TRALAC - Trade Law Centre

Ethiopia: US clothing brands to scout for local producers

Tuesday, 12 April 2011

Source: Addis Fortune

Amid increasing demand from the international market, Ethiopia is preparing to become the new frontier for the textile and apparel industry. Many buyers from the United States (US) are looking for local suppliers of new apparel fabrics.

With the support of USAID’s Competitiveness and Trade Expansion Programme (COMPETE), it is planning to invite four buyers from the US retail market to Ethiopia. They previously focused on working with the textile and garment industries in China, but due to the increasing cost of cotton on the world market, the cost of apparel production in China is also increasing significantly.

The prospective buyers are searching for another supplier country that could be less expensive and easily accessible, according to Finn Holm-Olsen, director of USAID’s East and Central Trade Hub.

Charity USA, Swahili Imports, Global Girl Friends, and Eileen Fisher will visit Ethiopia between May 17 and May 21, 2011.

The companies primarily purchase home decor and personal accessories ranging from the mid-value price range to high-end products.

“USAID, in collaboration with other interested bodies, are making an effort to change the perception about doing business in Africa,” Holm-Olsen said.

The visit from the four US apparel buyers to Ethiopia is part of this arrangement.

They are small to large US brands and after visiting Ethiopia they plan to visit Uganda and Tanzania, according to Tewodros Wesenyele, marketing coordinator for USAID’s African Growth and Opportunity Act (AGOA) Plus project.

AGOA offers African countries the opportunity to export certain products to the US duty-free.

“With the collaboration of COMPETE, we are working hard to meet the demand, but not hard enough,’’ said Kassaye Mekuria, president of the Ethiopian Textile and Garment Manufacturers’ Association (ETGAMA), during a workshop titled, “Integrating Design and Marketing,” held at the Sheraton Addis on Wednesday, April 6, 2011.

COMPETE aims to increase the global competitiveness of African companies by reducing barriers to trade, increasing competitiveness and market access in selected value chains, and increasing trade and investment between the US and Eastern and Central Africa.

The panellists during the workshop were Kassaye; Holm-Olsen; Fikirte Addis, winner of the “Origin Africa: Fibre to Fashion 2011” clothing design competition that was organised by USAID; Addis Alemayehu, chief of party for VEGA Ethiopia; and JC Mazingue, apparel advisor for COMPETE.

“The most vital question in this regard is, ‘Are we ready for the approaching overflow?’” Kassaye asked.

The performance of Ethiopia’s textile and garment industries does not seem to welcome new opportunities, he explained. Ethiopian products are usually late in arriving to the US, and the buyers do not accept late deliveries, according to Kassaye. Local manufacturers do not produce in bulk, something the market demands, he claimed.

These shortcomings must be set right for Ethiopian manufacturers to benefit from the apparel export opportunities available under AGOA, the president of ETGAMA recommended.

To solve the problem, COMPETE is working closely with manufacturers, designers, and cotton producers in Ethiopia to help them reach the world market in the quantity and quality that would help them be competitive, according to Mazingue.

Many countries eligible to use AGOA have registered less than one million dollars in US bound exports annually under the project. Nigeria, Angola, South Africa, and Gabon have been the major beneficiaries of the opportunity since it started. Recently, Lesotho, Madagascar, and Kenya have also started to enjoy a larger market share.

Although bilateral trade in the general market between Ethiopia and the US dropped sharply after 2002, there are indications of an increment in apparel exports through AGOA during the same period.

The trade balance between Ethiopia and the US shows an enormous gap, according to recent statistics published by the Ethiopian Revenues and Customs Authority (ERCA). In 2010, Ethiopia earned 96.9 million dollars from exports to the US, while it imported 446 million dollars worth of US products, according to the statistics.

Ethiopia is ranked 15th in apparel exports to the US under AGOA, according to research conducted by the US International Trade Commission (USITC).

Ethiopia’s exports to the US through AGOA were estimated at 11.6 million dollars in 2009, but decreased to 10.4 million dollars in 2010, a four per cent decline.

Knitted and woven shirts cover only between 33pc and 13pc of the US apparel market, respectively, Mazingue pointed out at the workshop. Ethiopian textile and garment manufacturers must place the necessary emphasis on those products to develop their capacity, according to Mazingue.

To maintain its goal, COMPETE is working with local designers under the Origin Africa programme, which supports them to catch up with the international market.

The major purpose of the project is to help local designers learn to integrate designing with marketing, the panellists agreed.

The most recent Origin Africa competition in Mauritius was won by Fikirte, a local designer, who shared her experience with attendees at the workshop. She is on her way to participate at the New York Fashion Week.

This exposure could also attract new buyers, according to Kassaye.

Since the country imports much of its unfinished garments from abroad, the textile and apparel factories are exposed to unnecessary expenses that could be saved if the sector’s capacity improved, according to Kassaye. Only MAA Garment Factory, AYKA ADDIS Textile & Investment Group Plc, and Almeda Textile Plc can use their own raw materials, Kassaye claimed.

Ethiopia’s current cotton production barely meets the demand of the 13 existing textile factories, despite plans of the Ministry of Agriculture (MoA) to increase the annual production from around 27,000tn to 98,000tn over the next five years.

Only 21,000tn of cotton is produced annually but the demand is between 48,000tn and 52,000tn, according to Esayas Kebede, director of investment at MoA.

Recently, the export of cotton was banned by the government as a temporary solution to meet local demand.



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Ethiopia's bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.




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