Ethiopia takes full advantage of being low-end textile manufacturing location

Frontier African nations such as Ethiopia are positioning themselves to take advantage of the soaring basic wages as China is looking for low-end manufacturing and have starting to shift to cheaper locations around the world.

Ethiopia is one of Africa’s and the world’s fastest-growing economies, the continent’s most populous nation after Nigeria is building a reputation for producing clothes, shoes and other basic goods with rock-bottom wages, cheap and stable electricity and improving transport infrastructure.

With state investment in factory zones and the arrival of firms from Turkey, India, the Gulf and China suggest industrialisation is finally taking root in the east African giant, where many still rely on subsistence agriculture.

Ethiopia enjoys stability, the government is eager to industrialise and there is also the low labour cost here – a tenth compared to China.

For years, investors gave Ethiopia a wide berth, wary of the heavy role played in the economy by a government that shuns the liberalisation seen in other African nations and which has retained its monopoly on telecommunications and bar on foreigners in the financial sector.

However, in the last few years the commercial logic of factory production has started to outweigh those concerns, and the wider effects are dramatic.

The government is projecting gross domestic product (GDP) growth at 11 percent a year, and even though the International Monetary Fund is more sober its 8.5 percent forecast for this year.