Over the last couple of years, Ethiopia has been continuously emerging as a point of attraction for European countries. Most European and US-based companies are taking a keen interest in sourcing apparel from Ethiopia. It has all the potential of becoming a dominating garment supplier in the global market. If you are running a business and thinking about Ethiopia sourcing, you need to learn about the textile industry in this country and the challenges of sourcing from this country.
Being the second most populous nation in the African continent, next only to Nigeria, is the abode of 104,6 million people. The Ethiopian economy is based on agriculture. For more than five years, the government has been diversifying the garment and textile manufacturing export sectors of the country to convert the country’s agriculture-based economy into an industrialized economy. In 1939, the first garment factory was developed in this country. In the last five years, the country reportedly witnessed a double-digit hike of almost 55%. Moreover, more than 65 global textile projects have acquired licenses for foreign investors in these five years.
In Ethiopia, textile suppliers have been experiencing remarkable developments. A worldwide escalated demand for textile products is an outcome of the plenty of raw materials available in the country. Other reasons for which sourcing companies take a keen interest in Ethiopia are:
- Availability affordable labors
- Working-age population size
- Low energy costs
Multiple joint trade agreements
The government has been putting efforts into representing the country as an alluring sourcing hub for foreign investors. Many initiatives have already been taken, such as the Growth and Transformation Plan (2015-2020). This plan escalated exports to more than 1 billion USD by the end of 2020. It has created nearly 350,000 jobs in the textile industry. Other initiatives are the Africa Growth and Opportunity Act, the Common Markets of East Africa, and many other free trade agreements.
Moreover, Ethiopia sourcing has witnessed 80 years of development. Over time, it has been converted from one of the most undeveloped textile markets to a flourishing industry having envious revenues. The growth of the textile industry has also contributed to the GDP of the nation by delivering around 41$ million worth of exports in the 2015-2016 fiscal year. An article written on the current state of Ethiopia has revealed that the country generates mostly formal garments for the local market. On the other hand, a huge number of customized shirts, suits, and formal wear are supplied to the national and foreign markets.
Challenges of Ethiopia Sourcing
One of the critical challenges reported by the textile industry of the country is the lack of skilled human resources. Though the country has an abundance of laborers, most of them need proper training and skills. The employee turnover rate is very high while the productivity levels are low.
Lack of uniformity is another challenge. Both the suppliers and their employees should be well aware of the social compliances and maintain them strictly.
Bottom Line
Despite these challenges, sourcing companies are eager to invest in the textile industry of the country as it has a bright and impressive prospective and abundance of raw materials.