with
NIFT
, NI
D an
d IIH
T ) fo
r wea
vers
to le
arn va
rious
wea
ving
techn
ique
s : sc
reen
ing /
bloc
k prin
ting,
jac
quard
/ do
bby w
eavin
g, p
repara
tion
and
use o
f natu
ral d
yes,
etc.
1x
• At
leas
t 20
hand
loom
firm
s adv
ised
per y
ear
• At
leas
t thr
ee li
nkag
es es
tablis
hed
with
Indi
an p
artn
er tr
aining
ins
titut
ions
ETID
I, ET
GAM
A, re
gion
al su
p-po
rt fro
m A
CTIF
SC–W
azir
( coo
rdina
tion
with
Indi
an p
artn
ers )
, NI
FT, N
ID, I
IHT
1.7.
2 Co
nduc
t trai
ning
in th
e fol
lowi
ng ad
ditio
nal a
reas :
• Sa
les an
d m
arketi
ng•
Trend
rese
arch
– co
lour
s, sh
apes
, etc.
• Tra
nslat
ing tr
ends
into
uniq
ue /
mark
etabl
e pro
duct
item
s•
Dive
rsific
ation
of p
rodu
cts ( w
ith In
dian
supp
ort )
• Br
andi
ng o
f han
dloo
m te
chno
logi
es•
Use o
f hom
e dye
s •
Finish
ing te
chniq
ues.
1x
• At
leas
t 50
hand
loom
firm
s adv
ised
per y
ear
ETID
I, ET
GAM
A, re
gion
al su
p-po
rt fro
m A
CTIF
SC–W
azir
( coo
rdina
tion
with
Indi
an p
artn
ers )
1.7.
3 Se
ek co
oper
ation
with
the O
ffice
of t
he D
evelo
pmen
t Com
miss
ione
r for
Han
dloo
ms a
t the
Ind
ian M
inistr
y of T
extil
es to
dev
elop
a nati
onal
hand
loom
dev
elopm
ent p
rogr
amm
e for
Eth
iopi
a. Si
mila
rly to
the I
ndian
Nati
onal
Hand
loom
Pro
gram
me,
the E
thio
pian
sche
me s
houl
d m
erge a
ll th
e m
ajor c
ompo
nent
s, na
mely
an in
tegrat
ed h
andl
oom
s dev
elopm
ent s
chem
e, a m
arketi
ng an
d ex
port
prom
otio
n sc
hem
e, an
d a d
iversi
fied
hand
loom
dev
elopm
ent s
chem
e.
2x
• Na
tiona
l han
dloo
m d
evelo
pmen
t pr
ogram
me c
reated
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m A
CTIF
Conf
eder
ation
of I
ndian
Te
xtile
Indus
try ( C
ITI ),
SC–W
azir
( coo
rdina
tion
with
Indi
an p
artn
ers )
1.8
Deve
lop
skill
s spe
cific
to
MSM
Es.
1.8.
1 Ide
ntify
spec
ific s
kill d
evelo
pmen
t nee
ds o
f MSM
Es ( c
an b
e ent
erpr
ises i
n th
e inf
orm
al ec
onom
y ) an
d de
velo
p tai
lor-m
ade o
n-sit
e trai
ning
to in
crea
se th
eir ca
pacit
y and
pro
ducti
vity,
and
for m
aking
the t
ransit
ion
to th
e for
mal
econ
omy.
2x
• At
leas
t 20
SMEs
advis
ed p
er ye
ar E
TIDI,
ETGA
MA,
regi
onal
sup-
port
from
ACT
IF
1.8.
2 Co
nseq
uent
ly tra
in M
SME
owne
rs an
d m
anag
ers o
n sk
ills t
hat c
an b
e of i
mm
ediat
e use
and
are re
levan
t to
their
scale
of o
perat
ions
.2
x•
At le
ast 2
0 SM
Es ad
vised
per
year
ETID
I
1.8.
3 Co
nduc
t aud
its an
d di
agno
stics
of i
ndivi
dual
units
and
prov
ide s
uppo
rt to
obj
ectiv
ely se
-lec
ted M
SMEs
thro
ugh
the d
evelo
pmen
t of a
strat
egic
techn
olog
y plan
, con
sider
ing th
eir p
rodu
ct ran
ge, p
rodu
ct di
versi
ficati
on p
oten
tial a
nd ex
isting
pot
entia
l buy
ers’
need
s.
1x
• At
leas
t ten
SM
Es ad
vised
per
year
and
techn
olog
y plan
s dev
elope
dET
IDI
1.8.
4 Inc
rease
MSM
Es’ c
apac
ity to
sour
ce q
ualit
y inp
uts f
or th
eir p
rodu
ction
thro
ugh
cluste
r ar-
range
men
ts, in
ord
er to
incr
ease
barg
aining
pow
er an
d en
sure
know
ledge
diss
emina
tion
on so
urc-
ing p
ractic
es. C
luste
rs sh
ould
gro
up M
SMEs
in co
mm
on p
rodu
ction
area
s.Su
cces
sful e
xam
ples
of s
mall
wea
vers
shou
ld b
e diss
emina
ted ac
ross
clus
ters a
nd a
com
mon
br
andi
ng fo
r Eth
iopi
an h
and-
mad
e garm
ents
shou
ld b
e dev
elope
d.
2x
• At
leas
t five
MSM
E clu
sters
crea
ted
in th
e five
-yea
r per
iod
• Su
cces
s sto
ries d
evelo
ped
and
diss
emina
ted am
ong
MSM
Es ( e
.g.
Saba
har,
Muy
a, Sa
lem’s
Desig
n )•
Bran
d fo
r Eth
iopi
an h
andm
ade
deve
lope
d
ETID
I, ET
GAM
A, re
gion
al su
p-po
rt fro
m A
CTIF
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
72
Stra
tegi
c ob
ject
ive
2 : S
treng
then
the
enab
ling
envi
ronm
ent t
o fa
vour
sec
tor d
evel
opm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l inst
itutio
n an
d po
ssib
le im
plem
entin
g pa
rtner
s
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+ in
tern
atio
nal
partn
ers
1617
1819
20
2.1
Reinf
orce
sec-
tor c
oord
inatio
n to
fav
our w
orkfo
rce
deve
lopm
ent a
nd
polic
y adv
ocac
y.
2.1.
1 Se
t up
a hig
h-lev
el PP
P pl
atfor
m to
repr
esen
t the
inter
ests
of th
e ind
ustry
and
to en
sure
align
-m
ent b
etwee
n ET
IDI,
ETGA
MA,
pub
lic u
niver
sities
and
voca
tiona
l sch
ools,
with
a vie
w to
upg
rading
th
e qua
lity a
nd ca
pacit
y of t
he T
& C tr
aining
and
educ
ation
al of
fering
. The
par
tner
ship
plat
form
shou
ld
com
prise
repr
esen
tative
s of l
ead
firm
s / fo
reign
buy
ers /
retai
lers.
1x
• Hi
gh-le
vel P
PP se
t up,
co
mpr
ised
of E
TIDI,
ETGA
MA,
univ
ersit
ies an
d TV
ET in
stitu
tions
Mini
stry o
f Ind
ustry
, ETID
I and
ET
GAM
ABu
ilding
on
exist
ing P
PP ex
peri-
ence
s in
Ethio
pia
2.1.
2 Ba
sed
on st
anda
rds f
or sk
ill d
evelo
pmen
t set
by le
ad fi
rms,
the p
latfo
rm co
ordi
nates
the d
evel-
opm
ent o
f cur
ricul
a and
train
ing m
odul
es an
d m
ateria
ls.2
x•
Cour
se cu
rricu
lum
for e
ach
area,
asse
ssm
ent s
tanda
rds
for c
ertif
icatio
n ag
ency
, an
d id
entif
icatio
n of
way
s to
train
( on-
job,
theo
ry,
mix )
– ( l
inked
to ac
tivity
1.
1.1 )
PPP,
ETID
I, ET
GAM
A
2.1.
3 Th
e par
tner
ship
plat
form
play
s a le
ader
ship
role
in th
e des
ign
of a
natio
nal f
acto
ry im
prov
emen
t pr
ogram
me (
as an
effec
tive a
nd n
ation
wide
mea
ns o
f inc
reasin
g Et
hiopi
an en
terpr
ises’
capa
city a
nd
com
petit
ivene
ss ).
The p
rogr
amm
e is b
ased
arou
nd th
e deli
very
of se
ven
prog
ramm
e mod
ules
:
• W
orkp
lace c
oope
ratio
n•
Quali
ty•
Prod
uctiv
ity•
Clea
ner p
rodu
ction
and
cont
inuou
s im
prov
emen
t•
HR m
anag
emen
t•
Healt
h •
Safet
y.
2x
• Inp
uts p
rovid
ed b
y PPP
du
ring
desig
n sta
ge•
Impl
emen
tatio
n m
echa
nism
dev
elope
d•
Adm
iniste
r im
plem
entat
ion
prog
ramm
e
PPP,
ETID
I, ET
GAM
A
2.1.
4 Th
e par
tner
ship
plat
form
cont
ribut
es to
mob
ilizin
g an
d se
curin
g res
ourc
es fo
r pro
gram
me i
m-
plem
entat
ion
and
puts
in pl
ace t
he p
rope
r mec
hanis
ms t
o m
onito
r and
audi
t its
exec
utio
n.2
x•
Reso
urce
s mob
ilize
d fo
r th
e pro
gram
me
• Im
plem
entat
ion
agen
cies
iden
tified
PPP,
ETID
I, ET
GAM
A
2.1.
5 M
embe
rs of
the h
igh-
level
partn
ersh
ip p
latfo
rm b
uild
a com
mon
pos
ition
ing o
n ke
y iss
ues a
f-fec
ting
the s
ecto
r and
buil
d th
e nec
essa
ry ad
voca
cy to
supp
ort r
equir
ed p
olicy
or r
egul
ation
chan
ges.
2x
• At
leas
t five
doc
umen
ts pr
oduc
ed to
conv
ey
com
mon
pos
ition
ing
( dec
larati
ons,
white
pa
pers,
etc.
)
PPP,
ETID
I, ET
GAM
A
2.2
Prov
ide h
igh
quali
ty ins
titut
iona
l su
ppor
t and
bus
i-ne
ss se
rvice
s to
T & C
firm
s.
2.2.
1 Ca
rry o
ut an
insti
tutio
nal b
ench
mark
ing p
rogr
amm
e for
ETID
I and
ETG
AMA
to im
prov
e the
ir pe
r-fo
rman
ce b
y mea
surin
g th
e effe
ctive
ness
and
effici
ency
of t
heir
busin
ess p
ractic
es. T
he p
rogr
amm
e sh
ould
surve
y all
activ
ity ar
eas,
inclu
ding
strat
egy a
nd g
over
nanc
e, res
ourc
es an
d pr
oces
ses,
prod
-uc
ts an
d se
rvice
s, an
d res
ults
mea
surem
ent.
2x
• Be
nchm
arking
repo
rts
prod
uced
and
valid
ated
by
the T
ISIs
• Bo
th in
stitu
tions
repo
rt pe
rform
ance
impr
ovem
ent
thro
ugh
surve
y qu
estio
nnair
es•
A 20
% im
prov
emen
t in
benc
hmark
ing sc
ore b
y the
en
d of
the p
rojec
t
Regi
onal
supp
ort f
rom
ACT
IF SI
TA /
TISI S
treng
then
ing ( T
S )
( sec
tion
of IT
C )
[ THE PLAN OF ACTION ]
73
Stra
tegi
c ob
ject
ive
2 : S
treng
then
the
enab
ling
envi
ronm
ent t
o fa
vour
sec
tor d
evel
opm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l inst
itutio
n an
d po
ssib
le im
plem
entin
g pa
rtner
s
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+ in
tern
atio
nal
partn
ers
1617
1819
20
2.2
Prov
ide h
igh
quali
ty ins
titut
iona
l su
ppor
t and
bus
i-ne
ss se
rvice
s to
T & C
firm
s.
2.2.
2 Se
nsiti
ze te
xtile
and
appa
rel co
mpa
nies t
o inv
est i
n an
ERP
solu
tion
which
is cu
stom
ized
to
their
requ
irem
ents,
and
help
them
strea
mlin
e pro
cess
es an
d im
prov
e con
trol.
ETID
I / E
TGAM
A sh
ould
co
nduc
t col
lectiv
e barg
aining
with
ERP
solu
tion
prov
ider
s on
beha
lf of
the e
ntire
indu
stry a
nd em
-pa
nel a
few
of th
em. E
TIDI /
ETG
AMA
shou
ld al
so m
obili
ze fu
nds t
o pa
rtiall
y fina
nce t
he co
st of
ERP
im
plem
entat
ion
in co
mpa
nies.
2x
x•
Orga
nize f
our w
orks
hops
in
partn
ersh
ip w
ith in
dustr
y, ex
perts
and
ERP
solu
tion
prov
ider
s•
Nego
tiate
with
and
enlis
t fo
ur E
RP so
lutio
n pr
ovid
ers
with
pro
ven
expe
rienc
e in
the T
& C
secto
r•
Prov
ide 2
5 % o
f the
cost
of
ERP
impl
emen
tatio
n in
10
selec
ted co
mpa
nies
ETID
I, ET
GAM
AAd
ama S
pinn
ing h
as in
trodu
ced
this
syste
m w
ith W
orld
Ban
k su
ppor
t
2.2.
3 Re
infor
ce E
TIDI’s
capa
cities
:
1. In
the l
atest
inter
natio
nal b
est p
ractic
e and
tech
nolo
gy av
ailab
le to
the s
ecto
r, to
ensu
re up
-to-d
ate
capa
city-
build
ing p
rovis
ions
2. In
the l
atest
traini
ng p
ractic
es an
d to
ols
3. T
o es
tablis
h pr
ofes
siona
l stan
dard
s, jo
b pr
ofile
s, qu
alific
ation
s, tes
ting
cent
res an
d ce
rtific
ation
s4.
To
facili
tate t
ransfe
r of k
now-
how
from
Indi
an in
stitu
tions
to d
evelo
p vo
catio
nal t
rainin
g pr
ogram
mes
.
1x
• At
leas
t one
train
ing
prov
ided
to al
l rele
vant
ET
IDI s
taff o
n po
ints 1
, 2,
and
3 pe
r yea
r•
MoU
with
one
Indi
an
instit
ute s
igne
d
ETID
I,reg
iona
l sup
port
from
ACT
IFSI
TA /
SC /
TS, W
azir
( coo
rdina
-tio
n wi
th in
stitu
tes ),
Indian
texti
le res
earc
h as
socia
tions
( NIFT
, ICT
an
d IIT
, Nor
ther
n Ind
ia Te
xtile
Rese
arch
Asso
ciatio
n, S
outh
Indi
a Te
xtile
Rese
arch
Asso
ciatio
n,
Ahm
edab
ad Te
xtile
Indus
try’s
Re-
searc
h As
socia
tion,
etc.
)2.
