The women who work as seamstresses in the Ethiopian factories earn $ 25 a month. One can imagine the savings for companies such as H & M, Levi’s, Guess and PVH brands Tommy Hilfiger and Calvin Klein, who manufacture their products all in Ethiopia and are constantly looking to improve margins and reduce supply chain costs. But the question remains: If countries like China, India, Sri Lanka and Bangladesh outsource their production to cheaper Ethiopian factories, what does that mean for the working conditions and fair wages of the Ethiopians?
The center of Ethiopia as a fast fashion hub is Hawassa Industrial Park. Funded with 250 million dollars of Chinese investment, it currently consists of four parks. According to Bloomberg, which called it “the great Beijing outsourcing experiment”, the plan is to open another eight by 2020.
The tax benefit is very attractive. Companies are exempt from income tax and duties and taxes on imports of capital goods and building materials for the first five business years. “The plan is to create a total of two million jobs in the industry by the end of 2025,” the Ethiopian investment commission told Bloomberg.
Of course there are gray areas on that point, and a dark one. The industrial development of the country could at any time clash with the unstable political situation, with a chance of the outbreak of a civil war. There are still unresolved ethnic conflicts and in the second most populous African country, with 105 million inhabitants, it is a minority of 6 percent who dictate politics and security forces.
