One Stop Support Practice with Reference to Textile and Leather Sectors

One Stop Support Practice One Stop Support Practice with Reference to Textile with Reference to Textile

and Leather Sectorsand Leather SectorsPresentation to GTZ SeminarPresentation to GTZ Seminar

Mount Grace Country House HotelMount Grace Country House Hotel

May 24, 2006May 24, 2006

ContentsContents

BackgroundBackground Business & Investment ClimateBusiness & Investment Climate Civil Service Reform ProgrammeCivil Service Reform Programme Industrial Development StrategyIndustrial Development Strategy Institutional ArrangementInstitutional Arrangement Textile and Leather IndustryTextile and Leather Industry The Way ForwardThe Way Forward

BackgroundBackground

A country of 77 million PopulationA country of 77 million Population 1.14 million sq.km1.14 million sq.km After 17 years of Socialist system, 1992 the current Gov‘t After 17 years of Socialist system, 1992 the current Gov‘t - Launched Economic Reform Prog.- Launched Economic Reform Prog. - Moving towards market economy- Moving towards market economy - Encourage private sector - Encourage private sector

Structure of the Economy:Structure of the Economy: - 45% of GDP originate from Agriculture- 45% of GDP originate from Agriculture - 43% Service- 43% Service - 12% Industry - 12% Industry

It is an agrarian EconomyIt is an agrarian Economy Adopted an Economic Development Strategy, ADLIAdopted an Economic Development Strategy, ADLI - 85% of the population base their lively hood on it- 85% of the population base their lively hood on it - 80% as raw material source for major industrial activities- 80% as raw material source for major industrial activities - 70% of the export earninig is generated from it- 70% of the export earninig is generated from it - 45% contribution to GDP - 45% contribution to GDP

Business & Investment ClimateBusiness & Investment Climate The Gov‘t has succeded in mentaininig a stable and preidictable macro-The Gov‘t has succeded in mentaininig a stable and preidictable macro-

economic environmenteconomic environment - the economy grows at an average rate of 6% per annum for the- the economy grows at an average rate of 6% per annum for the last 13 years,last 13 years, - inflation has declined from around 20% in 1992 to an annual- inflation has declined from around 20% in 1992 to an annual average rate below 5 % since then,average rate below 5 % since then, - In order to integrate the Ethiopian economy to the Global- In order to integrate the Ethiopian economy to the Global economy, it has been implemented a customs tariff reformeconomy, it has been implemented a customs tariff reform - It reduced from 230% to the current 30%- It reduced from 230% to the current 30% - the weighted average custom tariff has been reduced from- the weighted average custom tariff has been reduced from 40 % to the current 17.5% 40 % to the current 17.5% - Interest rate and foreign exchange have been relatively stable- Interest rate and foreign exchange have been relatively stable The Investment code and Regulation has been revised 4 times to widen the The Investment code and Regulation has been revised 4 times to widen the

scope and areas of investment and alsoscope and areas of investment and also - to reflect the demand of the private sector- to reflect the demand of the private sector - to be compatable with the global environment- to be compatable with the global environment Various incentives schemes, both fiscal and financial, have been put in Various incentives schemes, both fiscal and financial, have been put in

place to attract and encourage more investmentplace to attract and encourage more investment Licensing & business registration have been rationalized as well as access Licensing & business registration have been rationalized as well as access

to land and finance has been eased There are numbers of market access to land and finance has been eased There are numbers of market access privileges provided by bilateral countries and multi-lateral organizations. privileges provided by bilateral countries and multi-lateral organizations.

Civil Service Reform ProgrammeCivil Service Reform Programme

There are certain services that private investors need from any gov’t, There are certain services that private investors need from any gov’t, whether that government favors or opposes government interventions. whether that government favors or opposes government interventions.

The main thing expected from any gov’t, whatsoever the services it The main thing expected from any gov’t, whatsoever the services it renders, is to provide them renders, is to provide them transparently, accountably, efficiently and transparently, accountably, efficiently and effectively.effectively.

In the Ethiopian case, it has been well acknowledged by the Gov’t that the In the Ethiopian case, it has been well acknowledged by the Gov’t that the civil service has a series deficiency in discharging its responsibility civil service has a series deficiency in discharging its responsibility efficiently and effectively. efficiently and effectively.

