The Japanese conglomerate says the Ethiopian textile industry has not yet reached a level sufficient to be competitive in the global market

The Japanese conglomerate says the Ethiopian textile industry has not yet reached a level sufficient to be competitive in the global market

Japan's Itochu Corporation has signed an agreement with the Ethiopian Textile Industry Development Institute and the Ethiopian Investment Commission to further develop the African nation's growing textile and clothing industry. 

The Tokyo-based company declined to comment on the scale of the financial investment in the project but did confirm that it is part of the firm's global expansion plans. 

It intends to actively help improve the quality of textile products made in Ethiopia and increase local manufacturers' productivity in order "to utilise the Ethiopian textile industry as a production base for the Japanese market, which requires particularly strict global quality management." 

"We will send experts to consult and provide know-how to local producers," a spokesperson for the company, told just-style. "This will be in the areas of quality management, industrial sewing and inspections of work-in-progress and finished garments."

Itochu also plans to promote the sale of finished garments from Ethiopia overseas, including in Japan. 

And it will set up a quality assurance system for export-destined clothing and textile items before they are shipped from Ethiopia to Japan, working with local partners to establish operational procedures and to ensure that garments meet the standards expected by Japanese consumers, the spokesperson says. 

The project began in August but there is no time limit on its operations. 

Productivity boost

Gessesse Bantiyihun, communications affairs director at the Ethiopia Textile Industry Development Institute (TIDI), says the agreement will help dozens of textile and garment factories boost their productivity and improve textile quality. 

TIDI is the government institution tasked with supporting Ethiopia's nascent textile and garment sector.

"There are currently over 200 medium and large textile and garment factories in Ethiopia, many of them locally owned, but which have a problem of being globally competitive and manufacturing quality products," Bantiyihun told just-style.

"The agreement can help these firms improve their production process, the services they give and diversify the number of destinations for their exports."

TIDI supports Ethiopian textile and garment factories in areas such as technical support, technological transformation, research development, marketing research, product quality, benchmarking, environmentally sustainable activities, and counseling services, and the partnership with Itochu will help boost productivity and efficiency in these areas.  

Ethiopia's textile sector was worth US$109.3m in the 2017-18 fiscal year and "Ethiopia earned US$135m in the 2018-19 fiscal year, which ended on 8 July," Bantiyihun says. "The country hopes to generate US$254m from the textile and garment sector in the 2019-2020 fiscal year," he adds.

"The agreement with Itochu is expected to speed up the technological transformation and overall growth of Ethiopia's textile and garment sector,"

Expanded business

Itochu has already expanded its business in China and other parts of Asia, sharing knowledge and best practice with organisations and companies in those regions. It says it aims to help to foster and develop Ethiopia's textile industry by working with Ethiopian businesses and to increase textile exports to Japan.

Itochu's Textile Company business unit extends from raw materials to finished products, and from fashion to industrial materials used in the hygiene, automobile interior, electronics and building sectors.

It is evolving from an original equipment manufacturing (OEM) business only engaged in manufacturing into an original design manufacturing (ODM) business covering everything from product development through to production. Its production (both in Japan and overseas) includes men's and ladies' fashion, casual clothing, sportswear and underwear as well as uniforms and work clothes.

Recent investments have been in Jeplan, a company possessing manufacturing technology for recycling polyester, and a joint investment with Shandong Ruyi Science and Technology Group in The Lycra Company. 

Going forward, "we will expand our own raw materials brand, develop original materials, and leverage our manufacturing foundation in China and other parts of Asia...to provide the world's leading retailers with a one-stop service spanning raw materials to product manufacturing," the firm says.

Potential investments

As reported on just-style last month, Chinese industrialists from Kunshan city, a major clothing manufacturing centre in southeastern Jiangsu province, have also been eyeing potential investments in Ethiopia's Dire Dawa Industrial Park.

Through its five-year 'Growth and Transformation Plan' (GTP-II), which runs to 2020, Ethiopia plans to construct 15 industrial parks with a budget of more than US$1bn. And in recent years, more than 70 garment manufacturers from Bangladesh, China, India and Sri Lanka have begun setting up factories in Ethiopia to produce garments for Western brands.

These investors are drawn to Ethiopia by a range of factors, including base wages as low as $26 per month – the lowest wage in the global garment sector – a large and young workforce, relatively low levels of corruption, and a potential, but as yet undelivered, supply of locally grown African cotton

However, a recent report by the NYU Stern Center for Business and Human Rights found that worker turnover and unrest is undermining Ethiopia sourcing, and that the country's efforts to attract international investment in clothing manufacturing is failing the Ethiopians who work in factories making apparel for some of the world's biggest brands.

Its findings are based on interviews with workers at several factories at the flagship Hawassa Industrial Park located 140 miles south of the Ethiopian capital of Addis Ababa. The park currently has some 25,000 employees and is supposed to grow to 60,000. Factories here produce for brands and retailers including Levi Strauss, Guess, PVH, H&M and Hanesbrands.

The report's authors subsequently shared their advice on just-style on How to support a virtuous sourcing circle in Ethiopia.

The International Labour Organization (ILO) last month launched a programme to promote decent work and inclusive industrialisation in Ethiopia – with an initial focus on the garment and textile industries. And a new EU-funded project aims to help some 21,000 cotton farmers, rural workers and garment workers in Ethiopia.

With additional reporting by Elias Gebreselassie.