2.4
Reinf
orce
ETG
AMA’
s cap
aciti
es :
1. T
o pr
ovid
e for
mal
inter
nal t
rainin
g on
qua
lity c
ontro
l, lo
gisti
cs, m
anag
emen
t, m
arketi
ng an
d sa
les2.
To
have
grea
ter b
argain
ing p
ower
and
advo
cacy
to in
fluen
ce se
ctor-r
elated
pol
icies
3. In
fund
raisin
g an
d res
ourc
e mob
iliza
tion,
dire
cting
pub
lic an
d do
nor f
unds
towa
rds t
he ac
quisi
tion
of w
orld
-clas
s cur
ricul
a and
the l
atest
man
ufac
turin
g tec
hnol
ogy t
o tra
in on
4. T
o red
uce t
he so
urcin
g co
sts o
f its
mem
bers
thro
ugh
colle
ctive
sour
cing
for n
on-c
ompe
titive
inp
uts (
i.e. b
ulk o
rder
s to
ensu
re be
st po
ssib
le pr
ices f
or al
l play
ers )
.
1x
• At
leas
t one
train
ing
prov
ided
to al
l rele
vant
ET
GAM
A sta
ff on
poi
nts 1
, 2,
3 an
d 4
per y
ear
ETGA
MA,
regio
nal s
uppo
rt fro
m A
CTIF
SITA
/ TS
2.2.
5 Su
ppor
t ETID
I to
dem
onstr
ate th
e pot
entia
l of t
he h
andl
oom
secto
r for
job
crea
tion
and
incom
e ge
nerat
ion :
• Or
ganiz
e a st
udy t
our t
o Ind
ia fo
r sele
cted
supp
ort i
nstit
utio
ns to
und
ersta
nd th
e vas
t pot
entia
l of
hand
loom
wea
ving
and
the p
ossib
ilitie
s of o
perat
ing as
a lar
ge m
anuf
actu
ring
unit ;
•
Link M
SMEs
with
educ
ation
al ins
titut
ions
, TIS
Is, et
c. to
allo
w th
em to
ben
efit f
rom
sim
ilar
oppo
rtunit
ies an
d ac
cess
in ar
eas s
uch
as re
searc
h, m
arket
intell
igen
ce, f
inanc
ial su
ppor
t, tra
ining
, etc
. as t
he te
xtile
and
garm
ent s
ubse
ctors
; •
Facil
itate
infor
mati
on ex
chan
ge b
etwee
n ke
y acto
rs in
the T
& C
and
hand
wea
ving
supp
ort
instit
utio
ns to
share
skill
s and
know
-how
ben
eficia
l to
both
;•
Ensu
re th
e nee
ds o
f the
han
dloo
m se
ctor a
re du
ly co
nsid
ered
and
reflec
ted in
T & C
dev
elopm
ent
strate
gies
.
2x
• On
e stu
dy to
ur to
Indi
a ca
rried
out
ETID
I, ET
GAM
A, P
PP,
regio
nal s
uppo
rt fro
m A
CTIF
Waz
ir ( c
oord
inatio
n wi
th In
dian
pa
rtner
s ), N
IFT, N
ID, I
IHT
SC
2.2.
6 Pr
omot
e and
facil
itate
the c
reatio
n of
loca
l con
sulti
ng fi
rms a
nd b
usine
ss se
rvice
s of i
nter
na-
tiona
l con
sulti
ng fi
rms t
o pr
ovid
e ass
istan
ce an
d eff
ectiv
e bus
iness
supp
ort t
o T &
C co
mpa
nies.
2x
• Bu
sines
s ser
vices
and
pool
of
loca
l adv
isers
in th
e area
of
qua
lity (
ISO
9001
, ISO
14
001,
ISO
5000
1, 5
S,
quali
ty to
ols )
ETGA
MA
and
ETID
I SI
TA /
EC–E
QM
2.2.
7 En
cour
age g
reater
use
of m
oder
n m
achin
ery b
y hav
ing th
e Gov
ernm
ent g
uaran
tee lo
ng-te
rm
cred
it arr
ange
men
ts be
twee
n Et
hiopi
an b
uyer
s and
forei
gn su
pplie
rs.2
x•
At le
ast f
ive su
ch
arran
gem
ents
in th
e five
-ye
ar pe
riod.
Mini
stry o
f Fina
nce a
nd
Econ
omic
Deve
lopm
ent
( MoF
ED ),
ETID
I
ETID
I, ET
GAM
A
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
74
Stra
tegi
c ob
ject
ive
2 : S
treng
then
the
enab
ling
envi
ronm
ent t
o fa
vour
sec
tor d
evel
opm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l inst
itutio
n an
d po
ssib
le im
plem
entin
g pa
rtner
s
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+ in
tern
atio
nal
partn
ers
1617
1819
20
2.3
Impr
ove e
xist-
ing tr
aining
and
educ
ation
al of
fer-
ings a
nd al
ign
to
indus
try’s
need
s.
2.3.
1 Re
infor
ce ex
isting
TVET
offe
ring
targe
ting
both
texti
le an
d clo
thing
com
panie
s. Sp
ecifi
c tec
hni-
cal a
reas r
equir
ing sk
ill re
infor
cem
ent a
re :
• Sp
inning
ope
ratio
ns fo
r ring
spinn
ing, o
pen
end
and
airjet
• W
eavin
g an
d we
aving
prep
arato
ry op
erati
ons f
or m
ajor s
huttl
eless
tech
nolo
gies
– ai
rjet a
nd ra
pier
• Kn
itting
ope
ratio
ns•
Fibre
/ yarn
/ fab
ric d
yeing
and
finish
ing p
roce
sses
• Ga
rmen
t man
ufac
turin
g op
erati
ons
• Lis
t of s
kills
to b
e com
pleted
bas
ed o
n the
asse
ssm
ent s
tudy.
• In
each
of t
hese
area
s, cr
eate
highl
y spe
cific
shor
t-ter
m co
urse
s ( on
e to
three
wee
ks ),
adap
ted
to th
e tim
e con
strain
ts of
empl
oyee
s.For
mor
e spe
cializ
ed tr
aining
, a h
ighe
r per
iod
of fo
ur to
six
week
s may
be r
equir
ed. T
he ti
meli
ne sh
ould
be d
ecid
ed w
hile d
evelo
ping
the c
ourse
s.
1x
• At
leas
t two
new
cour
ses
crea
ted an
d av
ailab
le in
each
field
with
in th
e five
- ye
ar pe
riod
PPP,
ETID
I, ET
GAM
AInt
erna
tiona
l trai
ning
agen
cies
such
as W
azir
and
IL&FS
from
Ind
ia
2.3.
2 W
ork w
ith In
dian
and
loca
l trai
ning
instit
utio
ns to
dev
elop
or u
pdate
the h
andl
oom
wea
ving
traini
ng cu
rricu
lum
to in
clude
adva
nced
tech
nique
s :
• Tra
in sta
ff an
d m
anag
emen
t to
estab
lish
and
man
age q
ualit
y sys
temati
cally
to m
eet c
lient
nee
ds•
Estab
lish
a fee
dbac
k mec
hanis
m b
etwee
n M
SMEs
and
buye
rs fo
r con
tinuo
us im
prov
emen
t to
satis
fy bu
yers’
nee
ds an
d ex
pecta
tions
.
1x
• M
oU si
gned
with
one
Ind
ian in
stitu
te •
Obtai
n tw
o ex
perts
or a
n ag
ency
on-
board
• At
leas
t two
new
cour
ses
for h
andl
oom
wea
vers
on
quali
ty•
Feed
back
loop
mec
hanis
m
estab
lishe
d
ETID
I, P
PPInd
ian co
nsul
ting
firm
such
as
Waz
ir ( c
oord
inatio
n wi
th In
dian
ins
titut
es, a
genc
ies an
d ex
perts
)
2.3.
3 Re
plica
te in
Ethio
pia g
loba
l bes
t prac
tices
for c
otto
n pr
oduc
tion,
in co
nsul
tatio
n wi
th ex
perts
, e.g
. con
tract
farm
ing, r
ainwa
ter h
arves
ting,
etc.,
and
link w
ith in
terna
tiona
l ins
titut
es fo
r see
d re-
searc
h.
1x
• Si
gn o
ne M
oU w
ith an
int
erna
tiona
l see
d res
earc
h ins
titut
e
ETID
I and
ECP
GEA,
EIID
E, re
-gi
onal
supp
ort f
rom
ACT
IF
2.3.
4 Es
tablis
h a t
rainin
g ce
ntre
in ea
ch in
dustr
ial zo
ne : B
ole L
emi a
nd th
e zon
es u
nder
cons
tructi
on :
Alem
Gen
a, Du
kem
, Gela
n, K
ombo
lcha a
nd th
e Tur
kish
/ Chin
ese /
Rep
ublic
of K
orea
zone
s. In
prio
rity,
equip
the f
ollo
wing
zone
s with
train
ing ce
ntres
: Aro
und
Addi
s Aba
ba ; M
akale
to st
art c
on-
struc
tion
in Au
gust ;
Kom
bolch
a ; H
awas
sa, D
ireda
wa, J
ima a
nd A
dam
a ind
ustri
al zo
ne
Whe
neve
r an
addi
tiona
l ind
ustri
al zo
ne is
plan
ned,
a tra
ining
cent
re sh
ould
be s
ystem
atica
lly in
-clu
ded.
1x
• At
leas
t 7tra
ining
cent
res
estab
lishe
d in
indus
trial
zone
s with
in th
e five
-yea
r pe
riod.
• Re
gulat
ion
issue
d by
go
vern
men
t on
the
requir
emen
t for
a tra
ining
ce
ntre
in ea
ch n
ewly
plan
ned
indus
trial
zone
PPP,
ETID
I, ET
GAM
A, IP
DC,
regio
nal s
uppo
rt fro
m A
CTIF
2.3.
5 Sy
stem
atize
the u
se o
f TVE
T by c
reatin
g a r
equir
emen
t to
unde
rgo
a rele
vant
three
-wee
k cou
rse
( bas
ed o
n th
e spe
cifica
tions
) for
each
new
ope
rator
in E
thio
pian
com
panie
s. Fo
r som
e trai
nings
, a
highe
r per
iod
of fo
ur to
six w
eeks
may
be r
equir
ed. T
he ti
meli
ne sh
ould
be d
ecid
ed w
hile d
evelo
ping
th
e cou
rses.
Estab
lish
an M
oU b
etwee
n T &
C co
mpa
nies a
nd TV
ET in
stitu
tions
to sh
are co
sts fo
r the
train
ing.
2x
• At
leas
t 10
firm
s im
plem
ent m
anda
tory
traini
ng fo
r new
ope
rator
s ea
ch ye
ar•
An M
oU is
sign
ed b
etwee
n TV
ET in
stitu
tions
and
firm
s
PPP,
ETID
I, ET
GAM
A
2.3.
6 Ca
pacit
ate th
e TVE
T stru
cture
with
the r
equir
ed tr
aining
equip
men
t to
teach
train
ees t
he p
rope
r ha
ndlin
g of
new
equip
men
t use
d in
the i
ndus
try.
Seco
nd-h
and
/ sm
all sc
ale m
odels
of m
achin
ery c
an b
e im
porte
d fro
m cu
rrent
indu
stry l
eade
rs ( In
dia
for i
nstan
ce ).
Mac
hiner
y sup
plier
s can
also
be a
ppro
ache
d to
don
ate so
me o
f the
mac
hiner
y for
train
ing p
urpo
ses.
2x
• Ob
tain
a lett
er o
f sup
port
from
two
to th
ree
com
panie
s or m
achin
ery
supp
liers
PPP,
ETID
I, ET
GAM
AW
azir
( coo
rdina
tion
with
Indi
an
com
panie
s and
mac
hine s
up-
plier
s ) ; l
arge I
ndian
texti
le co
mpa
nies –
Arvi
nd, V
ardhm
an,
Alok
, Ray
mon
d ;m
achin
ery s
up-
plier
s – La
kshm
i Mac
hine W
orks
, Ri
eter,D
ornie
r, etc
.
[ THE PLAN OF ACTION ]
75
Stra
tegi
c ob
ject
ive
2 : S
treng
then
the
enab
ling
envi
ronm
ent t
o fa
vour
sec
tor d
evel
opm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l inst
itutio
n an
d po
ssib
le im
plem
entin
g pa
rtner
s
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+ in
tern
atio
nal
partn
ers
1617
1819
20
2.3
Impr
ove e
xist-
ing tr
aining
and
educ
ation
al of
fer-
ings a
nd al
ign
to
indus
try’s
need
s.
2.3.
7 St
rengt
hen
linka
ges b
etwee
n Et
hiopi
an u
niver
sities
and
enter
prise
s.
• Cr
eate
a par
tner
ship
plat
form
betw
een
the i
ndus
try, a
nd u
niver
sities
and
traini
ng in
stitu
tions
( a
ctivit
y 2.1
.1 ).
• Inv
ite in
terna
tiona
l pro
fesso
rs in
orde
r to
share
bes
t prac
tices
on
TVET
and
impr
ove i
nter-
unive
rsity
partn
ersh
ips.
• Se
nd te
ache
rs on
nati
onal
and
inter
natio
nal i
ndus
try vi
sits t
o pr
ovid
e the
m w
ith fi
rst-h
and
learn
ing
expe
rienc
es an
d to
help
buil
d ind
ustry
link
ages
.•
Invite
gue
st tea
cher
s fro
m in
dustr
y to
deliv
er sp
ecial
train
ing se
ssio
ns fo
r Eth
iopi
an st
uden
ts.•
ETID
I / E
TGAM
A to
initi
ate re
searc
h stu
dies
cove
ring
spec
ific c
halle
nges
face
d by
indu
stry t
o ge
nerat
e tho
ught
lead
ersh
ip an
d fin
d ap
prop
riate
solu
tions
( diss
emina
te res
ults
thro
ugh
their
ne
twor
k and
thro
ugh
unive
rsitie
s ).
• Inv
olve
stud
ents
and
teach
ers i
n int
erna
tiona
l exp
osur
e / ex
chan
ge an
d int
erns
hip p
rogr
amm
es.
Spec
ifica
lly cr
eate
a par
tner
ship
betw
een
NIFT
and
the I
ndian
Insti
tute
of Te
chno
logy
Delh
i, an
d Et
hiopi
an u
niver
sities
.•
Give
rese
arch
/ stu
dent
pro
ject b
riefs
to in
dustr
y and
get
indus
try fe
edba
ck an
d su
gges
tions
in
orde
r to
impr
ove r
esea
rch
/ stu
dent
pro
jects.
2x
• At
leas
t five
pro
fesso
rs inv
ited
per y
ear
• Re
quire
men
t put
in p
lace
to h
ave a
nati
onal
or
inter
natio
nal i
ndus
try vi
sit
per y
ear
• At
leas
t one
indu
stry
repres
entat
ive vi
sits
unive
rsitie
s per
curri
culu
m•
At le
ast f
ive n
ew st
udies
ini
tiated
• At
leas
t five
exch
ange
pr
ogram
mes
carri
ed o
ut
per y
ear
• M
oU si
gned
with
three
to
four
expe
rts o
r ins
titut
es•
Syste
mati
ze co
nnec
tions
be
twee
n stu
dent
s and
co
mpa
nies f
or p
rojec
t rev
iews
PPP,
ETID
I, ET
GAM
A, u
ni-ve
rsitie
sSI
TA /
SC ( c
oord
inatio
n wi
th In
-di
an in
stitu
tes an
d ex
perts
)
2.3.