-with time consuming procedures that focused on-with time consuming procedures that focused on inputs inputs rather than rather than outputsoutputs.. In a major paradigm shift, the Gov’t introduced the civil service In a major paradigm shift, the Gov’t introduced the civil service

program up on which public service delivery improvement policy is program up on which public service delivery improvement policy is one of the major focuses.one of the major focuses.

BPR (Business Process Reengineering)BPR (Business Process Reengineering) - Are we doing the right thing?- Are we doing the right thing? - Are we doing the right things in the right way?- Are we doing the right things in the right way?

Service Delivery Improvement for the Three Service Delivery Improvement for the Three InstitutionsInstitutions

DescriptionsDescriptions Work StepsWork Steps Time (Days) to get ServiceTime (Days) to get Service

Before Before BPRBPR

After After BPRBPR

Before BPRBefore BPR NowNow

EIAEIA

Inv. LicenceInv. Licence 18-3918-39 44 25-10825-108 4 hours4 hours

Reg. certificateReg. certificate 18-3918-39 44 28-9628-96 4 hours4 hours

Job licenceJob licence 1313 44 5858 1 hour1 hour

Bus. registrationBus. registration 2626 44 225225 4 hours4 hours

Inv. Licence renewalInv. Licence renewal 1111 44 1313 1 hour1 hour




After BPRAfter BPR Before BPRBefore BPR NowNow

Ministry of Trade & IndustryMinistry of Trade & Industry

Trade LicenceTrade Licence 14-2614-26 66 2-352-35 34 minutes34 minutes

Business RegistrationBusiness Registration 2323 1212 2121 76 minutes76 minutes

New trade licenceNew trade licence 1414 66 88 39 minutes39 minutes

Trade licence renewalTrade licence renewal 1010 44 1717 36 minutes36 minutes




After BPRAfter BPR Before BPRBefore BPR NowNow

Ethiopian Customs AuthorityEthiopian Customs Authority

Transit Import processTransit Import process 4343 66 2-42-4 15-45 minutes15-45 minutes

Transit Export processTransit Export process 88 33 22 20-40 minutes20-40 minutes

Clearance ImportClearance Import 2929 66 4343 6 h 15 minutes6 h 15 minutes

Clearance exportClearance export 88 33 2-152-15 26 minutes26 minutes

Industrial Development StrategyIndustrial Development Strategy

In line with the over all economic development strategy, In line with the over all economic development strategy, apart from maintaining stable and predictable macro-apart from maintaining stable and predictable macro-economic environment, the Government has put in place economic environment, the Government has put in place various sectoral policies and strategies to create more various sectoral policies and strategies to create more favorable situations for the private sector.favorable situations for the private sector.

In view of the industrial development of the country, In view of the industrial development of the country, recognizing the paramount significance of the recognizing the paramount significance of the manufacturing sector in particular, the Government of manufacturing sector in particular, the Government of Ethiopia has adopted and put in place the Industrial Ethiopia has adopted and put in place the Industrial

Development Strategy in 2002Development Strategy in 2002..


The basic objectives and principles, which the strategy has The basic objectives and principles, which the strategy has taken into considerations are:taken into considerations are:

It first and foremost recognizes the private sector as an It first and foremost recognizes the private sector as an engine of growth of the economy,engine of growth of the economy,

It takes into consideration the country’s all over all It takes into consideration the country’s all over all development strategy, i.e. ADLI,development strategy, i.e. ADLI,

It emphasis the export activities as the main target and It emphasis the export activities as the main target and hence known as Export-Led-Industrialization,hence known as Export-Led-Industrialization,

It is based on the principle of labor intensive technology It is based on the principle of labor intensive technology and greater use of local resources,and greater use of local resources,

It acknowledges the developmental role of the Government,It acknowledges the developmental role of the Government, It emphasis the active role of FDI and the importance of It emphasis the active role of FDI and the importance of

creating alliance and collaborations between foreign and creating alliance and collaborations between foreign and domestic investors,domestic investors,

It recognizes the active participation of the public, private, It recognizes the active participation of the public, private, civic societies and employee - employer relation.civic societies and employee - employer relation.


