Addis Ababa, April 24 (IANS) Kanoria African Textiles Plc, a subsidiary of India's Kanoria Chemicals & Industries, is setting up a denim fabric manufacturing plant that will be a first for Ethiopia and East Africa and will create 350 jobs, mainly for Ethiopians.
This is one of the 577 projects on which Indian investers will be spending $52 billion in Ethiopia, according to data released by the Ethiopian Investment Agency (EIA). Of these, 152 are operational and have created 13,000 permanent and 98,000 temporary jobs across the country. Indian investers have been in the country since 1985.
The Kanoria factory in Bishoftu town of Oromiya Regional State, 44 km southeast of the capital, when completed in January 2014, will annually produce 12 million metres of denim.
The company has acquired on lease 153,000 sq m from the Bishoftu town administration. Sources close to the company said construction of the plant will start by the end of May after the environmental assessment is finalized.
The plant will have spinning (1,440 rotors) and weaving (60 looms) units, a dyeing facility and a finishing line in one production, according to the business plan submitted to the Bishoftu administration.
The level of industrialization in Ethiopia is very low, with the manufacturing sector accounting for hardly five percent of the gross domestic product (GDP).
According to a study conducted by the industry ministry in 2012 to assess the competitiveness of Ethiopian firms for participation in the COMESA (Common Market for Eastern and Southern Africa) Free Trade Area, manufacturing sector exports account for a meagre 0.5 percent.
The export performance report published by the Ministry of Trade (MoT) for 2011-12 also shows that textiles registered the lowest export figures at 46.4 percent, bringing in $84.6 million.
The type of cotton that grows in Ethiopia is suitable for manufacturing denim and the company plans to make quality products of export standard.
According to Enawgaw Negusse, director of weaving and knitting technology at the Textile Industry Development Institute (TIDI), the quality of jeans is based on the weight of the thread which is made from short stapled cotton and is measured by count (the best is between 8-10 counts).
"In addition to the cotton type, the dyeing material (indigo dye) and the finishing play a great role in terms of flexibility, durability and strength of the fabric," Enawgaw told IANS, adding that the company has made a smart move in choosing to manufacture denim.
"We need to use new textile manufacturing companies that would add value," said another TIDI official.
"Labour and low-cost energy are what attracts investors from various countries to Ethiopia," said the TIDI official.
The federal government is providing incentives such as duty-free imports and a five-year tax holiday.
The company, owned by R.V. Kanoria, former president of the Federation of Indian Chambers of Commerce and Industry (FICCI), has plans to enter other businesses like coffee exports.
(Hadra Ahmed can be contacted at firstname.lastname@example.org)