8 Es
tablis
h un
iversi
ty co
oper
ation
with
selec
ted le
ading
T & C
coun
tries
’ univ
ersit
ies th
at ha
ve
up-to
-date
mark
et an
alysis
curri
cula.
In ad
ditio
n to
incr
easin
g m
arket
analy
sis ca
pacit
y, th
is wo
uld
estab
lish
links
with
coun
tries
that
coul
d be
com
e pot
entia
l mark
ets fo
r Eth
iopi
an T
& C p
rodu
cts.
2x
• M
oU si
gned
with
one
to
two
Indian
and
inter
natio
nal
instit
utes
PPP,
ETID
I, ET
GAM
A, u
ni-ve
rsitie
sW
azir
( coo
rdina
tion
with
Indi
an
instit
utes
), Ind
ian In
stitu
te of
Te
chno
logy
, DKT
E So
ciety’
s Tex
-til
e & E
ngine
ering
Insti
tute,
Tech
-no
logi
cal I
nstit
ute o
f Tex
tile a
nd
Scien
ces,
Uttar
Prad
esh
Texti
le Te
chno
logy
Insti
tute,
SITA
–SC
2.3.
9 Ba
sed
on th
e agr
eem
ents
reach
ed b
y the
univ
ersit
y par
tner
ship
plat
form
and
inter
natio
nal
benc
hmark
ing, u
pdate
curri
cula
with
in un
iversi
ties a
nd tr
aining
pro
gram
mes
of t
rainin
g ins
titut
ions
.2
x•
Deve
lopm
ent o
f cou
rse
curri
cula
for t
extil
e en
gine
ering
pro
gram
mes
in
unive
rsitie
s and
train
ing
intuit
ions
PPP,
ETID
I, ET
GAM
A, u
ni-ve
rsitie
sInt
erna
tiona
l trai
ning
agen
cies
such
as W
azir
and
IL&FS
from
Ind
ia
2.3.
10 B
ased
on
a gap
asse
ssm
ent s
tudy
and
cour
se cu
rricu
lum
dev
elopm
ent i
n lin
e with
indu
strial
req
uirem
ents
and
inter
natio
nal s
tanda
rds,
help
insti
tutes
to li
nk w
ith :
• Int
erna
tiona
l ins
titut
es fo
r stu
dent
and
facul
ty ex
chan
ge /
know
ledge
exch
ange
pro
gram
mes
• He
lp in
stitu
tes d
evelo
p a s
trong
indu
stry i
nter
face –
gue
st lec
tures
, sch
olars
hips,
spon
sorsh
ips,
traini
ng, p
lacem
ents,
etc.
2x
• At
leas
t five
exch
ange
pr
ogram
mes
dev
elope
d•
At le
ast t
hree
inter
faces
de
velo
ped
PPP,
ETID
I, ET
GAM
A, u
ni-ve
rsitie
s
2.3.
11 A
dver
tise a
vaila
ble c
apac
ity-b
uildi
ng se
rvice
s to
firm
s and
illu
strate
succ
ess s
torie
s to
show
qu
ick b
enefi
ts fro
m in
vesti
ng in
hig
hly q
ualif
ied la
bour
.Inv
ite su
cces
sful E
thio
pian
T & C
com
panie
s to
give
spee
ches
at u
niver
sities
( cam
paig
ns to
be p
ro-
mot
ed b
y ETG
AMA
and
ETID
I ).
2x
• Inf
orm
ation
cam
paig
n de
velo
ped
and
runn
ingPP
P, ET
IDI,
ETGA
MA,
uni-
versi
ties
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
76
Stra
tegi
c ob
ject
ive
2 : S
treng
then
the
enab
ling
envi
ronm
ent t
o fa
vour
sec
tor d
evel
opm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l inst
itutio
n an
d po
ssib
le im
plem
entin
g pa
rtner
s
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+ in
tern
atio
nal
partn
ers
1617
1819
20
2.4
Enab
le th
e de
velo
pmen
t of
skill
s thr
ough
lead
fir
m an
d clu
ster
arran
gem
ents.
2.4.
1 Ha
ve le
ad fi
rm /
forei
gn b
uyer
s ( e.
g. H
&M, P
VH et
c. ) e
stabl
ish p
olici
es an
d pr
oced
ures
for
loca
l firm
s to
follo
w. Le
ad fi
rms t
o di
rectly
enga
ge lo
cal f
irms i
n th
eir im
plem
entat
ion
thro
ugh
the
exch
ange
of p
erso
nnel
betw
een
firm
s and
thro
ugh
the d
evelo
pmen
t of n
etwor
king
activ
ities
. In
som
e ca
ses l
ead
firm
s will
pro
vide t
he fa
ciliti
es an
d pe
rsonn
el to
deli
ver t
rainin
g.
2x
• Ex
chan
ges b
etwee
n fo
ur
firm
s per
year
ETID
I, ET
GAM
ASC
/ SI
TA
2.4.
2 Fo
reign
buy
ers t
o es
tablis
h sm
all-s
cale
traini
ng ac
adem
ies an
d tec
hnica
l ass
istan
ce p
rojec
ts fin
ance
d th
roug
h th
eir C
SR b
udge
ts, to
offe
r skil
l for
mati
on p
rogr
amm
es o
fferin
g TV
ET to
supp
ly th
e T &
C ind
ustry
with
qua
lified
wor
kers
at bo
th th
e ope
rator
and
mid
-man
agem
ent l
evels
.
1x
• At
leas
t two
train
ing
acad
emies
crea
ted b
y lea
d fir
ms
• At
leas
t fou
r trai
ning
cent
res su
ppor
ted b
y lea
d fir
ms w
ithin
the f
ive-y
ear
perio
d. ( l
inked
with
2.3
.4 )
ETID
I, ET
GAM
ASC
/ SI
TA
2.4.
3 Su
ppor
t int
er-fir
m ar
range
men
ts th
roug
h th
e for
mati
on o
f kno
wled
ge /
com
peten
cies s
harin
g clu
sters
( e.g
. kno
wled
ge sh
aring
and
prob
lem so
lving
; tran
sferri
ng kn
owled
ge o
n tra
ditio
nal g
armen
t de
sign
from
MSM
Es to
lead
firm
s ; jo
int m
arketi
ng an
d di
strib
utio
n ).
2x
• At
leas
t five
MSM
E clu
sters
supp
orted
in th
e five
-yea
r pe
riod
( link
ed w
ith 1
.8.4
)
ETID
I, ET
GAM
A
2.4.
4 ET
GAM
A inc
entiv
izes h
igh
perfo
rman
ce b
y enc
ourag
ing en
terpr
ises t
hat s
ignif
icant
ly im
prov
e th
eir p
rodu
ctivit
y and
appl
y new
man
agem
ent t
echn
ique
s ( th
roug
h ind
ustry
/ sta
te aw
ards )
. Sup
plier
clu
bs an
d as
socia
tions
may
be c
reated
, and
a ke
y foc
us o
f the
se o
rgan
izatio
ns is
the i
mpl
emen
tatio
n of
pro
ducti
on p
ractic
es, w
ork p
ractic
es an
d m
anag
emen
t sys
tems.
2x
• Re
ward
pro
gram
me
estab
lishe
d by
ETG
AMA
ETGA
MA
2.5
Ensu
re th
at na
tiona
l qua
lity
man
agem
ent i
nfra-
struc
ture
respo
nds
to th
e ind
ustry
’s ne
eds a
nd in
terna
-tio
nal a
mbi
tions
.
2.5.
1 Su
ppor
t ESA
to d
evelo
p an
d pu
blish
nati
onal
quali
ty sta
ndard
s for
garm
ents,
and
prom
ote t
he
use o
f tho
se st
anda
rds t
o m
embe
rs th
roug
h cir
cular
s and
sem
inars.
2
x•
Advis
ory s
ervic
e to
ESA
on co
de o
f prac
tice f
or th
e de
velo
pmen
t of s
tanda
rds
• Fiv
e stan
dard
s ado
pted
• Tw
o se
nsiti
zatio
n se
mina
rs co
nduc
ted•
Regu
lar ci
rcul
ars
ESA
( inclu
ding
ECAE
, NM
I, an
d EN
AO )
SITA
/ EC
–EQM
2.5.
2 Bu
ild E
TIDI a
nd E
CAE
capa
city a
s a te
sting
and
certi
fying
bod
y for
garm
ent q
ualit
y.At
tract
inter
natio
nal c
onfo
rmity
asse
ssm
ent b
odies
– e.
g. S
GS –
in o
rder
to co
ver t
he in
terna
tiona
l sta
ndard
s.
1x
• At
leas
t two
testi
ng an
d ce
rtifyi
ng b
odies
train
ed•
At le
ast o
ne in
terna
tiona
l ins
titut
ion
invol
ved
ETID
I, EN
AOSI
TA /
EC–E
QM
2.5.
3 Inv
olve
secto
r ins
titut
ions
in se
nsiti
zing
and
supp
ortin
g th
e priv
ate se
ctor o
n qu
ality
man
age-
men
t and
conf
orm
ity as
sess
men
t ( te
sting
, cer
tifica
tion,
insp
ectio
n ) :
• ET
IDI a
nd E
TGAM
A to
cond
uct a
waren
ess-
raisin
g co
urse
s for
MSM
Es ab
out i
nter
natio
nal
man
dato
ry an
d vo
lunt
ary st
anda
rds r
elated
to T
& C.
2x
• ET
IDI a
nd E
TGAM
A de
velo
p se
nsiti
zatio
n ca
mpa
igns
for
their
mem
bers
ETID
I, ET
GAM
A
2.5.
4 Ta
ke th
e fol
lowi
ng m
easu
res to
strea
mlin
e int
erna
tiona
l acc
redita
tion
of E
thio
pian
certi
ficati
on
and
accr
edita
tion
bodi
es :
• Su
ppor
t the
accr
edita
tion
of la
borat
ories
for k
ey te
xtiles
and
cloth
ing te
sts fo
r exp
orts
to IS
O /
Inter
natio
nal E
lectro
techn
ical C
omm
issio
n170
25•
Supp
ort t
he ac
cred
itatio
n pr
oces
s for
ENA
O to
bec
ome a
mem
ber o
f ILA
C M
RA an
d IA
F M
LA•
Guid
ance
on
selec
ting
forei
gn ce
rtific
ation
and
accr
edita
tion
bodi
es in
the a
bsen
ce o
f ade
quate
na
tiona
l bod
ies.
2x
• On
e tes
ting
/ cer
tifica
tion
body
upg
raded
• EN
AO re
ady t
o ap
ply f
or
ILAC
MRA
/ IA
F M
LA•
Guid
e on
forei
gn
certi
ficati
on an
d ac
cred
itatio
n bo
dies
av
ailab
le
ESA
( inclu
ding
ECAE
, NM
I, an
d EN
AO )
SITA
/ EC
–-EQ
M
[ THE PLAN OF ACTION ]
77
Stra
tegi
c ob
ject
ive
2 : S
treng
then
the
enab
ling
envi
ronm
ent t
o fa
vour
sec
tor d
evel
opm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l inst
itutio
n an
d po
ssib
le im
plem
entin
g pa
rtner
s
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+ in
tern
atio
nal
partn
ers
1617
1819
20
2.6
Impr
ove t
he
legal
and
regul
a-to
ry fra
mew
ork r
el-ev
ant t
o th
e T &
C ind
ustry
.
2.6.
1 Int
rodu
ce T
& C ( i
nclu
ding
ginn
eries
) -sp
ecifi
c reg
ulati
ons :
• Int
rodu
ce a
requir
emen
t for
pro
duct
orig
in lab
elling
• Es
tablis
h a r
equir
emen
t for
an o
rigin
certi
ficate
/ res
pect
of p
hyto
sanit
ary n
orm
s•
Fine-
tunin
g of
labo
ur la
ws to
mee
t ind
ustry
requ
irem
ents
while
ensu
ring
the i
ntere
sts o
f wor
kers
• Ad
voca
te fo
r the
appr
oval
of B
t cot
ton
• Int
rodu
ce re
gulat
ions
lim
iting
hum
an ex
posu
re to
harm
ful w
orkin
g co
nditi
ons,
and
crea
te pe
nalti
es
for f
ailur
e to
com
ply
• Int
rodu
ce re
gulat
ions
on
waste
water
and
pena
lties
for f
ailur
e to
com
ply
• Al
low
zero
FOB
tran
sacti
ons t
o CM
Ts ( f
ollo
wing
Mor
occo
exam
ple )
in o
rder
for f
irms t
o cir
cum
vent
th
e for
eign
exch
ange
shor
tage.
2x
• Se
ven
new
regul
ation
s de
signe
d an
d su
bmitt
ed fo
r ap
prov
al
ETID
I, M
inistr
y of J
ustic
e
2.6.
2 Fo
rmali
ze te
chnic
al as
sistan
ce p
rovid
ed to
subc
ontra
ctors
by g
loba
l bran
ds w
ith m
anag
emen
t an
d oc
cupa
tiona
l safe
ty tra
ining
pro
gram
mes
.2
x•
A ne
w reg
ulati
on re
lated
to
syste
mize
d ca
pacit
y-bu
ilding
for s
ubco
ntrac
tors
desig
ned
and
subm
itted
for
appr
oval
ETID
I, M
oLSA
Mini
stry o
f Ju
stice
SC–S
ITA
2.6.
3 Ad
voca
te fo
r law
s on
empl
oym
ent a
nd sk
ill d
evelo
pmen
t. Ar
ticul
ate re
gulat
ions
for t
he tr
ained
wo
rker r
etent
ion
claus
e and
enfo
rce t
hem
, so
that
empl
oyer
s and
wor
kers
may
enga
ge in
mea
ningf
ul
cont
racts
by w
hich
empl
oyee
s rec
eive a
dvan
ced
traini
ng fr
om fi
rms i
n ex
chan
ge fo
r com
mitm
ents
to st
ay w
ith th
ose f
irms f
or an
agree
d pe
riod,
there
by in
cent
ivizin
g em
ploy
er in
vestm
ent i
n Et
hiopi
an
labou
r.
1x
• Th
ree n
ew em
ploy
men
t an
d sk
ill d
evelo
pmen
t reg
ulati
ons d
esig
ned
and
subm
itted
for a
ppro
val
ETID
I, M
inistr
y of J
ustic
e
2.6.
4 Fa
cilita
te th
e pro
curem
ent o
f wor
k per
mits
for f
oreig
n tec
hnici
ans a
nd p
rofes
siona
ls fo
r per
iods
of
from
three
mon
ths t
o on
e yea
r, wi
th th
e pos
sibili
ty of
rene
wal,
so th
at Et
hiopi
an fi
rms c
an p
redict
-ab
ly fil
l crit
ical s
kill g
aps w
hile d
omes
tic sk
ills a
nd w
orke
r rete
ntio
n po
licies
are b
eing
impr
oved
.
