Middle East firm to set up $80mn garment unit in Ethiopia

06 Jun '14

2 min read

A Middle East-based textile company is going to set up an integrated garment factory at a cost of US$ 80 million in Mekelle town, the capital of Tigray region in Ethiopia, reports Addis Fortune.

The company, Velocity Apparel Plc, which has factories in Egypt, Jordan and the United Arab Emirates, has already secured 100 hectares of land in Mekelle, about 780 km north of Addis Ababa. It has also received a loan from the Development Bank of Ethiopia for establishment of the garment manufacturing factory.

Established in 1990, Velocity Apparel supplies its products to well-known international companies like Gap, Target and Walmart. In 2013, it clocked a turnover of $100 million.

The construction of the new garment factory would be undertaken in three phases. The first phase, which is expected to commence in few months, would be only for garment production. This would cost about $30 million and take about one year for completion.

In recent months, foreign companies are making a beeline to invest in Ethiopian textile and garment sector. Among them is India-based ShriVallabh Pittie (SVP) Group, which is setting up a $ 550 million spinning mill in Kombolcha town, located in the Debub Wollo Zone of Ethiopia’s Amhara region.

Turkish textile manufacturing firm Akber has also announced investment of $175 million to set up a textile plant in the Ejere town of the Oromia region.

Last month, China-based textile company Zhejiang Jinda Flax Llc signed a memorandum of understanding (MoU) with the Ethiopian Ministry of Industry to set up a textile industrial zone in the Bole district of the capital Addis Ababa.

As per the MoU, the Ministry and Zhejiang Jinda Flax would jointly set up a new company by the name of Kingdom Linen Textile Industrial Zone, which would oversee the construction and development of the textile industrial zone project.

At present, Ethiopian textile and garment industry comprises of 115 factories that together employ 40,000 people.

Under the Growth and Transformation Plan (GTP) of the Ethiopian Government, the target for textile and garment exports is set at $1 billion by 2015. In comparison, Ethiopian textile and apparel exports stood at $99 million in last fiscal year.

In the first nine months of the ongoing fiscal year 2013-14 that began on July 8, 2013, Ethiopia exported $84 million worth of textiles and apparel, according to the Textile Industry Development Institute.

Fibre2fashion News Desk - India