PROJECT PROPOSAL FOR INVESTMENT ONGARMENT FACTORYPROJECT TO BE IMPLEMENTED

IN ADDISEABEBA REGION, ADDIS ABABA CITYADMINISTRATION PROMOTER: IFA JADAOct, 2022

ADDISE ABEBA, ETHIOPIA1

Feb 2017ADDISABABA,ETHIOPIA

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Contents

EXECUTIVE

SUMMARY.........................................................................................................................41.Introd

uction.........................................................................................................................................52.T

he Project

Area..................................................................................................................................62.1.

Infrastructure...................................................................................................................................

.62.2. Communication and Power

Services................................................................................................72.3. Power

Services.................................................................................................................................72.4
Population and Economic

Activities..................................................................................................73.Description of the

Project....................................................................................................................84.Objectives of

the

Project......................................................................................................................95.Production

Program and Plant Capacity............................................................................................105.1.

Production

Program........................................................................................................................105.2.

Technology and

Engineering..........................................................................................................116.Market

Analysis.................................................................................................................................116.1.

Global Overview Of Textile And Apparel

Industry...................................................................116.2.The Structure of the Textile

Industry.........................................................................................126.3.National Overview Of

Textile And Apparel Industry................................................................136.4.Market

Strategy.........................................................................................................................176.5.Price

analysis.............................................................................................................................186.6.Mar

ket Operational

Dimension..................................................................................................196.7.Marketing

Information System..................................................................................................197.SWOT

Analysis.................................................................................................................................20A.Str

ength.........................................................................................................................................20B.
Weakness.......................................................................................................................................2

02

C.Opportunities...............................................................................................................................

..20D.Threat......................................................................................................................................

......208.Raw Material and

Inputs....................................................................................................................21A.Raw

Material

Requirements..........................................................................................................21B.Utilities......

....................................................................................................................................219.ORGANIZ

ATION AND

MANAGEMENT......................................................................................229.1.Organizational

Structure............................................................................................................229.2.Man Power

Requirements With Qualifications..........................................................................259.3.Skilled

and Unskilled

Workers..................................................................................................279.4.Training

Requirement...............................................................................................................2710.Financi

al

Analysis.........................................................................................................................2810.1.Total

Investment Costs..........................................................................................................2810.2.Fixed

Investment Cost...........................................................................................................3010.3.Work

Capital

Requirements...................................................................................................3310.4.Projected
Financial

Statements..............................................................................................3510.5.Production

Programed and Sales Forecast.............................................................................3510.6.Revenue

Projection................................................................................................................3610.7.Projecte

d Income

Statements.................................................................................................3810.8.Projected Cash

flow Statements.............................................................................................3910.9.Projected

Balance Sheet of the

Project...................................................................................4011.Environmental

Aspects..................................................................................................................4112.Project

Implementation Schedule and Land Use Plan....................................................................42A.

Project Implementation

Schedule....................................................................................................42B.Project Land Use

Plan...................................................................................................................4313.Risk

Assessment............................................................................................................................443

EXECUTIVE SUMMARY

1.Project name GARMENT FACTORY

2.Project Owner IFA JADA

4.Project LocationABEBA REGION, ADDIS ABABA CITY ADMINISTRATION

5.ProjectCompositionGarment factory specialized in the production of quality and affordable

Men andLadies suits, Trousers, T- shirt, Underwear etc.6.PremisesRequired1 hectare, which is

equivalent to 4,000M27.Total CapitalBr. 10,000,000 of which 30% equivalent toBr. 3,000,000.00

financed by theowner equity and the rest 70% equivalent toBr. 7,000,000.00 financed through

bank loan8.EmploymentOpportunityThe total manpower required for the plant will

be510employeesPermanent workers 448Skilled310Unskilled 138Temporary workers

62Skilled2Unskilled 609.Market Share 30% for domestic market and 70% for

export.10.Technology Modern Garment Technology11.Benefits of thefactory For TheRegion/

CountryProduce and supply of quality Garment Products, source of Revenue,

Employmentopportunity, Save Foreign currency, Benefit for the Local Community andStimulate

the Local Economy5

1.Introduction Ethiopia has in placed policies, strategies and related legal frameworks aiming

to transform itseconomy from that dominated by agriculture towards an industry with the

ultimate goal of achieving a middle income nation by 2025. To realize this structural economic

transformation,the Ministry of Industry as a center of driving force working towards the

effectiveimplementation of such policies and strategies.Based on the country’s export led

industrialization policy, a great effort has been made inrevising and updating the legal frame

works, working procedures and guidelines, supportinginstitutional setups, and building

and transformation plan of the country. In this regard Ethiopia isworking to attract and

encourage domestic investment and FDI with major focuses on exportones. In addition to

facilitating the necessary legal frame works, and incentive mechanisms,there is an effort in

developing cluster zones by sector to serve the basic infrastructure andcontrol the

environmental impacts of the specific sectors. The Ethiopian Government has learntfrom the

experience of other countries that cluster zonation has played a vital role in enhancingthe

inflow of FDI.The Industrial Development Strategy of Ethiopia has ranked some sectors as core

sectors so thatto facilitate and provide prioritized and strategic support from the government.