2x
• Th
e am
endm
ent t
o th
e reg
ulati
on o
n wo
rk pe
rmits
is
desig
ned
and
subm
itted
fo
r app
rova
l
ETID
I, M
oLSA
, Mini
stry o
f Ju
stice
2.7
Increa
se th
e ca
pacit
y of t
he
Custo
ms s
ervic
e to
regul
ate im
ports
of
T & C
prod
ucts.
2.7.
1 Pr
ovid
e trai
ning
to C
usto
ms o
ffice
rs to
: rec
ogniz
e pro
duct
coun
try o
f orig
in ba
sed
on th
e orig
in ce
rtific
ate ; c
ompl
y with
new
impo
rt reg
ulati
on n
orm
s ; an
d ge
t the
m fa
mili
arize
d wi
th te
xtile
prod
ucts,
th
eir u
nique
ness
and
need
ed fl
exib
ility.
2x
• At
leas
t 20
offic
ers o
f the
Et
hiopi
an R
even
ues a
nd
Custo
ms A
utho
rity (
ERCA
) tra
ined
ERCA
and
ETID
I
2.7.
2 Int
rodu
ce m
oder
n tra
cking
syste
ms w
ithin
Custo
ms o
ffice
s and
cond
uct t
rainin
g of
Cus
tom
s of-
ficial
s in
class
ifying
( tari
ffs ) i
mpo
rt ite
ms c
orrec
tly.
1x
• Tra
cking
syste
m
estab
lishe
d•
At le
ast 2
0 of
ficer
s of E
RCA
traine
d on
the s
ystem
ERCA
, ETID
I
2.7.
3 Inc
rease
gov
ernm
ental
fund
ing to
capa
citate
the C
usto
ms s
ervic
e and
redu
ce ri
sks o
f brib
ery a
t th
e bor
ders.
Iden
tify g
ood
prac
tices
of o
ther
coun
tries
on
impr
oving
Cus
tom
s prac
tices
– to
redu
ce
room
for c
orru
ptio
n.
2x
• Fu
nding
to C
usto
ms
servi
ces i
ncrea
sed
by 1
0 %•
Good
prac
tices
to al
leviat
e co
rrupt
ion
impl
emen
ted
ERCA
, ETID
I
2.7.
4 Re
infor
ce th
e con
trol o
f int
er-bo
rder
area
s, sp
ecifi
cally
thos
e tha
t are
know
n to
be u
sed
for
smug
gling
of T
& C
prod
ucts.
2x
• At
leas
t two
new
cont
rol
point
s esta
blish
edER
CA, E
TIDI
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
78
Stra
tegi
c ob
ject
ive
2 : S
treng
then
the
enab
ling
envi
ronm
ent t
o fa
vour
sec
tor d
evel
opm
ent.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l inst
itutio
n an
d po
ssib
le im
plem
entin
g pa
rtner
s
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+ in
tern
atio
nal
partn
ers
1617
1819
20
2.8
Ensu
re av
ailab
ility
of
acce
ssib
le fin
ancia
l too
ls fo
r M
SMEs
.
2.8.
1 Inc
entiv
ize th
e dev
elopm
ent o
f fina
ncial
tool
s and
servi
ces t
ailor
ed to
MSM
Es in
the T
& C
sec-
tor,
inclu
ding
leas
ing an
d sm
all lo
ans w
ith lo
w co
llater
al.1
x•
At le
ast 5
0 em
ploy
ees o
f fin
ancia
l ins
titut
ions
train
ed
per y
ear o
n th
e T &
C se
ctor’s
fina
ncial
nee
ds
and
the d
evelo
pmen
t of
adap
ted fi
nanc
ial to
ols
MoF
ED, E
TIDI
Exist
ing sc
hem
es fo
r SM
Es u
nder
th
e Nati
onal
Bank
of E
thio
pia,
but m
icro
enter
prise
s are
servi
ced
by m
icrof
inanc
e ins
titut
ions
2.8.
2 St
rengt
hen
capa
city o
f fina
ncial
insti
tutio
ns o
n pa
ymen
t con
ditio
ns sp
ecifi
c to
inter
natio
nal c
li-en
ts, an
d sp
ecifi
c int
erna
tiona
l bes
t prac
tices
and
requir
emen
ts.2
x•
At le
ast 5
0 em
ploy
ees o
f fin
ancia
l ins
titut
ions
train
ed
per y
ear
MoF
ED, E
TIDI
2.8.
3 Ad
voca
te fo
r the
crea
tion
of a
cred
it gu
arant
ee tr
ust f
und :
dev
elopm
ent o
f a fr
amew
ork t
o id
en-
tify e
ligib
le inv
estm
ent t
ypes
and
borro
wers
; mec
hanis
m fo
r pro
viding
gua
rantee
( fun
ding
insti
tutio
ns,
proc
ess o
f ava
iling
cred
its, e
tc. ) ;
and
a mon
itorin
g sy
stem
.
2x
• Cr
edit
guara
ntee
trus
t fun
d cr
eated
MoF
ED, E
TIDI,
exist
ing m
icro-
finan
ce in
stitu
tions
( aro
und
10–1
2 )
Cred
it gu
arant
ee sc
hem
es w
ere
crea
ted u
nder
Men
nonit
e Eco
-no
mic
Deve
lopm
ent A
ssoc
iates
wi
th B
una B
ank (
priva
te ba
nk ),
espe
cially
for h
andl
oom
, des
ign-
ers,
retail
ers
2.8.
4 Pr
ovid
e trai
ning
( and
train
ing o
f trai
ners
) in
finan
cial l
iterac
y to
enab
le m
anag
ers t
o de
fine t
heir
finan
cing
need
s, de
velo
p a f
inanc
ing st
rateg
y, an
d ev
aluate
fina
ncing
opt
ions
. This
will
inclu
de tr
ain-
ing o
n m
oder
n bu
dgeti
ng te
chniq
ues a
nd ac
coun
ting
trans
paren
cy.
2x
• 16
0 co
mpa
ny m
anag
ers
per y
ear i
n m
ultip
le lo
catio
ns•
At le
ast o
ne tr
ainer
form
ed
per t
raine
d co
mpa
ny
MoF
ED, E
TIDI
2.8.
5 He
lp S
MEs
iden
tify a
ppro
priat
e len
ders,
und
ersta
nd le
nding
requ
irem
ents,
and
prep
are an
d su
bmit
adeq
uate
appl
icatio
ns to
vario
us so
urce
s of f
inanc
ing in
cludi
ng ex
port
insur
ance
, fac
torin
g /
rever
se fa
ctorin
g, cr
edit
guara
ntee
sche
mes
, lea
sing
and
tradi
tiona
l loa
ns, a
ccor
ding
to th
e nee
ds o
f ea
ch en
terpr
ise.
2x
• On
e hun
dred
and
sixty
com
pany
man
ager
s per
ye
ar in
mul
tiple
loca
tions
• At
leas
t one
train
er fo
rmed
pe
r trai
ned
com
pany
MoF
ED, E
TIDI
2.8.
6 Pr
ovid
e fina
ncial
ince
ntive
s to
MSM
Es to
adva
nce p
rivate
secto
r and
indi
vidua
l inv
estm
ent i
n tra
ining
( e.g
. lev
y gran
t sch
emes
; com
pulso
ry or
volu
ntary
taxe
s on
payro
ll or
out
com
e ; le
vy re
bate
sche
mes
, in
which
MSM
Es ar
e par
tially
reim
burse
d fo
r app
rove
d tra
ining
).
2x
• At
leas
t thr
ee n
ew in
cent
ive
mec
hanis
ms d
evelo
ped
by E
thio
pian
fina
ncial
ins
titut
ions
MoF
ED, E
TIDI
2.9
Impr
ove t
he
effici
ency
and
cost
com
petit
ive-n
ess
of tr
ansp
ortat
ion
and
logi
stics
.
2.9.
1 Inc
rease
the n
umbe
r of o
ptio
ns fo
r sele
ction
of p
orts
( to d
evelo
p ba
rgain
ing p
ower
) by l
iaisin
g wi
th th
e Nor
th E
thio
pia P
ort p
rojec
t and
Por
t Sud
an.
2x
• Tw
o ne
w po
rts av
ailab
le fo
r tra
ding
from
Eth
iopi
a at t
he
end
of th
e five
-yea
r per
iod
Mini
stry o
f Tran
spor
t,, M
inis-
try o
f Ind
ustry
and
ETID
I
2.9.
2 En
able
com
petit
ion
in th
e tru
cking
secto
r – an
d ca
ncel
dutie
s on
this
servi
ce to
redu
ce p
rices
–
thro
ugh
a pro
gram
me o
f priv
atiza
tion
and
best
prac
tice c
ompe
titio
n po
licy f
or E
thio
pia’s
truc
king
and
logi
stics
secto
r, in
colla
borat
ion
with
inter
natio
nal o
rgan
izatio
ns.
2x
• Ne
w reg
ulati
on o
n tru
cking
es
tablis
hed
to en
sure
liber
aliza
tion
• Du
ties s
ystem
on
truck
ing
servi
ces c
ance
lled
Mini
stry o
f Tran
spor
t and
M
inistr
y of I
ndus
try, E
TIDI
2.9.
3 Pr
omot
e and
facil
itate
the c
reatio
n of
T & C
-spe
cific
logi
stics
com
panie
s tha
t cou
ld re
spon
d to
th
e req
uirem
ents
of th
e T &
C se
ctor (
espe
cially
clot
hing )
, suc
h as
tim
e sen
sitivi
ty.1
x•
At le
ast t
wo T
& C-s
pecif
ic lo
gisti
cs co
mpa
nies
crea
ted b
y the
end
of fi
ve
years
ETID
I, M
inistr
y of T
ransp
ort
and
Mini
stry o
f Ind
ustry
[ THE PLAN OF ACTION ]
79
Stra
tegi
c ob
ject
ive
3 : E
stab
lish
cond
ition
s to
har
ness
FDI
as
an e
ngin
e fo
r gro
wth
in T
& C.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l in
stitu
tion
and
poss
ible
impl
emen
ting
partn
ers
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
inte
rnat
iona
l par
tner
s16
1718
1920
3.1
Estab
lish
an
inter
natio
nally
co
mpe
titive
ope
rating
en
viron
men
t co
nduc
ive to
T & C
se
ctor d
evelo
pmen
t.
3.1.
1 Fo
llowi
ng th
e exa
mpl
e of B
ole L
emi I
Indus
trial
Park,
secu
re m
ore s
table
electr
icity
supp
ly fo
r T &
C clu
sters
by p
urch
asing
and
instal
ling
dedi
cated
elec
tricit
y sub
statio
ns at
each
of t
he co
untry
’s ind
ustri
al pa
rks
where
T & C
is b
eing
prom
oted
. This
wou
ld in
clude
indu
strial
park
s at B
ole L
emi II
( clo
thing
), Ko
mbo
lcha
( texti
les ),
Dire
Dawa
( tex
tiles
), an
d ev
entu
ally E
aster
n Ind
ustri
al Pa
rk ( c
loth
ing ) a
nd A
ddis
Indus
trial
Villa
ge
( clo
thing
), am
ong
othe
rs.
2x
• A
dedi
cated
elec
tricit
y su
bstat
ion
for e
ach
indus
trial
park
Mini
stry o
f Ind
ustry
, IP
DC, E
TIDI
3.1.
2 Ide
ntify
all t
he in
frastr
uctu
re req
uirem
ents
for a
texti
le m
ega c
luste
r in
line w
ith th
e typ
e of i
nves
tmen
t to
be a
ttrac
ted ( i
nteg
rated
, onl
y app
arel,
them
e-ba
sed,
targ
eting
inve
stors
from
a sp
ecifi
c cou
ntry,
etc.
) and
th
en p
roce
ed to
dev
elopm
ent.
1x
• De
tailed
pro
ject r
epor
t for
pr
opos
ed te
xtile
park
Mini
stry o
f Ind
ustry
, IP
DC, E
TIDI
Inter
natio
nal t
rainin
g ag
encie
s suc
h as
Waz
ir an
d IL&
FS fr
om In
dia
3.1.
3 Ba
sed
on th
e rep
ort d
evelo
ped
unde
r 3.1
.2, s
uppo
rt fu
rther
crea
tion
of te
xtile
meg
a clu
sters
thro
ugh
indus
trial
parks
with
all n
eces
sary
infras
tructu
res ( E
fflue
nt Tr
eatm
ent P
lants
( ETP
s ), d
orm
itorie
s, sh
eds,
unin-
terru
pted
pow
er an
d wa
ter su
pply,
expr
essw
ay co
nnec
tivity
to p
orts
/ main
citie
s, etc
. )
2x
• St
art o
f com
pany
ope
ratio
ns
at ind
ustri
al pa
rks B
ole L
emi
II, Ko
mbo
lcha,
Dire
Dawa
Mini
stry o
f Ind
ustry
, IP
DC, E
TIDI
3.1.
4 Ha
ving
estab
lishe
d a m
echa
nism
for r
apid
ly ram
ping
up
the n
umbe
r of t
raine
d ga
rmen
t fac
tory
worke
rs ( s
ee ac
tivity
1.1
.8 ),
mak
e agr
eem
ents
betw
een
garm
ent f
acto
ries a
nd tr
aining
insti
tutio
ns, w
hereb
y fac
torie
s gu
arant
ee a
fixed
num
ber o
f job
s in
retur
n fo
r the
train
ing in
stitu
tion
guara
ntee
ing th
e sam
e num
ber o
f wor
k-er
s with
agree
d sk
ills.
2x
• Fir
st 10
,000
wor
kers
empl
oyed
und
er p
lacem
ent
MoU
betw
een
facto
ries
and
parti
cipati
ng tr
aining
ins
titut
ions
ETID
I, M
inistr
y of
Labo
ur an
d So
cial
Affai
rs
3.2
Increa
se
capa
city o
f TIS
Is to
id
entif
y and
attra
ct th
e app
ropr
iate
inves
tmen
ts fo
r the
se
ctor.
3.2.
1 Bu
ild ca
pacit
y of E
IC an
d Et
hiopi
an In
vestm
ent C
omm
issio
n ( E
IC ) o
ffice
rs to
effec
tively
facil
itate
and
targe
t T &
C inv
estm
ent,
and
impr
ove t
heir
inves
tmen
t ana
lysis
and
targe
ting
capa
city /
tech
nique
s to
narro
w do
wn an
d be
st tar
get p
oten
tial i
nves
tors
base
d on
inve
stmen
t req
uirem
ents
and
spec
ifica
tions
( this
impl
ies
inves
ting
in da
ta ac
cess
and
man
agem
ent s
ervic
es su
ch D
un an
d Br
adstr
eet,
Finan
cial T
imes
, fDi
Mark
ets ).
