Ethiopia envisions USD 1bn revenue from textile export in GTP II

The Ethiopian government extends attractive incentive packages to boost production of the manufacturing industry subsector in an attempt to make the nation a major exporter of textile products.

The government’s incentive is provided for private sectors so as to attract more investment in the sector with 100 percent duty free importation of machineries and equipment.

Similarly, duty free importation of spare parts of 15 percent of capital goods for the first five years of operation, the possibility to hire expatriates free from income tax provided they stay for no more than two years, and reconciliation of VAT for materials purchased locally during the project period is possible if declared in six months time are included among the incentives provided by the government.

During the second phase of the growth and transformation plan, Textile Industry Development Institute (TIDI) said that they have targeted USD one billion in annual revenue from textile and garment export.

Silesh Lemma, Director-General of the institute, at a workshop held at Intercontinental Hotel last week organized to sensitize manufacturers over Ethiopia’s plans for the sector said that they are working to be a leading country in light manufacturing in Africa which will lay the foundation for heavy and high tech industries by 2025.

According to the director, more than 152 new investments are expected during GTP II while at least USD one billion is anticipated from the sector’s export coupled with more than 170,000 job opportunities.

The Director-General also indicated that the Development Bank of Ethiopia (DBE) extends a 70 percent loan against 30 percent equity contribution in-cash by the investor (in-kind contribution policy revision is underway) for green field investment. In addition, DBE further extends a 60 percent loan against 40 percent equity contribution in cash or in kind.

In order to realize the ambitious plan, the country is building over ten industrial zones all of them are state developed.

Textile Industry is considered as a number one priority by the Government’s Industrial Development Strategy even during the current GTP which ends in June 2015.

However, the sector’s performance has not been to the satisfaction of the government during the GTP period with annual earnings from export not exceeding USD 100 million with shortage of raw materials, inefficiency, and lack of technological applications, among others affecting the sector. But the government insists that the future for the sector is bright.