Ethiopia: Abay Industrial Ventures Into Garment Industry

Abay Industrial Development S.C., the economic wing of Amhara Regional State, has set up its fourth manufacturing plant in Gonder town for 452 million Br.

Abay Garment Factory, located 500Km north of the capital, rests on four hectares of land with three sheds each covering 4,618Sqm of land. The plant will make polo shirts, T-shirts, trousers, jeans and khaki trousers. Having a production capacity of 26,000 pieces a day, the factory is expected to create job opportunities for 565 employees.

Expected to commence operations at the end of January, the company is currently giving training to its human resources team.

Amhara Building Work Construction Company, the regional construction firm that engages in the construction of roads, bridges and factories, constructed the plant. Amhara Urban Development Bureau supervised the project.

Abay imported the sewing machines from Japan at a cost of 2.1 million dollars. Other finishing and cutting machines were also imported from the United States, Japan, Vietnam and Turkey for 3.4 million dollars.

JUKI Corporation, a Japanese manufacturer of industrial sewing machines since 1938 that recently opened branches in Ethiopia, has installed the sewing machines. Value Technology, an Egyptian company established in 2003, installed the cutting machines and other related work.

"Once the plant becomes operational, we've got a plan to export our products to Europe and the United States," said Telayneh Webneh, project manager of Abay Garment, which has been under construction for the past three years.

The garment plant is the fourth manufacturing set up for Abay Industrial, a public-private partnership formed with four billion Birr in registered capital raised from about 516 investors and state-owned enterprises in the Amhara Regional State. It is also engaged in the construction of a cement factory, a cold steel rolling mill and a sugar factory.

The cement plant is under construction in Eastern Gojam Zone, Dejen Wereda, Amhara Regional State at a cost of the 8.8 billion Br. The construction commenced in March 2019. Abay Industrial is also in the process of hiring contractors for the metal and sugar factories.

Abay Garment will join the 140 companies registered to manufacture textile and garment products in Ethiopia. In the first half of the last fiscal year, the garment industry generated 12.9 million dollars from exports, which accounts for only one percent of the total 1.2 billion dollars the country earned from overall exports during the same period.

"Power interruptions and finding drinking water for workers are the main challenges we're facing now," Telayneh said.

Henok Semaw, an assistant professor and dean of business and economics at Harmaya University, applauded the construction of the company in terms of creating job opportunities and generating foreign exchange from exports.

Henok also notes that the government should set a minimum wage, since most of the employees in the garment industry complain about lower salaries.

"Besides developing a hard-working environment," said Henok, "the company should continue giving training."

Mulugeta G. Medhn (PhD), a lecturer at Addis Abeba University's School of Commerce, also recommends the government work on electric power supply to create a suitable investment environment in the country.

"There has to be a policy that prioritises dedicated electric power, especially for massive investments," Mulugeta said.

Mulugeta also says that to support the infant garment industry in the country, the government has to have an incentive package for local manufacturers.

"To compete in the global market," he said, "the local manufacturers should create a joint venture with the foreign manufacturers to acquire experience and technology. "

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