2x
• Fir
st fab
ric an
d ac
cess
ory
proj
ects
com
e onl
ine as
a r
esul
t of E
IC ta
rgeti
ng
cam
paig
ns
EIC, E
IA
3.2.
2 St
rengt
hen
the c
apac
ities
of E
IC an
d EIA
in b
randi
ng an
d ou
treac
h ( e
.g. s
ocial
med
ia, ev
ents,
etc.
), inc
ludi
ng th
roug
h tra
de at
taché
s. 2
x•
At le
ast 2
0 sta
ff fro
m E
IC an
d EIA
train
ed in
bran
ding
and
outre
ach
EIC, E
IA
3.2.
3 Co
llabo
rate w
ith th
e Con
feder
ation
of I
ndian
Indu
stry (
CII )
and
the I
ndian
Exim
Ban
k to
furth
er st
rengt
h-en
exist
ing se
ctor–
prod
uct c
ompe
titive
ness
stud
ies fo
r fab
rics,
threa
ds, a
cces
sorie
s and
pac
kagi
ng.
• Co
llabo
rate w
ith C
II and
Exim
Ban
k to
furth
er id
entif
y the
subs
egm
ents,
com
panie
s and
coun
tries
from
wh
ich to
attra
ct FD
I :•
Deve
lopm
ent o
f cus
tom
ized
prom
otio
nal m
ateria
l to
attrac
t FDI
• Pr
epare
inve
stmen
t pro
files
for i
nves
tors.
2x
• De
velo
pmen
t of i
nves
tmen
t gu
ide,
feasib
ility
studi
es,
broc
hures
and
webs
ite
cont
ent (
two
to th
ree m
onth
s fo
r pro
mot
iona
l mate
rial )
• De
velo
pmen
t of p
rofil
es fo
r id
entif
ied p
rojec
ts,six
to
eight
wee
ks fo
r eac
h pr
ojec
t pr
ofile
( mor
e tha
n on
e can
be
take
n up
sim
ultan
eous
ly th
ough
)
EIC, T
IDI a
nd E
IASI
TA /
Trade
Fac
ilitat
ion
and
Polic
y for
Bus
iness
( T
FPB )
( sec
tion
of IT
C )
/ int
erna
tiona
l trai
ning
agen
cies s
uch
as W
azir
and
IL&FS
from
Indi
a
3.2.
4 St
rengt
hen
the a
bilit
y of E
IC–I
PDC–
ETGA
MA–
ETID
I to
respo
nd ef
fectiv
ely to
dire
ct inq
uiries
from
inve
s-to
rs th
roug
h a s
ystem
atic j
oint
appr
oach
, rely
ing o
n sh
ared
inves
tor d
ata an
d m
ateria
ls.
Also
stren
gthe
n th
ese i
nstit
utio
ns’ c
apac
ity o
n aft
ercare
servi
ces t
o ex
isting
inve
stors.
1x
• Si
gned
MoU
s am
ong
the
four
par
tner
s, an
d sh
ared
adop
tion
of te
chnic
ally
cons
isten
t and
unif
orm
ly br
ande
d pr
omot
iona
l m
ateria
ls fo
r the
secto
r
EIC–I
PDC–
ETGA
-M
A–ET
IDI
SITA
/ TF
PB
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
80
Stra
tegi
c ob
ject
ive
3 : E
stab
lish
cond
ition
s to
har
ness
FDI
as
an e
ngin
e fo
r gro
wth
in T
& C.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l in
stitu
tion
and
poss
ible
impl
emen
ting
partn
ers
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
inte
rnat
iona
l par
tner
s16
1718
1920
3.3
Furth
er p
rom
ote
Ethio
pia a
s a ke
y de
stina
tion
for F
DI.
3.3.
1 Pr
omot
e and
ince
ntivi
ze n
ation
al / i
nter
natio
nal i
nves
tmen
ts in
the f
ollo
wing
spec
ific m
achin
ery r
e-qu
ired
in th
e valu
e cha
in :
• Sp
inni
ng : m
oder
nize l
aggi
ng sp
inning
mill
s•
Wea
ving
and
knitt
ing :
mod
erniz
e all
weav
ing lo
oms t
o air
jet an
d rap
ier te
chno
logy
• Dy
eing
and
finish
ing :
intro
duce
mas
s dye
ing o
f yarn
and
fabric
• Pa
ckag
ing :
intro
duce
loca
l pac
kagi
ng m
ateria
l man
ufac
turin
g co
mpa
nies t
hat w
ould
pro
duce
pap
er co
nes,
pape
r tub
es, c
arto
ns, e
tc.•
Acce
ssor
ies : i
nves
t in
at lea
st on
e acc
esso
ries’
prod
uctio
n pl
ant i
n on
e of t
he in
dustr
ial zo
nes i
n Et
hiopi
a•
Dyes
and
che
mica
ls : l
ocall
y pro
duce
som
e of t
he au
xiliar
ies re
quire
d fo
r dye
s to
increa
se re
activ
ity
( carb
onate
s, etc
. ) an
d pr
oduc
e natu
ral d
yes f
rom
flow
ers f
or h
andl
oom
pro
ducti
on.
1x
• ET
GAM
A an
d ET
IDI,
with
EIC
and
EIA as
mul
tiplie
rs,
adve
rtise
the s
ix ke
y are
as an
d ha
ve p
repare
d pr
omot
iona
l mate
rial f
or
each
of t
hem
ETGA
MA,
ETID
I and
Et
hiopi
an In
vest-
men
t Com
miss
ion
SITA
/ TF
PB
3.3.
2 Fa
cilita
te lin
kage
s and
inve
stmen
t in
hand
loom
tech
nolo
gy fr
om In
dia f
or va
lue a
dditi
on to
:
• Se
t up
scree
n pr
inting
shop
s•
Set u
p bl
ock p
rintin
g un
its•
Upgr
ade t
o ad
vanc
ed ty
pes o
f han
dloo
ms a
nd ac
cess
ories
.
1x
• At
leas
t thr
ee li
nkag
es
estab
lishe
d wi
th In
dian
pa
rtner
train
ing in
stitu
tions
ETGA
MA–
ETID
I
3.3.
3 Ca
rry o
ut in
vestm
ent p
rom
otio
n ac
tiviti
es in
targ
et co
untri
es ( I
ndia )
– ro
ad sh
ows,
facili
tating
dire
ct int
erac
tions
betw
een
Ethio
pian
firm
s and
targ
eted
inves
tors,
help
ing fo
reign
repr
esen
tative
s to
prom
ote t
he
secto
r, etc
.Us
e sid
e eve
nts t
o sh
owca
se in
vestm
ent p
rofil
es d
evelo
ped
as w
ell as
buil
d un
derst
andi
ng o
f the
bus
iness
/ inv
estm
ent c
limate
. Exa
mpl
e of s
ide e
vent
s cou
ld b
e Afri
ca–I
ndia
Conc
lave o
r Orig
in Af
rica.
Invite
pot
entia
l inv
esto
rs to
strat
egic
loca
tions
to sh
owca
se th
e inf
rastru
cture
and
busin
ess c
limate
.
2x
• On
e roa
d sh
ow ea
ch
in six
majo
r tex
tile
cities
- Lu
dhian
a, De
lhi,
Ahm
edab
ad, M
umba
i, Ba
ngalo
re an
d Tir
upur
• M
eetin
gs w
ith 8
–10
inves
tors
in ea
ch lo
catio
n•
Visit
s of i
ntere
sted
inves
tors
( total
8–1
0 ) to
Eth
iopi
a
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m A
CTIF
SITA
/ TS
/ SC
/ TF
PB,
inter
natio
nal t
rainin
g ag
encie
s suc
h as
Waz
ir an
d IL&
FS fr
om In
dia
3.3.
4 St
rengt
hen
the i
nves
tmen
t pro
mot
ion
man
date
/ res
pons
ibili
ty pa
rt of
the d
iplo
mats
’ rol
e and
pro
vide
regul
ar tra
ining
to st
aff. R
evise
and
enha
nce t
he in
vestm
ent p
rom
otio
n pr
ogram
me f
or em
bass
ies, r
eflec
ting
lates
t tren
ds.
Subs
eque
ntly
supp
ort a
nd p
lan en
quiry
and
prom
otio
nal v
isits
to ap
prop
riate
and
targe
ted in
terna
tiona
l inv
es-
tors
by em
bass
y staf
f
2x
• M
oU an
d sta
ndard
ope
rating
pr
oced
ures
draf
ted an
d ag
reed
betw
een
EIC an
d th
e M
inistr
y of F
oreig
n Af
fairs
and
Mini
stry o
f Ind
ustry
• Co
nclu
de in
vestm
ent
prom
otio
n tra
ining
for
econ
omic
/ com
merc
ial
coun
sello
rs an
d se
creta
ries
at em
bass
ies an
d co
nsul
ates
in tar
get c
ount
ries
• Fin
alize
inve
stmen
t pr
omot
ion
man
ual f
or n
ew
dipl
omats
Mini
stry o
f For
eign
Affai
rs an
d M
inistr
y of
Indu
stry
SITA
/ TF
PB
[ THE PLAN OF ACTION ]
81
Stra
tegi
c ob
ject
ive
3 : E
stab
lish
cond
ition
s to
har
ness
FDI
as
an e
ngin
e fo
r gro
wth
in T
& C.
Oper
atio
nal
objec
tive
Activ
ities
Prio
rity
1=hi
gh,
3=lo
w
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l in
stitu
tion
and
poss
ible
impl
emen
ting
partn
ers
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
inte
rnat
iona
l par
tner
s16
1718
1920
3.3
Furth
er p
rom
ote
Ethio
pia a
s a ke
y de
stina
tion
for F
DI.
3.3.
5 Su
ppor
t the
dev
elopm
ent o
f ( ex
isting
and
new )
custo
mize
d FD
I pro
mot
iona
l mate
rial :
• De
velo
p we
ll-cr
afted
valu
e pro
posit
ions
for p
oten
tial i
nves
tors,
com
prisi
ng fe
asib
ility
studi
es o
n th
reads
, ac
cess
ories
and
pack
aging
• De
velo
p a c
ompr
ehen
sive s
ecto
r pro
file
• De
velo
p a c
entra
lized
data
base
of t
he cr
itica
l inf
orm
ation
and
intell
igen
ce re
quire
d by
inve
stors.
2x
• Pu
blica
tion
of te
chnic
ally
cons
isten
t, un
iform
ly br
ande
d an
d reg
ularl
y up
dated
pro
mot
iona
l m
ateria
ls fo
r the
secto
r, inc
ludi
ng w
ebsit
es, P
ower
Po
ints,
secto
r pro
files
, star
t-up
road
map
s and
supp
lier
datab
ases
ETID
I, ET
GAM
A,EIC
reg
iona
l sup
port
from
ACT
IF
SITA
/ TF
PB /
an In
dian
co
nsul
ting
firm
such
as
Waz
ir
3.3.
6 EIC
and
IPDC
, tog
ether
with
ETID
I and
ETG
AMA,
are s
uppo
rted
to co
llabo
rate w
ith ex
isting
garm
ent
man
ufac
turer
s to :
• Ide
ntify
the n
eeds
of e
xistin
g su
pplie
rs to
inve
st ne
ar th
eir cu
stom
ers (
e.g.
wate
r pur
ifica
tion
facili
ty to
red
uce w
ater h
ardne
ss at
Bol
e Lem
i to
a lev
el co
nduc
ive to
fabr
ic pr
oduc
tion )
•
Prep
are an
inve
stor-t
argeti
ng ca
mpa
ign
for m
anuf
actu
rers o
f fab
rics a
nd ac
cess
ories
.
2x
• Tw
o fo
reign
fabr
ic m
anuf
actu
rers a
nd
two
forei
gn ac
cess
ory
man
ufac
turer
s star
ted,
resul
ting
from
inve
stor-
targe
ting
EIC–I
PDC–
ETGA
-M
A–ET
IDI
SITA
/ TF
PB
3.3.
7 En
hanc
e col
labor
ation
and
partn
ersh
ip b
etwee
n EIC
and
Ethio
pian
Airl
ines,
using
Eth
iopi
an A
irline
s res
ourc
es to
help
pro
mot
e inv
estm
ent o
ppor
tunit
ies ( s
ee Tu
rkish
Airl
ines m
odel
).2
x•
First
adve
rtisin
g ca
mpa
ign
impl
emen
ted o
n fli
ghts
from
Ad
dis A
baba
to th
ree to
p tar
get m
arkets
for i
nves
tors
EIC, E
thio
pian
Air-
lines
, ETID
I
3.3.
8 Re
view
the c
urren
t Gov
ernm
ent D
iaspo
ra po
licy t
o fu
rther
enco
urag
e and
ince
ntivi
ze m
embe
rs of
the
Dias
pora
to en
gage
in in
vestm
ent a
ctivit
ies, e
.g. G
over
nmen
t offe
rs to
matc
h th
e am
ount
inve
sted,
par
tner
wi
th n
ation
al ba
nks a
nd in
terna
tiona
l fina
ncial
insti
tutio
ns to
redu
ce th
e cos
t of t
ransfe
r of r
emitt
ance
s.Su
ppor
t the
Dias
pora
Affai
rs Of
ficer
at E
IC to
raise
aware
ness
of t
he G
over
nmen
t Dias
pora
polic
y, to
enco
ur-ag
e Eth
iopi
an b
usine
sspe
ople
abro
ad to
inve
st in
Ethio
pia a
nd to
use
their
expe
rienc
e to
targe
t app
ropr
iate
and
realis
tic TN
Cs in
their
pro
mot
ion
effor
ts.
2x
• Th
e am
endm
ent t
o th
e reg
ulati
on o
n Di
aspo
ra is
desig
ned
and
subm
itted
for
appr
oval
Mini
stry o
f For
eign
Affai
r with
EIC
and
ETID
I
SITA
/ TF
PB
3.3.
9 Ha
ve E
IC an
d IP
DC im
plem
ent t
he W
orld
Ban
k-de
signe
d inv
esto
r afte
rcare
pro
gram
me –
curre
ntly
unde
r con
sider
ation
at IP
DC –
of r
egul
ar co
mpa
ny vi
sitati
on, o
ngoi
ng p
robl
em-s
olvin
g, in
vesto
r sur
veys
, inv
esto
r sem
inars
and
netw
orkin
g ev
ents,
and
parti
cipati
on in
a pu
blic–
priva
te fo
rum
for b
usine
ss en
viron
-m
ent r
eform
. This
pro
gram
me w
ould
supp
ort i
nves
tor r
etent
ion
and
expa
nsio
n, b
ut it
wou
ld al
so b
e a p
rimary
m
echa
nism
for e
xplo
ring
ongo
ing o
ppor
tunit
ies fo
r and
obs
tacles
to p
rivate
secto
r-led
valu
e cha
in de
velo
p-m
ent,
as w
ell as
for f
oster
ing b
ackw
ard li
nkag
es b
etwee
n fo
reign
inve
stors
and
loca
l sup
plier
s.
