RE: More Ethiopian news23 Aug 2018 11:11
Ethiopia's economy has registered double digit growth in recent years, making it one of the fastest growing in sub-Saharan Africa. The World Bank projects 8.9% growth this year. Foreign investment has played a critical role in the country's economic success, with the government taking a proactive approach by offering favourable benefit packages to attract clothing and textile companies looking to relocate their manufacturing bases to Africa.
Incentives include preferential trade deals and land policies, which can give investors profit tax holidays for up to nine years. Duty free importations of machinery, equipment and construction materials are also incentives used to attract investors.
All exports of products made in Ethiopia to the US are duty and quota free under America's African Growth and Opportunity Act (AGOA). The same benefits are also available for exports to the European Union (EU) under its 'Everything but Arms' trade access for least developed countries.
Furthermore, Ethiopia offers extremely cheap electricity at US$0.04 cents per kilowatt hour. It is now the second largest electricity producer in sub-Saharan Africa due to its hydropower dams – Ethiopia is the source of major rivers, such as the Blue Nile.
Such low costs are particularly attractive to Chinese companies, as the rising cost of land and labour in their home country has spurred many of its textile and clothing businesses to eye moving production to African countries such as Ethiopia to tap their abundant cheap labour – wages are approximately one tenth of what Chinese workers are paid, according to the investment commission.
"Ethiopia has a population of 100m, the second largest in Africa after Nigeria and over 65% are under 20, making it a labour pool that is easily trainable to fit the requirements of the garment and textile industry", says Zemedeneh Negatu, global chairman of Fairfax Africa Fund and former managing partner of EY Ethiopia (Ernst & Young).
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