The strategy has also emphasis that a better and conducive environment hasThe strategy has also emphasis that a better and conducive environment has to be created for the industrial development by way of:to be created for the industrial development by way of:

creating and deepening macro-economic stability,creating and deepening macro-economic stability,

modernizing the financial system,modernizing the financial system,

creating dependable physical infrastructure services,creating dependable physical infrastructure services,

developing the human resource asset,developing the human resource asset, creating efficient, effective and accountable and dependable civil servant,creating efficient, effective and accountable and dependable civil servant, creating efficient judiciary system.creating efficient judiciary system.


On the basis of the above mentioned principles, and also on the basis of the On the basis of the above mentioned principles, and also on the basis of the comparative and competitive advantage of the country, the strategy has comparative and competitive advantage of the country, the strategy has already identified priority areas that deserve special and unique attention already identified priority areas that deserve special and unique attention and support by the Government. In this respect, the sectoral focus of the and support by the Government. In this respect, the sectoral focus of the strategy in agro-based industries and the interrelationship between strategy in agro-based industries and the interrelationship between agriculture and industry. The priority sector, hence, are identified:agriculture and industry. The priority sector, hence, are identified:

Textile and Garment Industries,Textile and Garment Industries, Meat, Leather and Leather Product Industries,Meat, Leather and Leather Product Industries, Agro-processing Industries,Agro-processing Industries, Construction Industries,Construction Industries, Micro and Small Scale Enterprises,Micro and Small Scale Enterprises, Tourism and IT.Tourism and IT.

Institutional ArrangeemntInstitutional Arrangeemnt

Ministry of Trade IndustryMinistry of Trade Industry Private sector operatorsPrivate sector operators Sectoral AssociationsSectoral Associations Other Gov‘t OrganizationOther Gov‘t Organization Non-Government organizationNon-Government organization

Ministry of Trade and IndustryMinistry of Trade and Industry VisionVision: Secure globally competitive trade and: Secure globally competitive trade and industrial sector that would be wellindustrial sector that would be well founded on the basis of consistentfounded on the basis of consistent development and growth.development and growth.

Mission:Mission: promote, and expandpromote, and expand the development the development of trade, industry and investment in theof trade, industry and investment in the country by creating conducive enablingcountry by creating conducive enabling environment to the developmental environment to the developmental forces and render transparent andforces and render transparent and efficient services and supports.efficient services and supports.

Investment GrowthInvestment Growth

YearYear Number of projects obtaining Number of projects obtaining Investment licenseInvestment license

CapitalCapital

In bill.In bill.

US $US $

EmploymentEmployment

TotalTotal Growth Growth %%

% FDI% FDI

20032003 1,4551,455 5959 1212 1.601.60 74,08574,085

20042004 2,7742,774 9191 1717 3.563.56 149,349149,349

20052005 3,7053,705 3434 1818 10.0010.00 147,185147,185

Textile and Leather Industry SectorTextile and Leather Industry Sector

The sector is completely in line with the industrial developemnt strategy of The sector is completely in line with the industrial developemnt strategy of the countrythe country

- save capital- save capital

- employ large labour force- employ large labour force

- resource base- resource base

- in terms of livestock population- 1st in Africa 10th in the world- in terms of livestock population- 1st in Africa 10th in the world

- cattle-41million- cattle-41million

- sheep- 25 million- sheep- 25 million

- goat- 23 million- goat- 23 million

- in terms of cotton 70-80 thousands ha., 32-35 thousands tons lint- in terms of cotton 70-80 thousands ha., 32-35 thousands tons lint

cotton, only 50% consumedcotton, only 50% consumed

- demand of the product- demand of the product

Top-Down (Pull) ApproachTop-Down (Pull) Approach

Value ChainValue Chain

““Value chain”:Value chain”:

the sequence of the productive process (functions) from the the sequence of the productive process (functions) from the provision of specific inputs to raw material production, provision of specific inputs to raw material production, transformation, and marketing and up to final consumption of a transformation, and marketing and up to final consumption of a particular product. It is also an institutional arrangement linking particular product. It is also an institutional arrangement linking and coordinating the producers, processors, traders and and coordinating the producers, processors, traders and distributors of that product.”distributors of that product.”

