Spintex, an Indian textile company, has received 50ht of land at the Kombolcha Industrial Zone in the Amhara Regional State to construct what could become the largest textile factory with five times the capacity of the current leader.

It will produce 100tn of yarn a day, which is five times the capacity of Ayka Addis.

Ayka Addis is a Turkish company that moved to Ethiopia and set up a factory at Alem Gena in Oromia.

"This company [Spintex] has promised to the Prime Minister and Girma Birru [minister of Trade and Industry] that it will export one billion dollar worth of products a year in seven years' time," a high-level government official told Fortune.

The government's target for 2009/10, as indicated in the Plan for Accelerated and Sustainable Development to End Poverty (PASDEP), was to be able to export fve billion dollar worth of textile and garment products. However, the highest amount that is now expected is only about 53.5 million dollar.

"The history of the Ethiopian textile industry will completely change," Sileshi Lema, director of the Ethiopian Textile and Leather Development Centre, told Fortune. His conviction is based on the level of foreign direct investment in the country.

Spintex was established in India in 1972 with four companies under it specialising in different areas of the textile industry. The group has been producing different machinery for spinning, weaving and knitting.

The company will fully own the factory it will establish in Ethiopia. But it has indicated that it would need a loan from local banks, an official at the Ministry of Trade and Industry (MoTI) told Fortune, which he confirmed would be awarded.

The Development Bank of Ethiopia, alone, has the capability to extend loans counted in hundreds of millions of Birr. Spintex has already received support in the form of 50,000ht of land in the Awi Zone of the Amhara Regional State for cotton farming.

With investment in the textile and garment industry gradually growing, a new point of concern has emerged, according to an expert at MoTI, because the companies that were established exclusively for export are beginning to eye the local market which is also growing. The ministry has instructed the Textile and Leather Development Centre to conduct a study on the issue.

Source: Fortune