FDI into Ethiopia’s textile industry in 2017 reached its highest level since greenfield investment monitor fDi Markets began recording data in 2003. Inflow has been increasing since 2015, albeit marginally, with only one additional investment recorded between January 2015 and December 2016.
Capital investment during this period saw a sharp increase from $90m to $636m. However, job creation witnessed a decline of 14.5%. In contrast, data for 2017 illustrates a huge influx of investments throughout the course of the year. In 2017 project numbers for textile investments increased from four to 13, jobs created increased by 236% to 25,422 and capital expenditure more than doubled from $636m to $1.53bn.
The primary source for investment into Ethiopia is China, accounting for a quarter of all investment between January 2015 and December 2017, followed by Turkey with 15% and India and the US with 10% each. Interestingly, 100% of textile investments into Ethiopia during this period were in manufacturing operations, with five of the 20 facilities going into the newly established Hawassa Industrial Park.
The record year for investment can be attributed to a conscious effort by the Ethiopian Investment Commission to help the country become a global textile hub through the creation of numerous investment parks. The federal government announced plans to develop 17 parks in different parts of the country as part of a five-year growth and transformation plan period to attract investment and create jobs. In addition to the Hawassa Industrial Park, which was inaugurated in 2016, the country also welcomed Mekele, Adama and Kombolcha industrial parks in 2017.
Additional parks are due to commence operations in 2018, including Dire Dawa which is currently under construction and received confirmed investments from prospective international investors in 2017.