Bangladesh based ready-made garment and textile giant DBL Group is making progress on plans to establish a factory in Ethiopia that will provide around 4,000 jobs and be supported by long-time customer Hennes & Mauritz (H&M).
The Mekele-based integrated knitting, dyeing and garment facility will be solely owned by DBL Group, with Swedish state-owned investment firm Swedfund investing US$15m through a loan for the facility. Fast fashion retailer H&M has committed to becoming a long-time buyer and supporting the factory with expert knowledge in sustainable textile production.
Local reports suggest the total investment will be in the region of $100m, with the Ethiopian Development Bank has extending an additional $55m loan to the Bangladesh company.
"The factory will be a long-term sustainable industrial plant in every aspect and will be an important step for developing the textile industry in Ethiopia," says Anna Ryott, managing director at Swedfund.
The agreement was signed at the Swedish Embassy in Addis Ababa last week. Decent working conditions, job creation for women, and environmental considerations are some of the key goals for the project aimed at pushing one of Ethiopia's prioritised industry sectors forward.
The collaboration also involves local and international partners to enhance the know-how around sustainable production of ready-made garments in Ethiopia.
"H&M is pleased that Swedfund is co-financing a project with DBL Group," adds Helena Helmersson, H&M's global head of production. "H&M wants to contribute to a long-term sustainable textile industry in Ethiopia taking social as well as environmental dimensions into consideration. It is important to us that both DBL and Swedfund are putting these questions on top of their agenda when doing investments."
MA Rahim, vice president of DBL Group, says it is a "milestone for us to build an integrated textile factory entirely focused on export.
"DBL will, together with other partners, focus on sustainability in every part of the process, including collaborations with the civil society in Mekelle and Addis Ababa. We are looking forward to a successful and long-term collaboration."
DBL Group is one of the largest exporters of ready-made garments in Bangladesh, with annual exports of $350m and more than 25,000 workers. The Mekele facility is due to become operational in the second half of 2016, with additional investments over the next two years. DBL's customers also include KiK, Lidl, Esprit, Puma, George and Walmart.
Ethiopia enjoys preferential market access to the EU through the Everything But Arms (EBA) scheme, and duty-free access to the US through AGOA (the African Growth and Opportunity Act).
And as was recently reported on just-style, the scale of investment in the country appears to be accelerating, some of the largest US and European brands are placing orders, and the government seems committed to building a sourcing hub for the future.