Interview with Mr Kassaye Mekuria

Indeed the association is a very important organ of the members to voice their demands and at the same time be a pivotal point for the entire sector’s performances data collections. However to make fruitful results it needs the effort of all members and office bearers to sacrifice their busy hour consistently to the activities of the association. I think there is a lot to do for industry. The association being young has to look further for better performance to alleviate the various problems encountered by the sector.

Yes, this is an important sector. In fact Ethiopia has about 2.3 million hectares of land good for cotton cultivation. Only about 3% of this is cultivated at the moment. Thus the chance for the expansion of the cotton plantation is a potential advantage for the sector. Presently the cotton shortage is at its highest and the cotton price is sky rocketing. The cotton produced domestically is not enough for the local textile factories. This is another bottle neck for the textile factories to run at full capacity.

I am afraid that the plan and the performance had not matched because of several reasons. The plan to export has not been fulfilled because the export market demands high quality performance in respect to productivity, quality and delivery. In all these three points the sector is not yet competitive enough to achieve the goal. Productivity and quality are achieved through continuous operation and needs time to attain it. Timely delivery is another challenge that industry confronts as it involves several operators who at times fail to respond to the international time level. Paper work in the Customs, transit offices, container searches, inland haulage and days spent in the port are factors that makes the delivery times a difficult factor. Moreover, all this factors cumulatively make the export business very much problematic and end up in loss. The whole chain of activities does not make the factories beneficial and the driving force of attaining positive figures are missing whereby motivation of the working force is missing that ends up in low performance. The majority of the export was supposed to come from the garment side and this sector did not operate well as a result of points discussed above. It is also a point that the buyers do not know much Ethiopia and its textile business. Now it is better than the past days.

Yes. I could say capacity to deliver is the main point. In actual fact, we have the potential to do it, but the way the business is handled has big holes here and there. I am sure we have analyzed the problems and the solutions too and for sure the industry will grow.

In order to improve the performance of the industry, there are a number of points needed to handle but the most important ones are: The industry policy in general is good, but some details like duty structure, incentive systems have to be designed to support the manufacturing sector better than the existing policy. The financial sector service has to be majorly improved. It should be fast and efficient. The manufacturing sector, at the moment, has little or insufficient support of adequate working capital. The bureaucratic operation chains in the supply which consume a lot of time have to be shortened and improved. The supply of human labor has to be prepared for the industry and schools and special training facilities have to produce enough labor force for the industry. This is a very important factor that both, the Government and the private sector, should give focus for better productivity and quality achievement of the industry. Telecommunication and information technology is the most important key to development. The telephone, fax, e-mail, etc are very essential to do our marketing business. Without fast and efficient telecommunication little is done. The sector needs this tool to perform better than today and this is the area that needs close attention. Transportation is another factor. An improvement on the whole logistics is necessary for the good growth of the sector.

In actual fact this was an initiative taken by ETGAMA to study the problems of the sector and come up with conclusive points for different stake holders can act to resolve the problems so that the sector could function in a healthy way. So, the Board of Directors at ETGAMA made a decision to prepare a TOR (Terms of Reference) and look for a consultant to do the study. This was agreed by the members and a pledge to pay the study fee was agreed. We chose experts from The Addis Ababa University is to conduct the study and have deliberated on the various issues of the sector problems with their recommendations. In one of the chapters in their studies Duty Tax is one area they found to be looked at since the present duty structure aids importers rather than manufacturers. The current duty structure puts the import of garments and fabrics at the same rate thus local garment factories cannot compete with foreign garment factories. This actually is the great impediment to the growth of the garment factories in the country whereby the export activities are limited to get skilled workers which come naturally from the local garment making factories. The competitive market would allow the garment factories engaged to serve the domestic market and slowly attain productivity and quality as they have a continuous market and then become a spring board for the export market. Since this was lacking, we think the export market plans short fall to meet its target. In our opinion this would continue unless Government ratifies the duty structure as experts found it necessary to take action as it is also in line with the Government policy fully putting this sector in the forefront of the economy, supporting fully the manufacturing sector. We have submitted this study to the MoI and it looks it is in the right agreement to the effort taken by the association about the submitted study options. We shall see in few months time the decision of the policy makers.

In the attempt of producing talented work force ETGAMA had run trainings for factory workers of our members with the help of ILO, EU, GTZ, US AID, etc. We will keep on training and try to expand it working closely with the Textile Industry Development Institute (TIDI) of MoI which is totally responsible for the growth and development of the sector.

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