ethiopian textile industry: opportunities and constraints · dyeing & finishing 44 garment 125...

34
ISO 9001:2015 Certified ISO/IEC/17025 Accredited 16 February 2020 15 February 2020 Ethiopian Textile Industry: Opportunities and Constraints By: Teshome Zeleke Fikadu Fentaw

Upload: others

Post on 11-Oct-2020

14 views

Category:

Documents


3 download

TRANSCRIPT

Page 1: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited 16 February 2020

15 February 2020

Ethiopian Textile Industry:

Opportunities and Constraints

By: Teshome Zeleke

Fikadu Fentaw

Page 2: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

CONTENTS

1. INTRODUCTION

1.1. Ethiopian Traditional Cotton Farm to Weaving

1.2. Ethiopian Modern Cotton Farm to Apparel

2. OPPORTUNITIES

3. CONSTRAINTS

4. RECOMMENDATIONS

5.About Ethiopian Textile Industry Development Institute (ETIDI)

2 16 February 2020

Page 3: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

1.INTRODUCTION

3 16 February 2020

1.1.Ethiopian Traditional Cotton Farming to Weaving Process

Page 4: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

INTRODUCTION …continued

4 16 February 2020

Cotton has been grown almost in all parts of Ethiopia for a century

It sustain the livelihood of more than 50,000 people engaged in related activities

The weaving history of Ethiopia goes back at least 3,500 Years

The practice were traditionally held by small artisans called “Shemane” or weavers

This traditional cottage weaving industry is inherited and still in practice

It is a means of living for millions of Ethiopian

Page 5: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

INTRODUCTION…continued

5 16 February 2020

1.2. Ethiopian Modern Cotton Farm to Apparel

Page 6: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited 16 February 2020

6

INTRODUCTION …continued

The first large scale commercial cotton farm established in 1948

Government established Awash Valley Authority to promote large scale commercial cotton

production in 1962

There are more than 500 medium and large scale cotton farmers

The first textile factory, Diredewa textile, established in 1939

In 1960’s 3 textile factories (i.e. Akaki, Bahirdar & Adey Abeba), Debrebrihan Blanket and

Augusta Garment established

Page 7: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

INTRODUCTION …continued

16 February 2020 7

Sub-Sector Number

Ginning 21

spinning 6

Knitting 25

Weaving 40

Dyeing & Finishing 44

Garment 125

Traditional (exporters) 10

Total 271

Number of L & M Textile Factories in Ethiopia

Source: ETIDI

Page 8: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited 16 February 2020

8

Addis Ababa

Afar

Tigray

Amhara

Benishangul Gumuz

Oromia Somali

SNNPR

Gambella

0.0

200.0

400.0

600.0

800.0

269.1

678.7 600.9

407.4 316.5 303.2

200.0 225.0

Area(in '000 Ha)

Total area suitable for cotton cultivation is 3 million hectare

Based on soil fertility, availability of water for irrigation:

1.99 million hectare (66.3%) is high production area

1.01 million hectare is medium production area

Land Suitable for Cotton Cultivation

2.OPPORTUNITIES

Source: ETIDI

Page 9: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited 16 February 2020

9

Opportunities…Continued

Source: ETIDI

14%

3%

52%

31% Comercial Irrigated

Small Irrigated

Comercial Rainfed

Small Rainfed

21%

3%

46%

30% Comercial Irrigated

Small Irrigated

Comercial Rainfed

Small Rainfed

Area in 2016/17 Per Type of Farming

Systems % of Total Area Area in 2016/17 Per Type of Farming

System % Total Production

Irrigation system holds 17 % of the total area and 24% of the total production

Commercial farmers holds 66 % of the total area and 76 % of the total production

Page 10: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020 10

29

.9

28

.3

27

.1

22

.2

19

.3

68

.6

36

.9 5

2.7

38

.4

58

.4

98

.6

65

.3 7

9.8

60

.6

77

.6

2014/15 2015/16 2016/17 2017/18 2018/19

SH Comertial farmers TotalLand cultivated by commercial farmers has

shown high fluctuation trend

It declined from 68.6 ha in 2014/15 to 36.9 ha

in the next year and increased to 58.4 ha in

2018/19

Land cultivated by SH has continuous

declining trend through out the given period

It decline from 29.9 ha in 2014/15 to 19.3 ha in

2018/19

Total utilized land is less 3.5%

Area Under cultivation in ‘000 Ha( 2014/15-2018/19)