2x
• Ac
coun
t man
ager
assig
ned
to ea
ch in
vesto
r•
Bian
nual
mee
tings
of E
IC
with
stak
ehol
ders
carri
ed o
ut•
Annu
al inv
esto
r sur
vey
carri
ed o
ut
EIC, I
PDC
3.4
Increa
se
colla
borat
ion
betw
een
loca
l SM
Es
and
FDIs
to en
sure
syne
rgies
.
3.4.
1 Su
ppor
t the
impl
emen
tatio
n of
the e
xistin
g pr
ogram
me (
of th
e Eth
iopi
a Cha
mbe
r, th
e Add
is Ab
aba
Cham
ber )
to h
elp es
tablis
h lin
kage
s betw
een
new
inter
natio
nal i
nves
tors
and
loca
l sup
plier
s in
a mor
e sys
-tem
atic m
anne
r, tak
ing in
to ac
coun
t the
SM
Es’ p
ersp
ectiv
e. E.
g. E
nsur
e tha
t for
eign-
owne
d fir
ms i
n ind
ustri
al zo
nes b
egin
to p
rovid
e mor
e sys
temati
c and
org
anize
d in-
hous
e trai
ning,
ope
ned
to lo
cal f
irms.
• As
sist i
n fin
ding
new
loca
l sup
plier
s•
Facil
itate
trans
fer o
f kno
wled
ge fr
om in
vesto
rs ( in
clude
s pro
duct
techn
olog
y, pr
oces
s tec
hnol
ogy a
nd
orga
nizati
onal
man
ager
ial kn
ow-h
ow an
d as
sistan
ce, e
tc. )
• Pr
ovid
e trai
ning
on p
ertin
ent i
ssue
s to
enha
nce m
eanin
gful
relat
ions
betw
een
inves
tors
and
loca
l SM
Es
( inclu
des c
oope
rative
learn
ing am
ong
supp
liers
; int
erna
l trai
ning
to af
filiat
es ; i
n-pl
ant t
rainin
g ; et
c. ).
1x
• Ex
chan
ge m
echa
nism
es
tablis
hed
with
in at
least
four
Indu
strial
zone
s usin
g th
e trai
ning
cent
res cr
eated
( li
nked
with
activ
ity 2
.3.4
)
ETID
I, IP
DC an
d ET
GAM
ASI
TA /
TFPB
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
82
Stra
tegi
c ob
ject
ive
4 : F
oste
r pro
duct
and
mar
ket d
evel
opm
ent t
hrou
gh th
e us
e of
trad
e in
form
atio
n.Op
erat
iona
l ob
jectiv
eAc
tivitie
sPr
iorit
y1=
high
,3=
low
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l in
stitu
tion
and
poss
ible
impl
emen
ting
partn
ers
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
Inte
rnat
iona
l par
tner
s
1617
1819
20
4.1
Ensu
re ea
sy
and
timely
acce
ss
to st
rateg
ic tra
de
intell
igen
ce fo
r T &
C fir
ms.
4.1.
1 Cr
eate
a stra
tegic
mon
itorin
g ce
ll, h
osted
at E
TIDI,
then
co-s
hared
with
ETG
AMA,
to g
ather
up-
to-
date
and
T & C-
spec
ific t
rade i
nfor
mati
on, a
nd to
dete
ct ea
rly si
gnals
on
targe
ted m
arkets
and
prod
ucts.
Th
e web
site o
f ETID
I can
be u
sed
to h
ost t
he m
onito
ring
cell
and
conn
ected
to th
e Eth
iopi
a Cha
mbe
r of
Com
merc
e web
site.
This
impl
ies su
ppor
ting
ETID
I and
ETG
AMA
to su
bscr
ibe t
o im
porta
nt te
xtile
jour
nals
and
webs
ites t
o be
ab
le to
upd
ate it
s mem
bers
with
lates
t mark
et inf
orm
ation
. The
se in
clude
: http
: / / w
ww.em
erging
textil
es.
com
/ ; w
ww.fi
breto
fashio
n.co
m ; w
ww.co
tlook
.com
1x
• On
e mon
itorin
g ce
ll se
t up
in ET
IDI
• Re
com
men
datio
n rep
ort
on im
plem
entat
ion
of th
e co
mpe
titive
intel
ligen
ce
syste
m
ETID
I,co
-resp
onsib
ility
with
ET-
GAM
A an
d EC
PGEA
SITA
/ Tra
de In
form
a-tio
n Se
rvice
s ( TI
S )
( sec
tion
of IT
C )
4.1.
2 Im
prov
e the
web
sites
of E
TIDI /
ETG
AMA
/ ECP
GEA
thro
ugh
web-
base
d so
lutio
ns fo
r effe
ctive
trad
e int
ellig
ence
gath
ering
and
diss
emina
tion,
and
insur
e a co
nstan
t sup
ply o
f tim
ely m
arket
intell
igen
ce, e
tc.Ad
ditio
nal a
ctivit
y : re
gular
upd
ates o
f com
pany
pro
files
on
ETGA
MA
webs
ite –
com
panie
s are
respo
nsi-
ble f
or th
e upd
ates.
ETGA
MA
to es
tablis
h a n
otifi
catio
n m
echa
nism
as a
remind
er.
2x
• Th
ree w
ebsit
es re
vam
ped
ETID
I,ET
GAM
A ( in
colla
borat
ion
with
Eth
iopi
a Cha
mbe
r of
Com
merc
e )
SITA
/ TIS
4.1.
3 Or
ganiz
e trai
nings
of c
omm
ercial
attac
hés b
ased
in ke
y targ
et m
arkets
and
trade
pro
mot
ion
offic
ials
to b
est c
oord
inate,
colle
ct, co
mpu
te an
d di
ssem
inate
trade
info
rmati
on an
d pr
omot
ion
matt
ers.
2x
• On
e trai
ning
orga
nized
an
d co
nduc
ted o
n a y
early
ba
sis
ETID
I, ET
GAM
A, M
inistr
y of
Forei
gn A
ffairs
SITA
/ TIS
4.1.
4 Pu
t in
plac
e a co
oper
ation
fram
ewor
k to
prom
ote t
he ex
chan
ge an
d di
ssem
inatio
n of
T & C
trad
e inf
orm
ation
amon
g go
vern
men
t age
ncies
, TIS
Is, m
edia,
acad
emia,
rese
arch
orga
nizati
ons a
nd th
e priv
ate
secto
r.
2x
• On
e netw
ork e
stabl
ished
ETID
I,co
-resp
onsib
ility
with
ET-
GAM
A an
d EC
PGEA
SITA
/ TIS
4.1.
5 Bu
ild ca
pacit
y of E
TGAM
A, E
TIDI a
nd th
e Eth
iopi
a Cha
mbe
r of C
omm
erce t
o de
velo
p m
arket
prof
ile
and
use m
arket
analy
sis to
ols a
nd re
searc
h m
ethod
olog
ies. T
hese
mark
et pr
ofile
s inc
lude
pro
ducti
on an
d co
nsum
ptio
n tre
nds,
trade
analy
sis, m
arket
requir
emen
ts, p
rice i
nfor
mati
on, d
istrib
utio
n ch
anne
ls, lo
gis-
tics (
tarif
f and
non
-tarif
f barr
iers )
and
key b
usine
ss co
ntac
ts
1x
• De
velo
pmen
t of t
wo
mark
et pr
ofile
s and
tra
ining
of E
TIDI,
ETGA
MA
and
Cham
ber s
taff t
o de
velo
p th
em an
d co
ach
them
for p
repari
ng tw
o m
ore s
uch
prof
iles
• Th
ree tr
aining
s on
com
petit
ive in
tellig
ence
an
d m
arket
prof
iles
orga
nized
and
cond
ucted
ETID
I, ET
GAM
A, E
CPGE
ASI
TA /
TIS /
inter
na-
tiona
l trai
ning
agen
cies
such
as W
azir
and
IL&FS
from
Indi
a
4.1.
6 Int
rodu
ce co
urse
s on
mod
ern
mark
et an
alysis
tool
s and
tech
nique
s, as
well
as o
n ho
w to
use
them
to
crea
te bu
sines
s plan
s, int
o th
e cur
ricul
a of e
duca
tiona
l ins
titut
ions
, and
cond
uct s
emina
rs at
facul
ties
/ univ
ersit
ies.
2x
• M
inim
um o
f 40
com
panie
s trai
ned
per
year,
of w
hich
at lea
st 20
are
SM
Es
ETID
I, ET
GAM
A, E
CPGE
ASI
TA /
Mark
et An
alysis
an
d Re
searc
h ( s
ectio
n of
ITC )
4.1.
7 En
cour
age e
xistin
g int
erna
tiona
l trad
ing co
mpa
nies i
n Et
hiopi
a to
crea
te T &
C tra
ding
servi
ces f
or
expo
rts an
d / o
r enc
ourag
e sou
rcing
com
panie
s fro
m m
ajor m
arkets
like
Indi
a to
open
offi
ces i
n Et
hiopi
a to
pro
mot
e mark
et lin
kage
s.
2x
• M
oU si
gned
betw
een
one
Indian
sour
cing
com
pany
an
d th
e Eth
iopi
an
Gove
rnm
ent
ETID
I, ET
GAM
A, E
CPGE
ASI
TA /
SC, W
azir
4.2
Increa
se fi
rms’
capa
city t
o un
der-
stand
regi
onal
and
inter
natio
nal m
arket
requir
emen
ts an
d ho
w to
bes
t alig
n pr
oduc
t dev
elop-
men
t / o
fferin
gs.
4.2.
1 Se
nsiti
ze fi
rms o
n th
e nee
d to
hav
e a m
arket
pros
pecti
ng fu
nctio
n an
d ho
w it
will
help
them
to
best
deve
lop
their
offe
ring
and
gene
rate n
ew b
usine
ss. S
ubse
quen
tly su
ppor
t sele
cted
firm
s to
estab
lish
mark
et pr
ospe
cting
dep
artm
ents
/ res
pons
ible
offic
ers w
ithin
firm
s. ET
IDI a
nd E
TGAM
A to
adve
rtise
this
amon
g fir
ms a
nd se
lect a
first
gro
up o
f firm
s for
pilo
t.
2x
• Es
tablis
hing
mark
et pr
ospe
cting
dep
artm
ents
in 10
firm
s per
year
ETID
I, ET
GAM
AW
azir
[ THE PLAN OF ACTION ]
83
Stra
tegi
c ob
ject
ive
4 : F
oste
r pro
duct
and
mar
ket d
evel
opm
ent t
hrou
gh th
e us
e of
trad
e in
form
atio
n.Op
erat
iona
l ob
jectiv
eAc
tivitie
sPr
iorit
y1=
high
,3=
low
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l in
stitu
tion
and
poss
ible
impl
emen
ting
partn
ers
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
Inte
rnat
iona
l par
tner
s
1617
1819
20
4.2
Increa
se fi
rms’
capa
city t
o un
der-
stand
regi
onal
and
inter
natio
nal m
arket
requir
emen
ts an
d ho
w to
bes
t alig
n pr
oduc
t dev
elop-
men
t / o
fferin
gs.
4.2.
2 Co
nduc
t trai
ning,
targ
eting
mid
-leve
l man
ager
s in
T & C
enter
prise
s, in
new
avail
able
textil
e con
-str
uctio
n tec
hnol
ogies
, late
st co
st eff
icien
cy te
chniq
ues,
prod
uct d
esig
n an
d m
ercha
ndisi
ng.
2x
• At
leas
t two
train
ing
instit
utio
ns ac
quire
kn
owled
ge an
d co
mpe
tence
s to
replic
ate
traini
ngs
• M
inim
um o
f 40
com
panie
s trai
ned
per
year,
of w
hich
at lea
st 20
are
SM
Es
ETID
I, ET
GAM
A,reg
iona
l sup
port
from
ACT
IFSI
TA, i
nter
natio
nal
traini
ng ag
encie
s suc
h as
Waz
ir an
d IL&
FS
from
Indi
a
4.2.
3 Pr
ovid
e trai
ning
on th
e con
tempo
rary t
rends
of f
ashio
n de
sign
( e.g
. col
our p
alette
s silh
ouett
es,
etc. ),
as w
ell as
the r
ole a
nd im
porta
nce o
f fas
hion
desig
ners.
1x
• At
leas
t two
train
ing
instit
utio
ns ac
quire
kn
owled
ge an
d co
mpe
tence
s to
replic
ate
traini
ngs
• M
inim
um o
f 10
com
panie
s trai
ned
per
year
ETID
I, ET
GAM
A,reg
iona
l sup
port
from
ACT
IFSI
TA /
SC
4.2.
4 Pr
ovid
e trai
nings
to to
p- an
d m
id-le
vel m
anag
ers a
bout
diff
erent
type
s of y
arn an
d tex
tiles
, and
po
ssib
le so
urce
s of i
nput
s for
their
enter
prise
s, in
orde
r to
increa
se ef
ficien
cy an
d pr
oduc
t ran
ge.
1x
• At
leas
t two
train
ing
instit
utio
ns ac
quire
kn
owled
ge an
d co
mpe
tence
s to
replic
ate
traini
ngs
• M
inim
um o
f 10
com
panie
s trai
ned
per
year
ETID
I, ET
GAM
ASI
TA /
SC, W
azir
4.2.
5 Tra
in fir
ms o
n ho
w to
enha
nce c
usto
mer
focu
s thr
ough
valu
e add
ed se
rvice
s suc
h as
vend
or-m
an-
aged
inve
ntor
y, m
ulti-
fibre
expe
rtise
, ICT
capa
city (
IT-en
abled
teac
hing )
, dro
p sh
ipm
ent.
2x
• At
leas
t two
train
ing
instit
utio
ns ac
quire
kn
owled
ge an
d co
mpe
tence
s to
replic
ate
traini
ngs
• M
inim
um o
f 10
com
panie
s trai
ned
per
year
ETID
I, ET
GAM
A, u
niver
sities
SITA
/ SC
, Waz
ir
4.2.
6 En
hanc
e und
ersta
nding
of p
rodu
ct de
sign
trend
s . A
ssist
com
panie
s to
inter
pret
and
unde
rstan
d co
nsum
er /
buye
r nee
ds in
spec
ific t
extil
e and
appa
rel p
rodu
ct ca
tegor
ies an
d tar
get m
arkets
. Mon
itor
the c
ompa
nies’
use o
f the
acqu
ired
know
ledge
.
2x
• At
leas
t two
train
ing
instit
utio
ns ac
quire
kn
owled
ge an
d co
mpe
tence
s to
replic
ate
traini
ngs
• M
inim
um o
f 15
com
panie
s trai
ned
per
year
ETID
I, ET
GAM
ASI
TA /
SC
4.2.
