Textile Sector Revenue Growth Falls Way Short of Government Targets

The Government has reported 29 million dollars in export revenue from the textile sector for the first, quarter of the 2013/14 fiscal year, over 50pc better than the same quarter a year ago, but likely to fall widely short of the annual target of 500 million dollars.

The revenue for the first quarter of 2012/13 was 19 million dollars; that year, the annual total revenue of 99 million dollars was way short of the 357 million dollars the government had targeted.

The Ethiopian Textile Industry Development Institute (ETIDI) expects factories to boost their production, in order to meet the half a billion dollar goal; bot the export targets set for each company are still not determined, however. This is affecting the production outputs, according to a source at the ETIDI who spoke to Fortune anonymously.

“We are getting closer to the fifth month of the budget year,” said the source. “The plan that outlines the share of export set for each company is, however, still under preparation.”

Modifications to the original plan had to be made since some companies are expanding and others are revising their targets, according to Bantihun Guessesse, acting corporate communication director at the ETIDI. That the revised targets are yet to come is of little concern for him as production is ongoing.

“To materialise our plan, we aim to raise the production capacity of factories to 80pc,” he said. “Some textile factories, like AYKA Addis, Kombolcha and Bahir Dar, have achieved this level of production after executing expansionary works.”

The textile sector is currently functioning at around 50pc of its production capacity.

Despite delays in revising plans and the low level of the production capacities, however, some in the sector feel that the problem lies in the government’s unrealistic targets.

“We do not agree with the government’s plan, which puts our export target at more than our capacity,” said Fassil Taddesse, CEO of Kebire Enterprise and president of the Ethiopian Textile & Garment Manufacturers’ Association. “We have so many problems that need to be addressed before expecting so much from us.”

He lists a number of problems, including the costly and time consuming import of spare parts by plane, and the shortage of inputs. This is in addition to regular power interruptions.

While Bantihun defends that the plan was based on research and the proposed export amount is not exaggerated, a macroeconomist at the Addis Abeba University (AAU) who previously talked to Fortune gives support to the concerns of the Association.

“The plan set by the government for the manufacturing sector is too ambitious and not based on a planned assessment,” he had claimed. “Rather, it is built on the figures of other middle-income countries.”

The ETIDI was established four years ago with the aim of facilitating the transformation of the country’s agriculture-led economy to industrialisation. The Growth & Transformation Plan (GTP) envisions creating 40,000 job opportunities in the textile sector by 2014/15, and hopes to reach one billion dollars in textile export revenue in the same year.

In addition to the 58 mid-sized factories that joined the sector during the past quarter, the ETIDI also places its hopes on new large textile companies, like Angels Addis and Etur Textile Plc, in order to meet the target. There are currently 110 textile companies in the country.


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