By Andreas Springer – HeinzeBy Andreas Springer – Heinze

Textile and Leather Industry Development Textile and Leather Industry Development One stop shop support CenterOne stop shop support Center

““One-stop shop service” means One-stop shop service” means rendering of supports and services rendering of supports and services directly to usersdirectly to users or or causing to be causing to be renderedrendered by strengthening and by strengthening and enhancing the integration of supply enhancing the integration of supply (value) chain activities in order to (value) chain activities in order to enable the textile and leather enable the textile and leather industry to be competitive and industry to be competitive and successful.successful.

One stop shop supportOne stop shop support Direct supportDirect support

- Information and advice, - Strengthening PPD , - Technical consultancy - Information and advice, - Strengthening PPD , - Technical consultancy including firm reengineering, - Marketing, - Planning and coordinationincluding firm reengineering, - Marketing, - Planning and coordination

- Follow-up- Follow-up - Policy issues & Research works- Policy issues & Research works - Investment promotion- Investment promotion - - Undertake those relevant activities that may be delegated to it from other Undertake those relevant activities that may be delegated to it from other

Government and Non-Government organizations to speed-up the sector’s Government and Non-Government organizations to speed-up the sector’s development.development.

Indirect support Indirect support

- Human resource- Human resource - Finance- Finance - Working premises- Working premises - Quality and Standardization- Quality and Standardization

The PPDThe PPD National Export Coordination CommitteeNational Export Coordination Committee

-Chaired by PM-Chaired by PM - Regularized every month- Regularized every month - Only those relevant government - Only those relevant government organs who directly and indirectlyorgans who directly and indirectly concerened in export activities are memebrsconcerened in export activities are memebrs - It is based on Action Plans prepared by each respective organns - It is based on Action Plans prepared by each respective organns

National PPDNational PPD

- Chaired by the Minister of MIT and Cochaired- Chaired by the Minister of MIT and Cochaired by the president of Chamber of commerceby the president of Chamber of commerce - Regularized every 3 months- Regularized every 3 months

The PPDThe PPD Textile and Leather PPD (sectoral)Textile and Leather PPD (sectoral)

- At the begining of every fiscal year a - At the begining of every fiscal year a jont action plan against production, jont action plan against production, marketing (sell), investment and marketing (sell), investment and intervention (support) areas ccordinglyintervention (support) areas ccordingly is designed firm by firm level.is designed firm by firm level. - Regularized every 2 months- Regularized every 2 months - Sectoral associations are actively - Sectoral associations are actively envolvedenvolved - M&E will be done in the presence of all - M&E will be done in the presence of all - Issues identified- Issues identified - Subsequent action plan prepared - Subsequent action plan prepared

AGOAAGOA

DescriptionDescription 20032003 20042004 20052005 TOTALTOTAL

Total number Total number of garment of garment enterprisesenterprises

33 77 1010 1010

Export ValueExport Value

(in mill. US$)(in mill. US$)0.5040.504 1.6741.674

(240%)(240%)1.7101.710

(6%)(6%)4.9224.922

(123%)(123%)

5+2 Selected Sister Shoe Companies5+2 Selected Sister Shoe Companies

Factories/Factories/

ProjectsProjectsInstalled Installed

Capacity/dayCapacity/dayAttainedAttained

CapacityCapacityPlanPlan MechanismsMechanisms

1.1. PeacockPeacock

Shoe factoryShoe factory25002500 10001000 50005000 Double Double

ShiftShift

2.2. KangarooKangaroo

Shoe factoryShoe factory10001000 800800 20002000 DoubleDouble

ShiftShift

3.3. Wallia ShoeWallia Shoe

factoryfactory800800 200200 800800

4.4. Ras DashenRas Dashen

Shoe factoryShoe factory800800 150150 800800

5.5. RamseaRamsea


ShiftShift

TotalTotal 58505850 28002800 1010010100



Capacity/dayCapacity/dayAttainedAttained


1.1. PeacockPeacock

Shoe factoryShoe factory25002500 10001000 50005000 Double Double

ShiftShift

2.2. KangarooKangaroo


ShiftShift

3.3. Wallia ShoeWallia Shoe

factoryfactory800800 200200 800800

4.4. Ras DashenRas Dashen

Shoe factoryShoe factory800800 150150 800800

5.5. RamseaRamsea


ShiftShift




Capacity/Capacity/dayday

AttainedAttained


6.6. Ethio-leatherEthio-leather

Industry/clusterIndustry/cluster1200012000 1000 MSEs 1000 MSEs

& 7000 jobs & 7000 jobs inder invest.inder invest.