7 Co
nduc
t visi
ts wi
th se
ctor p
artic
ipan
ts ( in
dustr
ial as
socia
tions
, clo
thing
enter
prise
s ) to
regi
onal
and
inter
natio
nal t
rade s
hows
for T
& C
entre
pren
eurs
on p
rodu
ctivit
y tec
hnol
ogies
and
new
mac
hiner
y.2
x•
Parti
cipate
in at
leas
t two
tra
de sh
ow p
er ye
arET
IDI,
ETGA
MA,
regio
nal s
uppo
rt fro
m A
CTIF
SITA
/ SC
[ ETHIOPIA TEXTILE AND CLOTHING VALUE CHAIN ROADMAP ]
84
Stra
tegi
c ob
ject
ive
4 : F
oste
r pro
duct
and
mar
ket d
evel
opm
ent t
hrou
gh th
e us
e of
trad
e in
form
atio
n.Op
erat
iona
l ob
jectiv
eAc
tivitie
sPr
iorit
y1=
high
,3=
low
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l in
stitu
tion
and
poss
ible
impl
emen
ting
partn
ers
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
Inte
rnat
iona
l par
tner
s
1617
1819
20
4.3
Expa
nd m
arket
acce
ss an
d pr
omot
e Et
hiopi
a’s T
& C
prod
ucts.
4.3.
1 En
hanc
e awa
renes
s am
ong
Ethio
pian
firm
s ( th
roug
h ET
GAM
A ) o
f the
exist
ence
and
bene
fits o
f Et
hiopi
a’s re
gion
al an
d int
erna
tiona
l pref
erent
ial m
arket
acce
ss co
nditi
ons.
2x
• Br
ochu
re pr
oduc
ed an
d di
ssem
inated
to m
embe
rs of
ETG
AMA
• On
e wwa
renes
s crea
tion
traini
ng h
as to
org
anize
d pe
r yea
r
ETID
I, ET
GAM
A,reg
iona
l sup
port
from
ACT
IFSI
TA /
Mark
et An
alysis
an
d Re
searc
h ( s
ectio
n of
ITC )
4.3.
2 Tra
in Et
hiopi
an fi
rms o
n th
e nee
d to
susta
in ex
isting
buy
er–s
eller
relat
ions
hips /
mut
ual t
rust
and
prov
ide t
rainin
g on
mark
eting
and
after-
sales
servi
ces /
crea
tion
of a
com
pany
web
site /
com
mun
icatio
ns
/ pro
mot
iona
l mate
rials,
etc.
2x
• On
e hun
dred
and
sixty
com
pany
man
ager
s tra
ined
per y
ear
ETGA
MA
and
ETID
ISI
TA /
SC
4.3.
3 Se
t up
a com
pany
cost-
shari
ng m
echa
nism
to su
ppor
t the
cost
of m
arket
deve
lopm
ent u
nder
taken
by
the c
ompa
nies.
E.g.
Eth
iopi
an te
xtile
expo
rters
to p
artic
ipate
in im
porta
nt in
terna
tiona
l tex
tile f
airs
such
as Ya
rn F
air, H
eimtex
til, M
ateria
l Wor
ld, e
tc.
1x
• Co
st sh
aring
mec
hanis
m
set u
p an
d ru
nning
ETID
I, ET
GAM
A
4.3.
4 ET
IDI,
in co
llabo
ratio
n wi
th o
verse
as E
thio
pian
trad
e miss
ions
( em
bass
ies ) a
rrang
es b
uyer
–sell
er
mee
tings
to fa
cilita
te int
erac
tion
betw
een
Ethio
pian
expo
rters
and
forei
gn b
uyer
s in
targe
t mark
ets.
2x
• At
leas
t 20
buye
r–se
ller
mee
tings
cond
ucted
by
ETID
I with
targ
eted
mark
ets
ETID
I, ET
GAM
ASI
TA–S
C
4.3.
5 De
velo
p ap
prop
riate
natio
nal b
rand
/ sig
n pr
omot
ion
polic
y and
coor
dina
te im
plem
entat
ion
of
activ
ities
und
er a
‘Mad
e in
Ethio
pia’
tag. P
rom
ote t
he b
rand
thro
ugh
ETGA
MA,
the E
thio
pian
Cha
mbe
r of
Com
merc
e and
ETID
I, as
well
as th
roug
h ind
ividu
al co
mpa
nies.
Build
on
loca
l cot
ton
prod
uctio
n an
d ar
ticul
ate b
randi
ng ar
ound
it, t
ogeth
er w
ith co
mpl
iance
.
1x
• On
e nati
onal
bran
ding
str
ategy
dev
elope
dET
IDI,
ETGA
MA,
ECP
GEA
SITA
–EC
/ SC
4.3.
6 Su
bseq
uent
to 4
.3.5
, con
duct
traini
ng o
n de
velo
pmen
t of c
ompa
ny le
vel b
rands
to b
e link
ed w
ith
the n
ation
al br
and.
2x
• As
sistan
ce p
rovid
ed to
at
least
10 fi
rms t
o cr
eate
or
impr
ove t
heir
bran
ding
ETID
ISI
TA–E
C
4.3.
7 Or
ganiz
e an
annu
al pr
omot
iona
l eve
nt ( e
.g. t
rade f
air, f
ashio
n sh
ow o
n th
e mod
el of
Orig
in Af
rica )
in
Ethio
pia t
o ad
verti
se E
thio
pia’s
firm
s and
attra
ct fu
rther
inve
stmen
t / b
uyer
s. Al
so o
rgan
ize b
uyer
–se
ller m
eetin
gs an
d ot
her b
usine
ss g
ener
ation
even
ts th
at pr
ovid
e plat
form
s for
Eth
iopi
an co
mpa
nies t
o pr
esen
t the
ir of
fer to
Indi
an /
inter
natio
nal b
uyer
s and
inve
stors.
2x
• Or
ganiz
ation
of /
pa
rticip
ation
in at
leas
t th
ree ev
ents
in th
e ne
xt fiv
e yea
rs, w
ith a
mini
mum
par
ticip
ation
of
50
com
panie
s ove
r fiv
e yea
rs
ETID
I, ET
GAM
A, E
CPGE
A,reg
iona
l sup
port
from
ACT
IFSI
TA /
TS /
SC
4.4
Prov
ide t
argete
d as
sistan
ce o
n m
arket
infor
mati
on an
alysis
to
han
dloo
m fi
rms.
4.4.
1 Co
nduc
t a b
ench
mark
ing o
f sele
cted
hand
loom
wov
en p
rodu
ct pr
oduc
ers t
o ga
in ins
ight
on :
• Pr
oduc
t offe
rings
• Sk
ills (
desig
n, w
eavin
g, m
arketi
ng, q
ualit
y man
agem
ent )
• Ta
rget
mark
et( s )
( loc
al, to
urist
, exp
ort,
etc. )
• Cu
rrent
buy
ers
• Bu
sines
s plan
/ po
sitio
ning
strate
gy•
Man
agem
ent p
ractic
es in
cludi
ng H
R, fa
ciliti
es, s
trateg
ic pl
annin
g, d
ay to
day
ope
ratio
ns, e
tc.•
Acce
ss to
mate
rial i
nput
s, ya
rn, d
yes,
etc.
• Lin
ks w
ith in
stitu
tions
– ac
adem
ic, ( n
ation
al an
d int
erna
tiona
l ) an
d TIS
Is –
and
mod
e of e
ngag
emen
t / o
r in
what
capa
city
• Th
e obj
ectiv
e is t
o ga
uge m
arket
oppo
rtunit
ies fo
r MSM
Es an
d id
entif
y area
s for
impr
ovem
ent t
o ga
in sh
are /
expa
nd in
to o
ther
mark
ets.
1x
• Re
port
on E
thio
pian
ha
ndlo
om se
ctor a
s per
sta
ted co
verag
e
ETID
I, ET
GAM
A,
regio
nal s
uppo
rt fro
m A
CTIF
SITA
/ SC
/ int
erna
-tio
nal t
rainin
g ag
encie
s su
ch as
Waz
ir an
d IL&
FS fr
om In
dia
[ THE PLAN OF ACTION ]
85
Stra
tegi
c ob
ject
ive
4 : F
oste
r pro
duct
and
mar
ket d
evel
opm
ent t
hrou
gh th
e us
e of
trad
e in
form
atio
n.Op
erat
iona
l ob
jectiv
eAc
tivitie
sPr
iorit
y1=
high
,3=
low
Star
ting
perio
dTa
rget
mea
sure
sLe
adin
g na
tiona
l in
stitu
tion
and
poss
ible
impl
emen
ting
partn
ers
Ongo
ing
/ fut
ure
deve
lopm
ent
prog
ram
mes
+
Inte
rnat
iona
l par
tner
s
1617
1819
20
4.4
Prov
ide t
argete
d as
sistan
ce o
n m
arket
infor
mati
on an
alysis
to
han
dloo
m fi
rms.
4.4.
2 Es
tablis
h lin
kage
s betw
een
Ethio
pian
han
dloo
m p
rodu
cers
and
forei
gn b
uyer
s :
• Cr
eate
dem
and
for u
nique
han
dloo
m p
rodu
ct de
signs
in co
llabo
ratio
n wi
th lo
cal a
nd /
or in
terna
tiona
l de
signe
rs / b
uyer
s •
Link l
ocal
desig
ners
with
han
dloo
m w
eave
rs to
dev
elop
uniq
ue fa
brics
, whic
h ca
n th
en b
e use
d to
de
velo
p pr
oduc
ts fo
r loc
al / e
xpor
t mark
ets.
2x
• Tw
o to
three
Indi
an o
r int
erna
tiona
l des
igne
rs sig
n an
MoU
with
the
Ethio
pian
Gov
ernm
ent f
or
prod
ucing
a ha
ndlo
om
prod
uct r
ange
in E
thio
pia
ETID
I and
ETG
AMA
SC--
Indian
cons
ultin
g fir
m su
ch as
Waz
ir
4.4.
3 En
sure
prom
otio
n of
Eth
iopi
an h
andl
oom
pro
ducts
:
• Pr
omot
e han
dwov
en p
rodu
cts th
roug
h fai
rs, ex
hibiti
ons,
med
ia an
d ret
ail o
utlet
s•
Deve
lop
a han
dloo
m m
ark th
at id
entif
ies /
certi
fies i
t is i
ndee
d ha
ndm
ade
• Pr
omot
e the
valu
e of h
andm
ade p
rodu
cts•
Prom
ote t
he u
se o
f org
anic
or n
atural
fibr
es in
all h
andw
oven
pro
ducts
for t
he p
urpo
se o
f mark
et di
fferen
tiatio
n •
Deve
lop
hand
loom
secto
r / p
rodu
ct pr
omot
iona
l mate
rial.
2x
• Pa
rticip
ation
in at
leas
t tw
o tra
de fa
irs p
er ye
ar•
Spec
ific b
randi
ng
deve
lope
d fo
r Eth
iopi
an
hand
loom
pro
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viron
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:
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th S
udan
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port
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each
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thio
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verag
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n-ing
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uch
as
Waz
ir an
d IL&
FS fr
om
India
86
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APPENDICES
Photo: ITC
90
SECTION A : MAIN ETHIOPIAN T & C PRODUCING AREAS ( IN PINK )
SECTION B : NUMBER OF EMPLOYEES IN ETHIOPIA’S T & C SECTOR, 2013 AND 2014
Sources : Ethiopian Central Statistical Agency ( 2014 ) ( a ) ; and Ethiopian Revenues and Customs Authority ( 2014 ) ( b ).
Country 2013 Urban areas only2013 2014
Textiles Total 416 913Urban 36.0 % 150 009 178 480
Female 60.3 % 43.4 %Share in T & C 86.0 % 72.8 % 76.0 %
Spinning, weaving and dyeing
Total 254 908Urban 41.1 % 104 655 134 199
Female 52.3 % 38.9 %Other textiles Total 158 854
Urban 27.8 % 44 203 44 281Female 72.8 % 57.3 %
Wearing apparel Total 68 148Urban 82.2 % 56 004 56 221
Female 26.7 % 21.4 %Share in T & C 14.0 % 27.2 % 24.0 %
Wearing apparel Total 53 350Urban 80.3 % 42 280 44 730
Female 24.3 % 16.4 %Knitted and crochet Total 11 137
Urban 100.0 % 11 137 9 558Female 26.0 % 39.7 %
Share in total manufacturing Textiles 21.9 % 16.3 % 18.7 %Wearing apparel 3.6 % 6.1 % 4.7 %
91
SECTION C : COTTON SUPPLY AND DEMAND IN ETHIOPIA 1990 / 91 TO 2010 / 11
Source : ICAC
SECTION D : TARIFFS FACED BY ETHIOPIAN APPAREL EXPORTS ( HARMONIZED SYSTEM ( HS-61 )
Source : International Trade Centre ( 2015 ) ( a ).
92
SECTION E : INCENTIVES FOR SECTORAL DEVELOPMENT IN ETHIOPIA
The Government of Ethiopia has implemented or encouraged a number of meas-ures in order to promote a favourable business environment and attract investment. Among these incentives, major ones are :
� International human resources are exempted from income tax if their stay is under two years ;
� Value Added Tax exemptions for locally purchased materials, subject to cer-tain restrictions ;
� The Development Bank of Ethiopia runs a number of programmes, including ( i ) the financing through loans of up to 70 % of capital requirements for new establishments ; ( ii ) loans that charge 8.5 % interest with five-year grace peri-ods ; and ( iii ) the operation of an Export Guarantee Scheme, which charges 1 % interest without collateral requirements for working capital ;
� Income tax holidays are granted based on export performance ; � A number of schemes, including the duty drawback, voucher, and bonded
manufacturing warehouse schemes, allow for the exemption of Customs taxes and duties for raw materials ;
� Investors can import machinery and fabrics free of duty for export production ; � Various other Customs and tax incentives ; � Availability of land and sheds for lease at competitive rates.
Ethiopia has low domestic supply of garment inputs yet strives to become a major producer of garments for export. The incentives allowing duty-free import of capital goods and raw materials are indispensable to this objective. Government provision of space and facilities at competitive rates further supports the bottom lines of gar-ment manufacturers, but it also establishes poles around which more manufacturers, and their suppliers and TVET partners, can cluster.
Value Added Tax exemptions on locally procured inputs and the Development Bank of Ethiopia’s preferential financing terms, which would be most important for domes-tic entrepreneurs, will be important in linking domestic suppliers and foreign garment manufacturers operating in Ethiopia.
Source : Ethiopian Textile Industry Development Institute ( 2014 ).
93
SECTION F : INTERNATIONAL BUSINESS RANKINGS OF ETHIOPIA AND ITS COMPETITORS
International benchmark
East African countries Selected Asian textile and apparel exporters
Ethiopia Kenya
United Republic
of Tanzania China India Bangladesh
Viet Nam Pakistan Myanmar
Ease of Doing Business ranking ( 1 ) 132 136 131 90 142 173 78 128 177
Competitive Industrial Performance ranking ( 2 ) 130 102 106 7 43 78 54 74
Not ranked
Global Competitiveness Index ( 3 ) 118 90 121 28 71 109 68 129 134
Inward FDI Performance Index ( 4 ) 120 129 59 86 97 114 22 110 52
Corruption Perception Index ( 5 ) 110 145 119 100 85 145 119 126 156
Economic Freedom Index ( 6 ) 149 122 109 139 128 131 148 121 161
1-World Bank Group, 2015 ) ; 2 United Nations Industrial Development Organization ( UNIDO ), 2010 ; 3 World Economic
Forum, 2014 ; 4-United Nations Conference on Trade and Development, 2010 ; 5-Transparency International, 2014 ; 6-Heritage
Foundation, 2015
94
SECTION G : TRADE ANALYSIS
The largest source of growth over the past 10 years has been the introduction of old products to new markets ( 53 % of 10-year growth ), followed by the continued pen-etration of old products in old markets ( 40 % ) and the introduction of new products to old markets ( 12 % ). Given the young state of the industry, together with the high levels of international competition, it should be no surprise that firms are not yet exporting new products to new markets.
