With a total population of nearly 100 million people, Ethiopia is the second most populous country in Africa. The country’s long history of conflict, drought and famine meant that its huge population has been long considered somewhat of an economic burden rather than a valuable resource. However, the Ethiopian government is now hoping that it can turn the massive population into a benefit by transforming the country into one of the world’s leading clothing and apparel producers.
The Population and Wage Factor
The main reason that major international manufacturers are starting to look towards Ethiopia is the combination of low wages and large population—similar to why the same companies were previously drawn to China, India and various other Southeast Asian nations. However, average wages in these other countries have inevitably increased due to their continued development, while human rights and environmental issues also continue to plague their manufacturing industries. This has led many major apparel manufacturers in search of greener pastures, i.e. places with a large population, low wages and little to no indigenous manufacturing industry.
Africa has been a prime target for many of these companies, and the relative stability, huge population and incredibly low rate of employment has led many to see Ethiopia as an ideal choice. In fact, amongst other popular manufacturing destinations, Ethiopia currently has the lowest labor and energy costs.
In this respect, many are now viewing Ethiopia in the way that they once viewed Bangladesh, which was for many years a hotbed of manufacturing activity before evidence began to emerge about the horrendous human rights breaches common throughout the entire Bangladeshi manufacturing industry.
The comparison between Ethiopia and Bangladesh makes sense, as both countries have a huge population with an incredibly low average wage. In Ethiopia, 40 percent of the population is under the age of 15, which means that the country is going to experience a huge workforce boom in the coming years. In turn, these population dynamics should ensure that wages remain quite low due to the huge amount of competition for jobs.
The Current State of Ethiopia’s Apparel Industry
All of the above factors make Ethiopia a dream destination for companies looking to manufacture goods cheaply. Further adding to this is the relatively low energy costs and high availability of natural resources. One such resource is leather as the country has one of the world’s largest untapped livestock markets and a vibrant tanning industry capable of producing high quality leather cheaply.
Already Tesco, H&M, Walmart, Primark and other major international manufacturers have begun sourcing textiles from the country. Furthermore, Adidas and other shoe manufacturers see huge potential in the country due to the wide availability of cheap leather. In fact, this has led some to suggest that the country’s manufacturing future might lie more in shoes than in clothing.
Improving Ethiopia’s Textile Industry for the Future
Likely the biggest factor holding back the country’s potential growth in textiles will be the availability of natural resources like cotton. However, the director of the Ethiopian Textile Industry Development Institute notes that the country is currently only using around 6 to 7 percent of its cotton-growing potential. This indicates that the country has huge room for growth, and if it can increase this production quickly, an abundance of resources combined with low wages and high population could create the perfect storm for its manufacturing industry.
In order for this to be true though, Ethiopia first needs to improve its human rights and environmental records. Still, it seems that manufacturers have learned from the mistakes made in Bangladesh and are attempting to ensure that all factories meet minimum labor and human rights requirements beforehand. So far the majority of companies have done so with great success, and if this continues, the majority of your new clothes could soon feature ‘Made in Ethiopia’ labels.