Skip to main content

Ethiopia: Awassa Textile to Expand

Ethiopian textile company Awassa Textile is set to expand thanks to a 168 million Ethiopian birr ($8 million) loan agreement with the Development Bank of Ethiopia (DBE). The company makes bed sheets, foam mattress covers, school uniforms, work uniforms and threads.

About 134 million birr (about $7 million) of the loan will be used for capital expenditure, with the remainder used for working capital, said Eyasu Atnafu, the general manager of the company, according to All Africa.

Out of all of its products, Awassa’s semi-finished thread products are the only ones to have so far made it to the international market. Kenya is the company’s major export destination, however this expansion is expected to change that, Atnafu said.

The plant currently produces four tons of textiles every day, bringing in 15 million birr ($731 thousand) monthly. But after the expansion, its production capacity is expected to double, reaching eight tons daily, Atnafu said. Awassa’s monthly revenue is also set to grow to about 45 million birr ($2.2 million) as its export destinations expand to Europe and U.S. markets.

In the third quarter of this fiscal year, Awassa Textile generated $26,000 dollars from exports, according to the Ethiopian Textile Industry Development Institute. The company plans to increase its export capacity by making 20 to 30 percent of its total production available internationally, Atnafu said.

The company will hire seven foreign textile experts to help train its 980 employees to further enhance production and efficiency, he added.

In the first Growth and Transformation Plan (GTP) which was created by the Ethiopian government as a strategic framework to help improve the country’s textile sector, the government set a goal of earning $1 billion from textile exports by 2025, Export earnings during the entire first period as well as the three quarters of this fiscal year totaled just $427 million.

To enhance the level of productivity, the government is developing a benchmark that will define the production capacity of an employee on a daily basis, which will also be a standard for calculating wages earned, the corporate communications director of the Ethiopian Textile Industry Development Institute noted.

There are roughly 130 medium and large-scale textile factories in Ethiopia, 37 of them owned by foreign investors. To encourage investors, the government provides various incentives including, duty-free privileges, financial loans and land.