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The expansion will create an additional 13,000 jobs and take the production capacity up to 100pc
Ayka Addis Textile & Investment Group is undertaking an almost one billion Birr expansion on six hectares of land. This could see its exports tripling to 150 million dollars and its employees increasing by around 13,000.
The Company moved from Turkey to Ethiopia with an investment of 140 million dollars. Its latest expansion – to take place in two phases, beginning as early as April 2014 – will consume 962.5 million Br, according to Amare Teklemariam, CEO of Ayka. Ayka has already received 3.6ha of land from the Kolfe Keranio District for its first phase, and is in the final stages of leasing an extra 2.6ha, he added.
The Company secured 3.6ha of land last year, through lease that will extend for 70 years, according to officials at the land management office of the Addis Ababa city administration.
The Company currently has five plants in Alem Gena town of the East Shoa Zone,Oromia Regional State(19km from Addis Abeba). These plants, now operating at 80pc to 90pc capacity, have the capacity to spin 40tns of cotton, knit 38tns of thread, dye 50tns of cloth and produce 80,000 pieces of garment – all in a day’s work, with 7,500 permanent and 100 temporary workers. The Company exports its produce mainly to Germany.
Now with a capital of 2.5 billion Br, the expansion projects are expected to boost the Company’s export earnings to 150 million dollars, from 56 million dollars in 2012/13.
“The expansion project will increase our present garment production capacity by 50pc, when the first phase of expansion is finalised and by 100pc when the second phase of expansion is finalised in 14 months,” the CEO told Fortune. “Once finalised, the project will create job opportunities for 13,000 people.”
From the total project cost of 962.5 million Br, building and civil work is expected to consume 221.3 million Br and 623.2 million Br will be spent on machinery and equipment. The remainder will be used as working capital, he said.
Ayka’s construction wing will undertake the construction and installation works of the new factory itself, as it did with its five other plants in the country.
“We will commence construction as soon as we get the title deed,” Amare says.
The land that has been given to Ayka currently houses stores and pole treatment plants of ethio telecom; these will move to new facilities to be set up by Ayka. Currently, there are six other expansion projects ongoing in the textile industry. Ten new additional factories with a combined production capacity of 100tns a day are also expected to start production during this fiscal year. An additional three new projects are expected to start production during the 2014/15 fiscal year according to Ethiopian Textile industries Development Institute (ETIDI).
Despite all this development, the industry that now comprises of 115 textile factories and 40,000 workers, was only able to earn 52pc of the 111 million dollars that it was supposed to achieve in the first half of the year, according to the Institute. The target for the year is set at 317 million dollars.
With a per capita fibre consumption of roughly one kilogram – far below the world average of 8.7 kg and the African average of 3.2 kg – the country has great potential, which needs to be used properly, according to a research conducted by the African Growth & Opportunity Act (AGOA), three years ago.
The underutilised capacity of existing factories is still a big problem in the industry, according to an expert, who talked to Fortune on condition of anonymity. Factories in the textile sector are currently only utilising around 60pc of their production capacity.
Around 99 million dollars worth of textile products was exported in the last fiscal year. This number is expected to reach one billion dollars by the end of the Growth & Transformation Plan (GTP) period, which is only one year away.
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