Ethiopia’s first denim mill opens with $50m investment
The first denim mill in Ethiopia was inaugurated last week
Ethiopia's textile industry is the nation's third largest manufacturing industry and a source of growing export earnings – and it now has its first fully-integrated denim facility.
Kanoria Africa Textiles, a subsidiary of the Indian group Kanoria Chemicals & Industries, last week inaugurated the new denim mill – the first in Ethiopia – in Bishoftu, 37km from Addis.
With an annual capacity of 12m metres of denim fabric, the plant has launched with less than 500 workers, but the plan is to ultimately employ some 2,000 people in Ethiopia.
It will initially cover the entire process from raw cotton, through to yarn, dyeing, weaving and finishing, with the fabric sold to manufacturers of jeans, shirts and other denim garments.
RV Kanoria, chairman and managing director of Kanoria Chemicals, says US$44m has already been invested into the project, with an additional US$6 to be invested as working capital.
He told CNBC-TV18 that the company has an 80% stake in the plant, with the remaining 20% held by Hong Kong-based Fung Capital.
The investment leapfrogs earlier plans by another Indian denim giant, Arvind, which had intended to build a denim plant in Ethiopia, and then to manufacture 5m shirts annually in an all-women factory in Addis Ababa.
But its plans changed, and in March 2015 Arvind started manufacturing denim bottoms, with an output of 12,000 pieces per day, in the textile industrial zone of Bole Lemi, near the airport in Addis Ababa.
Exports are for now destined for the US, but negotiations are underway with potential European customers like H&M and Benetton.
Head of operations, Anuj Kumar Sing, told just-style that in the meantime, Arvind is working on setting up an integrated supply chain in Ethiopia, starting from cotton cultivation to spinning and weaving.
Over recent years there has been an increasing amount of interest in Africa – and Ethiopia in particular – as a country with potential as a source of textiles and clothing.
Ethiopia grows some of the world’s finest cotton and has a rich textile spinning and weaving history, yet its importance on a global scale remains insignificant.
According to the government’s Growth and Transformation Plan launched in mid-2010, during the fiscal year 2013-14 Ethiopia’s textile and apparel exports should have been worth US$435m. However, exports reached just one-quarter of this, at US$112m in 2014.
Yet with several government incentives in place, a priority for developing the textile and clothing industry value chain, a viable business environment and duty-free market access to both US and EU, Ethiopia is now beginning to attract international buyers and investors – as was very much in evidence at last week’s ‘Origin Africa’ event.
Click on the following links for more reports from last week’s 'Origin Africa' event:
- All eyes on Ethiopia as an emerging sourcing hub
- Ethiopia textile and apparel investments accelerate
With additional reporting by Jozef De Coster.
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