Figure 1 : Decomposition of Ethiopia’s export growth of garments and textiles, 2004–2013
Source : International Trade Centre ( 2015 ) ( b ).
Figure 2 : Probability of export survival, 2002–2014
Source : International Trade Centre ( 2015 ) ( b ).
95
Figure 3 : Contribution to Ethiopia’s clothing trade deficit, 2014
25%
22%
13%
10%
10%
7%
5% 4% 4%
Other
Men's suits, jackets, trousers etc & shorts
T-shirts, singlets and other vests, knitted or crocheted
Women's suits, jackets,dresses skirts etc&shorts
Track suits, ski suits and swimwear; other garments
Babies' garments, knitted or crocheted
Shawls, scarves, mufflers, mantillas, etc
Women's blouses & shirts
Men's shirts
Source : International Trade Centre ( 2015 ) ( b ).
Figure 4 : Top importers of Ethiopian garments, 2001–2014 ( US $ thousands )
0 5.000
10.000 15.000 20.000 25.000 30.000 35.000 40.000
2001
20
02
2003
20
04
2005
20
06
2007
20
08
2009
20
10
2011
20
12
2013
20
14
Germany
United States of America
Sudan (North + South)
United Kingdom
Source : International Trade Centre ( 2015 ) ( b ).
96
Table 1 : Ethiopia’s top 10 exported garments, 2009–2014 ( US $ thousands )
Product label 2009 2010 2011 2012 2013 2014Five-year
CAGRShare
Total 2 915 11 786 33 971 37 156 40 262 46 177 74 % 100 %
T-shirts, singlets and other vests, knitted or crocheted 554 944 5 297 5 065 11 616 8 855 74 % 19 %
Men’s underpants, pyjamas, bathrobes, etc., knitted / crocheted 151 2 004 2 276 2 618 3 816 5 514 105 % 12 %
Women’s blouses & shirts, knitted or crocheted 33 0 165 12 695 4 375 166 % 9 %
Women’s suits, jackets, dresses, skirts, etc. & shorts 127 242 3 010 2 699 614 3 314 92 % 7 %
Jerseys, pullovers, cardigans, etc., knitted or crocheted 281 425 1 064 627 1 173 3 202 63 % 7 %
Women’s suits, dresses, skirts, etc. & shorts, knitted / crocheted 64 206 77 720 2 250 3 144 118 % 7 %
Men’s singlets, briefs, pyjamas, bathrobes etc. 124 166 1 691 2 303 2 125 2 954 89 % 6 %
Pantyhose, tights, stockings & other hosiery, knitted or crocheted 1 0 1 916 2 953 2 677 2 926 393 % 6 %
Men’s shirts, knitted or crocheted 85 180 1 707 330 2 603 2 837 102 % 6 %
Women’s blouses & shirts 109 148 5 523 4 117 1 768 1 806 75 % 4 %
Source : International Trade Centre ( 2015 ) ( b ).
Table 2 : Top changes in market share by product
Product label Export share 2004 Export share 2014 Difference
T-shirts, singlets and other vests, knitted or crocheted 2.90 % 19.18 % 16.27 %
Jerseys, pullovers, cardigans, etc., knitted or crocheted 0.16 % 6.93 % 6.78 %
Pantyhose, tights, stockings & other hosiery, knitted or crocheted 0.31 % 6.34 % 6.03 %
Women’s suits, jackets, dresses, skirts, etc. & shorts 1.19 % 7.18 % 5.98 %
Men’s shirts, knitted or crocheted 0.36 % 6.14 % 5.78 %
Men’s underpants, pyjamas, bathrobes, etc., knitted / crocheted 6.22 % 11.94 % 5.72 %
Women’s blouses & shirts, knitted or crocheted 4.35 % 9.47 % 5.12 %
Women’s suits, dresses, skirts, etc. & shorts, knitted / crocheted 1.71 % 6.81 % 5.10 %
Source : International Trade Centre ( 2015 ) ( b ).
97
Figure 5 : Contribution to Ethiopia’s textiles trade deficit ( 2014 )
52%
26%
16%
5%
1% Manmade filaments
Other made textile articles, sets, worn clothing etc
Manmade staple fibres
Wadding, felt, nonwovens, yarns, twine, cordage, etc
Other
Source : International Trade Centre ( 2015 ) ( b ).
Figure 6 : Top importing markets for Ethiopian textiles, 2001–2014 ( US $ thousands )
0
20.000
40.000
60.000
80.000
100.000
2001
20
02
2003
20
04
2005
20
06
2007
20
08
2009
20
10
2011
20
12
2013
20
14
Apparel Home textiles & carpets Textiles & yarn
Source : International Trade Centre ( 2015 ) ( b ).
98
Table 3 : Ethiopia’s top 10 textile exports, 2009–2014 ( US $ thousands )
Product label 2009 2010 2011 2012 2013 2014Five-year
CAGR
Share ( % )
Total 14 957 24 134 38 672 28 242 48 652 35 975 19.2 % 100.0 %
Cotton yarn 6 187 6 415 8 481 11 547 27 992 14 334 18.3 % 39.8 %
Cotton fabrics 3 108 10 094 12 621 5 228 6 730 5 214 10.9 % 14.5 %
Bed, table, toilet and kitchen linens 55 565 9 157 1 776 2 400 4 894 145.4 % 13.6 %
Special woven or tufted fabric, lace, tapestry, etc. 65 834 322 116 17 2 904 113.8 % 8.1 %
Furnishing articles n.e.s., excluding 94.04 783 722 1 290 3 413 4 455 2 855 29.5 % 7.9 %
Knitted or crocheted fabric 195 0 353 1 585 1 933 58.2 % 5.4 %
Man-made filaments 51 4 280 3 751 1 482 1 812 1 776 103.4 % 4.9 %
Man-made staple fibres 230 3 863 1 864 1 539 1 563 46.7 % 4.3 %
Sacks and bags of a kind used for the packing of goods 312 205 184 434 557 166 -11.9 % 0.5 %
Carpets and other textile floor coverings 30 151 100 163 297 165 40.6 % 0.5 %
Source : International Trade Centre ( 2015 ) ( b ).
SECTION H : TIME AND COST INVOLVED IN TRADING ACROSS BORDERS IN ETHIOPIA INVESTMENT
Nature of proceduresExport Import
Duration ( days ) Cost ( US $ ) Duration ( days ) Cost ( US $ )
Documents preparation 27 520 29 700
Customs clearance and inspections 7 290 5 390
Ports and terminal handling 3 270 3 270
Inland transportation and handling 7 1 300 7 1 600
Totals 44 2 380 44 2 960
Source : World Bank ( 2015 ).
99
SECTION I : INVESTMENT
Table 1 : Potential investors based in India
Company Products / activitiesTurnover
( US $ millions )
Vardhman Textiles Yarn, fabric, threads, fibre & garment 834
JBF Industries Ltd Synthetic fibre 772
Arvind Limited Denim, fabric, apparel, advanced materials 770
Trident Group Towels 624
Welspun India Ltd Home textiles and synthetic yarns 570
SRF Limited Tyre cord yarn 551
Garden Silk Mills Polymers, yarn, filament and fabric 495
SEL Manufacturing Company Ltd. Yarns, knitted fabric, terry towels, ready-made garments 477
Bombay Rayon Fashions Ltd Fabrics, apparel 469
RSWM Ltd Synthetic and blended yarn, fabric, denim fabric 463
Indo Rama Synthetic Ltd Synthetic fibre and filament 424
Lakshmi Machine Works Textile machinery 362
Nahar Spinning Mills Limited Yarn and fabric 356
Raymond Limited Suiting and shirting fabric, apparel 353
KPR Mill Limited Yarn and fabric 316
Sutlej Textiles Synthetic and blended yarn, fabric, home textiles 303
Filatex India Ltd Synthetic yarn 285
Mandhana Industries Pvt. Ltd Yarn dyeing, weaving, fabric printing, processing & garmenting 245
Century Enka Ltd Nylon & polyester filament yarns, polyfill yarn 237
Sangam India Limited Yarn, fabric, denim fabric 231
Indo Count Industries Ltd Yarn & knitted fabrics 227
Siyaram Silk Mills Ltd Suiting 210
Page Industries Knitwear 192
Spentex Industries Ltd Yarn and fabric 184
Gokaldas Exports Ltd Garments 179
Similar lists can be obtained for each target country from their respective sector associations or through independent sector research. As an example, the fol-lowing list offers the names of three of the top cloth-ing brands and retailers in each of Ethiopia’s most likely sources for T & C FDI. Investment promoters would investigate the top garment factories supplying such firms and target them for investment in Ethiopia.
100
Table 2 : Potential prospects in target markets
Likely FDI source countries Major brand, retailer or manufacturer Type of business
United States GAP Specialty store
Limited Brands Specialty store
Polo Ralph Lauren Specialty store
Republic of Korea Lotte Department store
Shinsegae Department store
Hyundai Department store
China Youngour Group Ready-made garment manufacturer
Hongdou Group Ready-made garment manufacturer
Heilan Group Ready-made garment manufacturer
Germany C&A Specialty store
H&M ( Sweden ) Specialty store
KiK Specialty store
Spain Inditex ( Zara ) Specialty store
Mango Specialty store
El Corte Inglés Department store
United Kingdom Next Specialty store
Marks and Spencer Department store
Heilan Group Ready-made garment manufacturer
Turkey Aksa Akrilik Kimya Ready-made garment manufacturer
Korteks Mensucat Ready-made garment manufacturer
Advansa Sasa Polyester Ready-made garment manufacturer
101
SECTION J: LIST OF PARTICIPANTS IN PUBLIC PRIVATE CONSULTATIONS
Name of Institution Name
1. Ministry of Trade - National AGOA Center Mr Tiglumanaye
2. Ministry of Trade - Trade promotion Directorate Mr.Yetsedaw Emagne
3. Ministry of Industry Mr.y.van Frausum
4. Ministry of Industry Mrs Selamawit H.Micheal
5. Ministry of Industry -Transformation Triggering Facility Mr. Shunum khalid
6. Ministry of Environment Mr.Tolosa Yadessa
7. Ministry of Industry Mr. Simon Baryou
8. Abeba Texilte and Garment Mr. Wolle Abegaz
9. Adama Spinning Factory Mr. Yimer Yimama
10. Addis Ababa science and technology university Mr. Kibebe Sahile
11. Addis Ababab Chamber of commerce Mr. Getache Regassa
12. Africa Center for Texitel Industries Federation Mr. Joseph Nyagari
13. Almeda Textile Plc Mr. Amanual Girmay
14. Awassa Textile S.C Mr. Eyasu Atnafu
15. Bahirdar Texitle S.C Mr. Abyay Melaku
16. COMESA Mr. Fred Kongongo
17. Commercial Bank of Ethiopia Mrs. Ejigayehu Demeke
18. Commercial Bank of Ethiopia Mr. Nigatu Wolde
19. Commercial Bank of Ethiopia Mr. Hirut Bekele
20. DFID Mr. John Primrose
21. Ethiopia Cotton producers Ginners and exporters Association Mr. Hadish Girmay
22. Ethiopia Cotton producers Ginners and exporters Association Mr. Assefa Aga
23. Ethiopia Textile and Garment Manufacturers Association Mr. Ageazi H Mariam
24. Ethiopia Textile and Garment Manufacturers Association Mr. Fassil Taddesse
25. Ethiopia Textile Industry Development Institute Mr. Sileshi Lema
26. Ethiopia Textile Industry Development Institute Mr. Yared Mesfin
27. Ethiopia Textile Industry Development Institute Mr. Enwagaw Nugusse
28. Ethiopia Textile Industry Development Institute Mr. Yitbarek Tilahun
29. Ethiopia Textile Industry Development Institute Mr. Epherm Bekele
30. Ethiopia Textile Industry Development Institute Mr. Fikr Tesfu
31. Ethiopia Textile Industry Development Institute Mr. Banthun Gessesse
32. Ethiopia Textile Industry Development Institute Mr. Demele Asrate
33. Ethiopia Textile Industry Development Institute Mr. Eshetu Shanko
34. Ethiopia Textile Industry Development Institute Mr. Erias Minda
102
Name of Institution Name
35. Ethiopia Textile Industry Development Institute Mr. Mulugeta Abera
36. Ethiopian chamber of commerce Mr. Wube Nengstu
37. Ethiopian Institute of Textile and Fashion Technology Mr. Addisu Ferede
38. Ethiopian Investment Commission Mrs. Meskerem Yeshitla
39. Ethiopian Investment Commission Mr. Dawit Lemma
40. Ethiopian Shipping & Logistics service enterprise Mr. Dereje Wassie
41. Ethiopian Standard Agency Mr. Wondale Mognehodie
42. FEMESEDA Mr. Esayas Tsegaye
43. Indian Business Forum Mr. Rajeev Sharma
44. Kebire enterprise Mr. Fassil Taddesse
45. Kestis Garment Production Plc Mr. Girima Wondimu
46. Kombolcha Textile S.C Mr. Mustefa Jemal
47. Konoria Africa Textile Factory Mr. Arun Gorodia
48. KOTRA Mr. Sewnet Hailu
49. KOTRA Mr. Kim Ju Hee
50. MAA Garment Mr. Kibrom Fitsum
51. PEPE TEAM Mr. Twodros Belachew
52. PEPE TEAM Mr. Addis alem Tesfaye
53. PEPE TEAM Mr. Nebil Kellow
54. PEPE TEAM Mr. Luc Boyolens
55. Private Enterprise Programme Mr. Tewodros Yilma
56. Raymond Ltd Mr. Ratesh Kr Singh
57. Saygindima Textile S.C Mr. Baye Hunegnaw
58. Saygindima Textile S.C Mr. Fatih Mehamet Yangin
59. Shashikant prabhudas & Co Ltd Mr. Kaushal Sheth
60. Velocity Apparel Mrs. Tesfanesh Lukw
61. Velocity Apparel Erica
62. Wollo University Mr. Negash Balcha
63. Women In Self Employment - WISE Mrs. Abeba Zenebe
64. Women In Self Employment - WISE Mrs. Etalem Yetayew Bekele,
65. Women In Self Employment - WISE Mrs. Misrach Kekonnen
66. Women In Self Employment - WISE Mrs. Worknesh Wade Oshie
67. Women In Self Employment - WISE Mrs. Kidist Buzuneh Yelesho
68. Women In Self Employment - WISE Mrs. Selemawit, Wondmagegnehu Eshete
Yirgalem Addis Textile Factory Mr. Nahom Aron
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