CONTEXT AND CHALLENGES
Market potential for suppliers in the garment industry
The garment industry in Ethiopia has almost no access to local companies who could supply them with zips, labels, cuffs, or textile printing processes. This increases production costs and has a negative impact on the quality of the final products. Moreover, it is almost impossible to respond to the demand of buyers at short notice. These obstacles make it difficult for the country’s garment industry to develop its full potential.
But the lack of production capacity is only one of the challenges that textile companies have to face. The development of domestic suppliers is further complicated by the fact that the Ethiopian labour market does not offer enough skilled workers who could meet the quality standards of international buyers.
PROJECT APPROACH AND PROJECT GOALS
A growing company on its way to internationalisation
DESTA PLC is a garment manufacturer with facilities in Addis Ababa and Butajira. With its 1,000 employees, 500 of them working in Butajira, the company produces clothes that are mainly destined for export.
As part of the project “Desta Accessory Unit” (DAU), DESTA PLC now wants to broaden its product range and manufacture accessories like zips, cuffs, cords, and other accessories. For this purpopse, a new production facility with modern machinery is to be built at the site in Butajira.
DAU will comply with social (BSCI and SEDEX) as well as with environmental (ISO 14001) standards. The company will work with an international compliance expert whose task it is to identify and minimise compliance risks. In the future, DAU also wants to play a pioneering role in establishing a local value chain for the garment industry.
STATUS AND OUTLOOK
Dual training as the starting signal for local production
A quarter of the planned production volume is intended to cover the company’s own needs. The remaining production will be sold to domestic companies and exported to the East African market. Once the new facility reaches full capacity, DAU can employ up to 1,500 workers.
Together with the Butajira TVET centre, DESTA PLC wants to set up a three-month, state-approved dual training programme. The company will provide rooms with the necessary equipment and machinery. The trainees will first receive theoretical and practical instruction at the Butajira TVET centre before undergoing practical training at the DAU. Within 20 months, up to 2,000 young people can receive officially recognised certificates. DESTA PLC intends to employ around 75% of the first graduates.
DESTA PLC is planning to invest 7.54 million euros for the construction of the new factory and the training programme. The Facility Investing for Employment grants a subsidy of 2.54 million euros (34%).
The Facility Investing for Employment of KfW Development Bank is part of the Special Initiative on Training and Job Creation of the German Federal Ministry for Economic Cooperation and Development (BMZ). With its support, it wants to remove barriers that prevent the creation of new and better jobs in the private sector.