Ethiopian Delegation to Turkey to Determine Textile Deal

An Ethiopian delegation is to travel to Turkey this month to seal a deal on the relocation to Ethiopia of what could become the third Turkish textile company.

This company, Selenteks Textile Inc, was established in 1986 and is known as a producer of 100pc wool.

Selenteks had earlier proposed to the government a joint investment in which the government would have a 35pc stake. The company's existing assets, technology and market network will account for its 65pc share.
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The delegation, headed by Beyene Gebremeskel, director of the Privatisation and Public Enterprises Supervising Agency (PPESA), and Sileshi Lema, director of the Ethiopian Textile and Leather Development Centre, examined the proposal and will go to Turkey to visit the factory and verify the details given in Selenteks's proposal, Sileshi told Fortune.

The delegation will inspect the company's plant to decide if it is worth the 65pc share the Turkish company is requesting in the new company to be established in Ethiopia with the old machinery from Turkey. The deal will be signed if the Ethiopian delegation is satisfied with what it sees in Turkey.

The company has accepted the government's precondition to locate the factory in the Kombolcha in the Amhara Regional State or in Dire Dawa's investment zones in the chartered city, an expert at the Ministry of Trade and Industry (MoTI) said.

If the two sides agree and the company moves to Ethiopia, it will be the third factory to do so after Ayca Addis and Saigin Dima SC.

Ayca, the largest textile company in Ethiopia, is located in Alem Gena Town in the Oromia Regional State along the road to Jimma. It has a daily production capacity of 20tn of yarn. The monthly export report compiled by MoTI for November 2009 indicates that Ayca exported 1.1 million dollars worth of products. The company will begin full operation in April 2010, according to the proposal it submitted when it moved to Ethiopia.

Saigin Dima, a joint investment with a 51pc share for the government, is undertaking the construction of the factory at a 20ht plot in Sebeta, in the Special Zone of the Oromia Regional State. This company will have the capacity to produce 10tn of yarn daily, similar to Selenteks.

The Turkish companies' interest to invest in Ethiopia, according to officials, is due to of the high cost of production, including increasing labour costs, in Turkey, and the duty-free access to European and American markets given to developing markets through the Everything But Arms Deal and the African Growth and Opportunity Act (AGOA), respectively, as well as the export incentives provided by the Ethiopian government, such as duty-free import of capital goods, income tax exemptions, and loans for new investments and expansions.

Source: Fortune