Source: ETIDI

Page 11: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020

Source: ETIDI

65.8

42.5

53.8

41.0

58.0

0

10

20

30

40

50

60

70

2014/15 2015/16 2016/17 2017/18 2018/19

Lint cotton production has fluctuating

trend similar with the amount of land

cultivated

The quantity of lint cotton produced

declined from 65.8 ton in 2014/15 to 41 tons

in 2017/18, and then increased back to 58

tons in the next year

Lint Cotton Production in ‘000 tons ( 2014/15-2018/19)

Page 12: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…continued

16 February 2020 12 12

Textile & Apparel

Potential Cotton

Production Areas

L E G E N D

Industrial Parks Bahir Dar IP

Kombolcha IP Kilinto IP

Debre Birhan IP

Jimma IP

Hawassa IP Bole lemi I &II IP

Dire Dawa IP

Adama IP

Somali IP

Major Roads

Paved Roads

Smallholder cotton

farmers

Ma

p o

f E

thio

pia

wit

h P

ote

nti

al

Are

as

Page 13: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020 13

The above map represents potential areas for the sector and their distance from

infrastructure

Potential areas for cotton production

Areas of small holder cotton farmers

Types of farming (rain fed, irrigated)

Textile & apparel industry parks

Roads, rail ways, dry port, air ports

Page 14: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020 14

More than 100 million Population – large domestic market

More than half of the population is under young age- active labor force

High potential for other natural fibers like bamboo, kenaf, silk, wool,flax/linen

Fast economic growth as market potential

Expansion of infrastructure i.e. road, rail way, dry port, power stations

Page 15: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020 15

Expansion of industrial parks (particular for textile 7 operational )

Supporting institutions, universities ( 7 with BA program) & TVTs in all Weredas

Supply of power at globally competitive rates

Large scope for value addition (cotton to garment to apparel marketing)

Geographic proximity for global markets i.e. Africa, Middle East, EU & USA

Page 16: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020

Export of T& C grown with CAGR of 63.8%, while Import grown with 17.7 %

The trade deficit increased from 221.4 USD in 2008 to 551.7 in 2017

This implies trade gap of more than half a billion

Source: WTO data base

Ethiopian T& C Import and Export (2008-20017) in Million USD

13.1 17.7 36.0 71.8 66.0 89.7

90.7 104.0 82.0 96.7

234.5 242.5

348.3 357.4

468.2

611.0 554.4 664.3 617.0 648.4

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

EXPORT

IMPORT

Page 17: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020 17

Ethiopian T&C Export in million USD Ethiopian T&C Import in million USD

Export of textile has high value than clothing up to 2011, then declining trend after 2013

While export of clothing has increasing trend through out the given period

Ethiopian Imports more textile than clothing up to 2013, more clothing after wards

Import of both categories has increasing trend

Source: WTO data base

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

TEXTILE

CLOTHING

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

TEXTILE

CLOTHING

Page 18: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020 18

Ethiopian Total T&C Export and Share of Ips (%) in Million USD

Source: ETIDI

T&G export reached a pick of 153.3 million USD in 2018/19, from 98.0 million in 2014/15

Export of companies in Ips increased from 2.3 million USD in 2014/15 to 49 million in 2018/19

The export share of Ips to total export of the sector increased from 2.3% to 32.1% in 2018/19

-

50.0

100.0

150.0

200.0

98.0 78.0 86.5

101.9

153.3

66.8

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2.3 9.7

21.6

45.3 49.1 55.3

Page 19: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020 19

$- $20.00 $40.00 $60.00 $80.00

$100.00 $120.00 $140.00 $160.00 $180.00

$178.78

$119.74

$63.21

Major Export Destinations (2014 – 2018) in million USD

EU and USA are destination for 79.4 % of Ethiopian T&G products

EU is destination for 52.7 % of T&G products

USA is destination for 26.7 % of T&G products

The rest went to Turkey, China, and Sudan

Page 20: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…continued

16 February 2020 20

The current increase in number of garment factories demands more fabric

High demand for fabric in turn demand s for more textile mills and raw cotton

Ethiopian long term strategy is to be self-sufficient in lint cotton supply, and export the

surplus

National Cotton Development Strategy (NCDS 2017-2032) is with the main purpose of:-

- understanding the major challenges of the sector

- implementing strategic interventions

- intensifying cotton development techniques

Page 21: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…continued

16 February 2020 21

NCDS has the goal to develop identity, resilience, responsible, transformative and

inclusive cotton sector

The NCDS aims to achieve sustainable improvement of the cotton sector in terms of

productivity, value addition and marketing

Increasing productivity and improving quality is top priority for improving the

competitiveness and profitability of cotton and textile sector in Ethiopia

GTP II is focused on building industrial base leading to structural economic

transformation and inclusive growth

Page 22: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020 22

The manufacturing sector is expected to play a key role to realize Ethiopia’s development

