Ethiopian govt to sell all its shares in companies jointly owned begins with Saygin Dima Textile Factory

The Ethiopian government sells all of its shares in the Saygin Dima Textile Factory S.C. to its Turkish private sector partner company Saygin. The Turkish company will pay 563 million Br over five years for 90pc of the value of the government’s share.

The Privatization & Public Enterprises Supervising Agency (PPESA), established the textile factory in partnership with Turkish investors in 2009, with a capital of 78.5 million dollars. Originally, the government owned 60pc of the company, while Saygin, a Turkish company, owned the remaining 40pc.

Saygin Dima was named after the Turkish company Saygin, and after Dima, the Kebele at Sebeta in the Oromia Special Zone where the company is based.

In April 2014, Saygin requested full ownership of the company from the Agency, which accepted the proposal following the approval of the Prime Minister’s Office in June 2014. Conditions for transfer of the government’s share involved a 10pc down-payment, with the remaining funds to be paid over five years.

The Turkish general manager of Saygin Dima, Fatih Mahmet Yangin, said that they are in the legal process of transferring the company to private investor ownership.

Saygin Dima became operational in January 2011, after securing land and building its factory in Sebeta, 24km southwest of Addis Abeba in the Oromia Zone. At that time, this was the first factory in Ethiopia to produce acrylic yarn, which is currently wholly imported.

The company employs about 600 Ethiopians at its plant, which spins, weaves and dyes natural and synthetic fibers. The production capacity of Saygin Dima is 30tns of yarn, 40,000m of fiber and 50,000m of finished fiber daily, but the factory is currently only operating at 30pc of its capacity. The factory was established with a requirement to export at least 45pc to 50pc of its products to the international market.

As of January 2014, sixteen textile companies from Turkey have obtained licenses for textile manufacturing in Ethiopia. These projects are currently at various stages of implementation, with some factories still under construction while others have already started production. Overall, there are currently 40 industrial-scale textile factories operational in Ethiopia, in addition to a number of smaller textile production facilities.

According to PPESA official, the Ethiopian government decided about a year ago to sell all of its shares in companies that it jointly owns. The government is currently in negotiations with several co-owning entities.

In the PPESA’s first round of auctions this fiscal year, involving six companies and one warehouse, the government succeeded only in the sale of the warehouse, which was part of the Ethiopian Fiber Products Enterprise. In the second round, announced a month ago, the Agency has offered three enterprises for auction, while it wants a negotiated sale for two additional textile factories located in Kombolcha and Bahir Dar.

The Ethiopian government has recently established the Ethiopian Industrial Inputs Development Enterprise (EIIDE), which will supply inputs to the manufacturing sector through local production or by national and international procurement.

The government was expecting export revenue from the textile industry of 350 million dollars in 2013/14, but ending up generating only 133 million dollars due to the poor supply of cotton.