7.7. Anbessa ShoeAnbessa Shoe

FactoryFactory10001000 UnderUnder

constructionconstruction

8.8. Ras Dashen Ras Dashen shoe factoryshoe factory

700700 PlannedPlanned

expansionexpansion

9.9. Walia ShoeWalia Shoe

FactoryFactory700700 PlannedPlanned

expansionexpansion

1010..

RamseaRamsea

Shoe factoryShoe factory30003000 PlannedPlanned

expansionexpansion


Support areas has already identified Support areas has already identified and action plan has designedand action plan has designed

- Marketing- Marketing - Trained manpower- Trained manpower - Logistics- Logistics - Fianancial requirements- Fianancial requirements - Quality finished leather- Quality finished leather - Environment issue- Environment issue

Supporting Upgradation of Selected Supporting Upgradation of Selected TanneriesTanneries

21 tanneries21 tanneries 80% of their production activity is in the form of semi-processed products80% of their production activity is in the form of semi-processed products

- 45% in pickled- 45% in pickled

- 25% in wet-blue- 25% in wet-blue

- 10 % in crust- 10 % in crust

- 20 % in finished leatrher - 20 % in finished leatrher In order to produce sufficent finished leather to the shoe and garment In order to produce sufficent finished leather to the shoe and garment

factories there need to upgrade or encourage to upgrade their production factories there need to upgrade or encourage to upgrade their production level.level.

11 factories have been identified as a first batch- on the basis of 11 factories have been identified as a first batch- on the basis of committment, experience, potentail, facility and readinesscommittment, experience, potentail, facility and readiness

Action Plan has been identified together with the operators-investment, Action Plan has been identified together with the operators-investment, marketing, human resource,policy issues etc.marketing, human resource,policy issues etc.

5 Strategic Textile Projects (All 5 Strategic Textile Projects (All private)private)

It is found that there is insufficent availability of It is found that there is insufficent availability of fabrics both in terms of quality and quantityfabrics both in terms of quality and quantity

Quite large number of garment factories import Quite large number of garment factories import fabricsfabrics

We have succeded to recruit investors who were We have succeded to recruit investors who were in other business to engage in the upstream in other business to engage in the upstream activities of producing yarn and fabricsactivities of producing yarn and fabrics

We have commenlf identified action planWe have commenlf identified action plan One of them will commence productio after one One of them will commence productio after one

month (1.7 million liner meter fabrics)month (1.7 million liner meter fabrics) The rest they are under diffrent investment stage The rest they are under diffrent investment stage

The way forewardThe way foreward

Export Plan (in million US$) 2006 2007 2008 2009 20010

Textile and garment 100 200 270 400 500 Textile and garment 100 200 270 400 500

Leather and leather products 105 180 250 350 500 Leather and leather products 105 180 250 350 500

Major constarints of the sector:Major constarints of the sector: -Low productivity-Low productivity - under capacity utilization- under capacity utilization - skills and qualificatins of workers- skills and qualificatins of workers - marketing problem- marketing problem - quality of product- quality of product - difficulty to access finance- difficulty to access finance - information and consultancy advice - information and consultancy advice

Recommended ActionRecommended Action Make the PPD very active Make the PPD very active Strengthen sectoral associationsStrengthen sectoral associations Strengthening existing capacitiesStrengthening existing capacities Expand capacitiesExpand capacities Investment promotionInvestment promotion Provission of information and consultancy adviceProvission of information and consultancy advice Quality and standardizationQuality and standardization Human resource developmentHuman resource development FinanceFinance Coordinating the value chainCoordinating the value chain Policy issuesPolicy issues Strengthen the Textile and Leather Industry Development Strengthen the Textile and Leather Industry Development

center to provide one stop support and servicecenter to provide one stop support and service Mobilization of External Support-GTZ, UNIDO, World BankMobilization of External Support-GTZ, UNIDO, World Bank

Thank You Very Much!!Thank You Very Much!!

One Stop Support Practice with Reference to Textile and Leather Sectors

Documents

current govt

civil service program

economic development

economic environment

market economy

global economy

ethiopian economy

economic reform prog