18 October 2017

Africa: 'Country Has Become Africa's Investment Hub for Textile and Garment Industry'


Ethiopia's non-oil driven rapid economic growth, which has got recognition by international financial institutions is attracting more Foreign Direct Investment (FDI) to the country. The government's massive infrastructural development projects such as industrial parks, roads, railways, airway, electricity and telecommunications are also widely believed to be major factors in drawing FDI. In an exclusive interview with The Ethiopian Herald, Ethiopian Investment Commission Commissioner Fistum Arega said Ethiopia has become Africa's investment hub for textile and garment industry supported by its aggressive development and expansion of industrial parks. The Commissioner further noted that considerable investments have been gained during the State of Emergency and flow of FDI was not seriously affected by the past unrest. Excerpts:

How do you describe Ethiopia's performance in attracting FDI in the 2016/17 fiscal year?

Ethiopia has attained significant investments during the last fiscal year and it has obtained 4.18 billion USD from FDI. The amount has exceeded what was gained in the previous year by over 900 million USD and hitting 93 percent of the plan.

Seeing how last year Ethiopia was challenged by an El Niño induced drought and unrest in some parts of the country, the success is worth admiration. In this regard, the country's viable investment policy and foreign investors' trust on government's capability to maintain peace and order are the major factors for the result.

Looking at the performance of each sector, the manufacturing sector in general and the textile and garment industry in particular had better achievements in attracting FDI in the last fiscal year. This is due to the fact that Hawassa Industrial Park, which is set to involve in exporting high- quality products to international markets lured major textile companies across the globe and more investments are coming into other parks including Bole Lemi I, Kombolcha and Mekele.

Furthermore, Adama I and Dire Dawa I industrial parks, whose construction is set to be completed very soon are expected to specialize in the textile and garment industries. As a result of this, Ethiopia has become the second largest destination for textile and garment industries next to Vietnam and Africa's investment hub.

The Commission is working to benefit from the huge industrial parks developments and utilize the abundant labor force to enhance country's competitiveness to attract more FDI in the sector.

Would you tell us where the investors come and their focus areas?

The majorities of the companies are engaged in the manufacturing sector, particularly in the textile and garment industry and they are primarily came from Asia. China and India taking the lead as they are among the world's largest textile and garment producers and exporters. This does not mean that Ethiopia's industrial parks are solely occupied by few countries. If we look at Hawassa Industrial Park, currently companies from Spain, Sri Lanka, Indonesia, USA, Taiwan and France have been involved alongside the Chinese and Indian firms.

How do you describe the contribution of these investment projects in bringing foreign currency and enhancing technology and knowledge transfer?

In its endeavor to attract FDI, the Commission is identifying three major goals such as bolstering foreign currency earnings, providing jobs and creating knowledge and technology transfer. Foreign-owned companies in the industrial parks are set to fully engaged in exporting high-end products to the international markets thereby boosting the country's foreign currency earnings. The investment projects are also contributing to transfer of knowledge and technology and would enable Ethiopian employees to acquire the desired skill in the process. We encourage companies to invest in labor-intensive projects including textile and garment that would provide massive job opportunities for the youth with a particular emphasis to females. The fact that women consist up to 80-85 percent of jobs in the textile and garment industry and floricultural sector shows that the country is in the right track in terms of ensuring women's economic participation and benefit and consolidating the feminization of workplaces.

How do you evaluate the role of Ethiopia's diplomatic missions in attracting FDI?

Our missions abroad are partnering with relevant bodies to promote Ethiopia's investment opportunities to potential stakeholders and encouraging them to invest in the country. The missions have also been instrumental in seeking new markets and consolidating the existing ones.

What is Commission's plan for the 2017/18 fiscal year?

We have set a target to obtain 4.5 billion USD from FDI in the current fiscal year taking advantage of the huge industrial parks development and encouraging the private sector's involvement in the endeavor. The Commission is working to attract foreign companies to the existing industrial parks and inspiring them to get involved in the parks' development and expansion activities. As a result, we have seen significant outcomes in that a Chinese company with an estimated investment capital of one billon USD seized plot in the nearly-completed Adama I Industrial Park and an Italian firm picked up land for factory in the Kombolcha Industrial Park.

The government has been paying due attention to keep this momentum going, and has been providing export incentives, customs duty exemption, income tax holidays and land in competitive lease price for foreign investors and encouraging them to build new industrial parks.

Our branch offices in the industrial parks are working in concert with various stakeholders in providing land, electricity, water and other amenities for investors. Through one-stop-shop service, the Commission's offices have also been facilitating conditions for foreign investors to obtain visas, work permits and other licenses.

Furthermore, Ethiopia has been made periodical investment policy amendments and massive infrastructural developments that would enhance its global competitiveness in luring FDI.


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