Saygin Group of Turkey said its Ethiopian subsidiary may generate $100 million in revenue a year from textile manufacturing, amid plans by the Horn of Africa country to boost the industry’s exports to 10 times that amount.
Saygin Dima Textile Share Co., which opened a factory three months ago in Dima, about 30 kilometers (19 miles) southwest of the capital, Addis Ababa, is targeting output of 50,000 meters (164,000 feet) of fabric a day to export around the world, General Manager Ahmed Turan Yangin said. The company is taking advantage of power costs that are a third of Turkey’s, and wages that are one-twentieth those in its home market, he said.
“It’s the major aspect for a textile investor to invest in Ethiopia,” Yangin said in an interview today at the plant. “It’s incomparable cost.”
Ethiopia earned $71 million from textile exports in the 10 months through April, an increase of 50 percent from the same period a year earlier, said Textile Industry Development Institute spokesman Fekadu Ethiopia. The country plans to increase annual export earnings to $1 billion in the fiscal year that ends July 7, 2015, according to a five-year growth plan.
Ethiopia should capitalize on its abundant labor, land and raw materials to develop light manufacturing industries with low set-up costs such as textiles, leather, wood, metal and agro-business, the World Bank said in March.
Power costs in Ethiopian industrial areas are 3.5 cents per kilowatt hour, compared with as much as 10 cents in Turkey, Yangin said. Electricity produced at the country’s hydropower facilities costs $1.5 million per megawatt to generate, compared with a world average of $2.5 million, according to Access Capital, an Addis Ababa-based research group.
Saygin’s $80 million plant is 60 percent-owned by Ethiopia’s Privatization and Public Enterprises Supervising Agency, Yangin said. It was established in 2009 after relocating from Kayseri in central Turkey.
The factory employs about 800 Ethiopians at its plant that spins, weaves and dyes natural and synthetic fibers. Workers earn 600 Ethiopian birr ($34) a month for a 48-hour working week, Yangin said. Duty-free access to European and U.S. markets for Ethiopian-made goods is also an important factor, he said.
Else Addis Development Plc, also Turkish-owned, invested about $65 million in fabric production and ginning factories in Nazreth, Project Coordinator Dilek Durular said in an interview.
The plant, which is about 90 kilometers southeast of Addis Ababa in the Oromia region, began production a year ago, she said on April 26 in Addis Ababa. The state-owned Development Bank of Ethiopia loaned Else 70 percent of the capital, she said.
Seven new textile plants run by companies from countries including India, Turkey and Pakistan are expected to be operational by July, Fekadu said by phone.
Saygin also plans to open a $200 million factory to produce power and telecommunications cables in September, said Yangin. The plant in Dima, operated by Saygin BM Technology Group, received a loan of 1.5 billion Ethiopian birr from the Development Bank of Ethiopia to start operations, he said.