The cotton and textile sector has been identified among the top priorities sector that can

create Jobs and earn foreign currency

Free market access to Europe (EBA), America (AGOA), Africa COMESSA

On going process to be member of WTO

The coming global apparel buyers like PVH, H&M, Arvind, etc

Peace agreement with Eritrea access to market and ports (Asseb & Mesewa)

Page 23: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020 23

100 percent exemption from the payment of import customs duty and

investment capital goods and construction materials necessary for

The establishment of a new enterprise

Expansion projects

Upgrading of an existing enterprise are exempted.

Motor vehicles exemption from customs duties

Locally originating or imported raw materials is exempted for exporter

Investment and Export trade Incentives

Page 24: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

Opportunities…Continued

16 February 2020 24

In Industrial Development zone income tax exemption is

10 years in In Addis Ababa and Special Zone of Oromia Surrounding A.A and

15 years in other areas like Hawassa, Mekelle and other industrial parks

Up to 5 years personal income tax exemption for Expatriate employees

Lease rent period in Industrial parks is ranges from 60 to 80 years.

Page 25: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

3.CONSTRAINTS

16 February 2020 25

High cost of production

Limited availability of inputs for cotton farm i.e. chemicals

Absence of transparency in pricing and marketing

Outdated equipment of ginneries (which affect lint quality)

Low quantity & quality of cotton due to poor harvesting and post-harvesting techniques,

transporting, ginnery status, etc

Inadequate and underfunded research

Minimal coordination between segments or across the subsectors

Page 26: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

CONSTRAINTS…continued

16 February 2020 26

weak contractual arrangements between smallholder farmers, ginners and textile

industries

Shortage of inputs, accessories, spare parts, etc

Low productivity due to under capacity utilization, labour related issues, etc

Low integration among the value chain

High transportation cost, delay in Djibouti port

Obsolete machineries, poor maintenance practice,

CMT based market for garment factories

Page 27: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

4.RECOMENDATIONS

16 February 2020 27

For Policy makers

Improve supply of inputs (seeds, chemicals, spare parts, accessories, etc)

Advance service and support delivery system

Strengthen coordination across the sector

Enhance research and development in the sector

Encourage the backward linkage in order to fill the gap

Strengthen the contractual agreement among farmers, ginneries and textile industries

Page 28: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

RECOMMENDATIONS…continued

16 February 2020 28

For investors

There is investment opportunities in the following areas of the sector

Vertical Integration

In cotton farm

Other natural fibers i.e. bamboo, kenaf, silk, wool, flax/linen

Man made fibers i.e. polyester, nylon, etc

In the backward & forward linkage i.e. ginning, spinning, weaving,

knitting, finishing, garment

Fashion marketing

Page 29: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

RECOMMENDATIONS…continued

16 February 2020 29

Horizontal Integration

Development of private or in joint-venture IP for textile industries

Manufacturing of accessories, spare parts, machineries, chemicals, dyestuffs, trimmers, etc

Supply of the above components by bonded ware house

Service delivery in maintenance , consultancy, laboratory, etc

Manufacturing of packaging, etc

Recycling of wasted plastics for production of man made fibers

Page 30: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

5.About Ethiopian Textile Industry Development Institute (ETIDI)

16 February 2020 30

Vision: We aspire to be a world-class institute

that enables the Ethiopian textile industry

competitive in the global market

Mission: Enabling the Ethiopian Textile

Industry competent in the global market by

providing sustained industry expansion,

consultancy, training, research and

development, laboratory service, and

marketing support & service

Page 31: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

About ETIDI…continued

16 February 2020 31

Main Supports and Services of ETIDI

Investment focused supports and services

Capacity building(production)

Market supports and services

policy initiation

Page 32: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

About ETIDI…continued

16 February 2020 32

Fully equipped training facilities

Model spinning factory (under progress)

Model weaving and knitting factory (under

progress)

Finishing facilities (under progress)

Design and Garment training classes and facilities

Modern chemical and physical laboratories

Fully equipped library.

Page 33: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

ISO 9001:2015 Certified ISO/IEC/17025 Accredited

About ETIDI…continued

16 February 2020 33

Cotton is tested in the laboratory Trainees in the knitting workshop

Page 34: Ethiopian Textile Industry: Opportunities and Constraints · Dyeing & Finishing 44 Garment 125 Traditional (exporters) 10 Total 271 ... silk, wool,flax/linen Fast economic growth

Thank You