By John Sambo |
Addis Ababa, Ethiopia―Last week, the Ethiopian Textile Industry Development Institute (EDITI) said exports for the first six months of Ethiopian fiscal year 2015-16 are lagging behind the plan target.
EDITI said that the target was to obtain $60.07 million from textile exports, while only $41.1 million was achieved, meeting 70% of the plan.
Mid last year the government revealed ambitious plans to stimulate the sector by offering attractive incentives to investors.
Incentives include duty free import of spare parts of 15% of capital goods for the first five years of operation, the possibility to hire expatriates free from income tax provided they stay for no more than two years.
The government also offers reconciliation of VAT for materials purchased locally during the project period if declared within six months.
At the time ETIDI director general Sileshi Lemma said, “We are working to be a leading country in light manufacturing in Africa which will lay the foundation for heavy and high tech industries by 2025.
More than 152 new investments were expected and least $1 billion was anticipated from the sector’s export. The GTP II is also expected to create more than 170,000 job opportunities.
The country is also building at least ten industrial zones and all of them will be set up by the government.
However last week, it was revealed that while cotton production was planned on 262,000 hectares of land, only 65,000 hectares was used for cotton production. The El Niño destroyed cotton crops over 14,000 hectares of land.
Other negative factors included lack of continuous power supply, weak company linkage, shortage of manpower, and delay in implementing investment projects accounted for the weak export performance of the Ethiopian textile industry during the six-month period.
Abebe Kasse, the ETIDI Planning and Information Management Director, said the government wants the textile sector to be export oriented and give emphasis to quality.
He said the Institute believes the textile industry can achieve the export target for the year in the coming six months ending June 2016.
The sector has the advantage of high quality cotton that is grown in the country, as well as duty free access to US through the African Growth and Opportunity Act (AGOA) and the EU market.
There are several foreign-owned enterprises involved in the Ethiopian textile industry, coming from the United States, China, Turkey and the EU.
Source: East African Business Week
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