Accordingly, thetextile and apparel sub sector has ranked as the first core subsector due to

certain reasons in theEthiopian context. The surplus labor force available in the country and

being labor intensivenature of textile and apparel sector, the availability of worldwide market

for textile are somereasons for the subsector to being ranked as first even from the prioritized

sector. Moreover, thetextile sector utilizes cotton as its main inputs so that it can create

conducive opportunity for agricultural developments; it has high back-ward linkages.Targeting

the textile sector as a key economic activity towards harnessing the growth of thenational

economy, the government of Ethiopia in its five years growth and Transformation planhas set

out to generate 1 billion us dollars and increasing total price of the end of the sector’s product

to 2.5 billion us dollars by the end of the plan period. The performance so far includingthe year

2012/2013 (2005 Et. physical year) is very far from the plan target and needs much6

Effort to be done. The existing situations shows that to achieve the envisaged export target,

inaddition to improving the productivity and product quality of the existing textile and
apparelindustry through renovation and expansion, it seems to be an assignment to the

government toattract additional foreign and domestics textile and apparel investments.On

other hand worldwide market opportunities, and wide domestic market, the cheaper &

easilytrainable work force, the conducive policy environment and government close support to

thesector, are no doubt that can be a good spring board to realize the inflow of FDI and

domesticinvestors. The government of Ethiopia is also trying to do the said assignment by

allocating bigland area to the sector, segmenting the investment areas by sectorial cluster

giving specialattention and building industrial infrastructure such as; industrial zones by its own,

jointly with private sector, and allowing the private sector to build and lease.Encouraged by the

incentives, the Promoter planned to commit his resources in the garmentindustry

establishment. Therefore, this project study is prepared to assess the feasibility of investing on

the garment factory.2.The Project AreaThe envisaged project is aimed to be established in

Addis Ababa City Administration the National Regional Sate of Addis Ababa Region where the

Djibouti- Addis Ababa Region railway line ends. So, it will have a good advantage for logistical

issues in relation to import andexport.The area is set by the regional government as an

industrial area which industrial establishmentsare being directed towards it and it is clustered

by different sectors and economic activities.Different domestic and foreign investors already

took land and started investment in the area andthe area is developing very well.2.1.

InfrastructureInfrastructure development is crucial for attracting investors who would like to

commit their resources and lifetime savings. To this end, it can be witnessed that the

infrastructuredevelopment in the area is well developed.7

western parts of Ethiopia passes through the area. This main high way takes this road is mainly

used as the main road for transporting the forest coffee products of Unlike the Nefase Silek

Lafeto K/k /Lebu/Bus stationThe Project area is not yet well developed as a town and it

doesn’t have bus station. However, with theestablishment of big industries and the

consequential urbanization, it is expected that the moment of people to and from this area will

increase which demands the establishment of bus station in the area.2.2. Communication and

Power ServicesTelecommunication:It is expected that the Ethio-Telecom is considering to set-

uptelecom service infrastructure in the area to support the industrialization. Postal Service:it is

found that there is no postal service around The Project Area.Thus, there is a need for having

standardized postal offices in the town.2.3. Power ServicesThe national power grid line of

Ethiopian Electric Power Corporation passes through near the projectarea and it is near to the

Nefase Selek Lafeto K/k /Lebu/ Sub-station. Due to its proximity to the nearbyEEPCo sub-

station, it is expected that the power supply for the project to be sourced from thissubstation in

a 33kv direct power line. This will enable the proposed project to get un-interruptedelectric

power.2.4 Population and Economic ActivitiesThe proposed project area is a rural area where

the population is leaving in a scattered anddispersed settlement. There is no official figure to

show the population estimate. The populationis mainly engaged in the farming activities mainly

commercial and cereal crops through rain-fedagriculture. However, with the industrialization of

the area and the consequential urbanization,the population of the area and the economic

activity is expected to grow.8

assortment in the NationalRegional Sate of Addis Ababa Region, Nefase Silek Lafeto K/k

/Lebu/.The garment assembly process will start with cutting to size as per different design and

patternsas the fashion and style of the pieces. The assembling (sewing) process involves among

othersstitching, buttoning and label attaching while finishing operation includes trimming,

ironing and packing.In cutting section, the knitted fabric will be spread on the spreading table

and then cut as per thespecified design mark. The fabric that is cut in specific pattern will be

handled in respectivestitching lines to produces items like T-shirts, polo shirts, trousers, over

coats, gown etc. Themajor production process flow chart involves the following.The detailed

production process of the major three lines is as shown below: A)Process Flow of the Cutting

Section Determining the Quantity of spreading clothFabric from warehouseCloth

spreadingPattern MakingCuttingHead cutting with knife NumberingClassifyingSorting and

certifyingSewing9 Cutng Packing Finishing Sewing

B)Process Flow of the Sewing SectionReceiving from cutting sectionSewing each part and

decoration makingAssemblyButton makingInspectionSupply to finishing sectionC)Process Flow

of the Finishing SectionReceiving from sewing

sectionIroningFoldingInspectionAssortingPackingFinished goods store4.Objectives of the

ProjectThe main objective of the project is manufacturing of quality and standardized garment

andtextile stitching for earning sustainable income that assures company’s growth. The other

related objectives are stated herein below:Maximize profits to the owners who have
committed their financial resources in anticipation of better opportunities,Stimulate large

scale production of good quality garmentand textile stitching in Ethiopia10