Daily Maverick (Johannesburg)

26 August 2013

Ethiopia: Does H&m's Investment in Ethiopia Finally Signal the African Manufacturing Boom?

analysis

Dirt-cheap manufacturing has fuelled Asia's majestic growth over the last few decades, but all good things must come to an end. With Asia getting more expensive, western companies are looking for alternatives. In Ethiopia, Swedish clothing giant H&M thinks it has found one. Is this the beginning of Africa's manufacturing boom?

No one really wants to make things in Africa. This is a generalisation, but it's a fair one. As a rule, African countries are not known for their manufacturing prowess, and there are a couple of good reasons for this.

There's the image problem, for a start. Too often Africa is seen as a continent of conflict, corruption and instability, none of which is conducive to long-term big capital investments. Then there's the competition: Asian countries, particularly China, India, Bangladesh and Vietnam, have perfected the art of producing things in the fastest possible time at the lowest possible price. These countries make most of the world's stuff, and have fuelled their own growth in the process. Quite simply, manufacturing in Africa is more expensive than elsewhere, and when it's not, it's perceived as too risky.

But the times they are a-changing. With the general increase in...

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