Ethiopian fails to achieve textiles exports and production target set in GTP I

The Ethiopian Textile Industry Development Institute (ETIDI) fails to achieve its export and production targets by more than half. It planned to export a billion dollars worth of products but managed only 456 million dollars. It also targeted 2.5 billion dollars in gross value of products (GVP) but achieved only 1.2 billion dollars. ETIDI has had an unsuccessful five-year period with its first Growth & Transformation Plan (GTP I).

According to the Institute, the major challenge is the low production of cotton, Ethiopia cultivated cotton on 75,000ha of land in 2010/11. It planned to cultivate 265,000ha by the end of 2014/15, but it managed only 125,000ha.

The productivity of cotton per hectare reached 1.7tn, growing from the initial 1.5tn in 2010/11. However, the productivity target was to reach 2.5tn per hectare.

Because of the shortage of cotton in the country, the demand and the supply could not be matched with 32pc gap seen in the first GTP period.
Local production of cotton in the year 2009/10 was 2,500tn, which was equal to the demand of the textile factories and the production had increased to 52,700tn, while the demand was at 33,300tn, creating surplus in the market in 2010/11.

The following year, the production surged to 79,500tn while the demand stood at 39,000tn. In 2012/13 production fell by more than half to 45,200tn, while the demand increased to 65,100tn. The trend continued the following year, with production falling to 33,500tn, 45pc of the 74,200tn demand by factories.

Bantihun Gessese, Communications Director of ETIDI said that although the export target was not achieved in the GTP period, there were good sides of the industry that they consider as their successes. The export revenue of 100 million dollars from the 23.2 million dollars in 2010/11 and the skill transfer to local workers by working for such employers as Ayka Addis are considered to be big successes.

As per the report by the Institute, lack of diversification in products, the quality and limited productivity affected the export performance. The average productivity capacity usage of the textile factories in the country was 40pc in 2010/11 when the GTP started and the plan was to reach 90pc by the end of the GTP. But it only grew to 60.5pc by 2013/14 and 67pc by 2014/15. Garment factories capacity utilization stands at 54pc.

A report from the Ministry of Industry (MoI), which reviewed the GTP performance up to the 11th month of the last year of the GTP, attributed the problem to frequent power blackouts.

In the fiscal year, the electric cut in the textile industries totaled 945 hours with Ayka Addis leading with the longest cut for 253 hours. Bedesta Industries follows with 140 hours, Adama spinning factory with 106 hours.

In addition to the electric power problems, some foreign companies, such as Elsi Addis, E-tour and MNS, were penalised for selling their products to the local markets. The penalty included, according to Bantihun, revoking their duty free incentive and imposing income tax on their foreign employees.

The GTP’s target of getting 48 new investments in the textile sector and creating 40,000 jobs also had modest success of 27 investments with 27, 806 jobs.

Bantihun said that the second GTP plans to take export to 2.5 billion dollars mark with production growing to 8 billion dollars and creating 99,653 jobs in the textile industry by 2019/20. The plan is not ambitious; as achieving this will be very easy with nine companies in the pipeline that will start production this year.