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The largest shoe factory in Ethiopia is under
construction in the Tigray Regional State, Wukro
area, with a projected investment of 264 million Br.
One of the 13 subsidiary companies of the Endowment
Fund for the Rehabilitation of Tigray (EFFORT),
Sheba Tannery Plc, is undertaking the construction
of the plant, hoping to begin operation in mid-2008.
Sheba will finance 60pc of the investment with a
loan from the Development Bank of Ethiopia, and will
pay the remaining balance in cash.
“We expect this factory will have a major role in
achieving the foreign exchange Ethiopia plans to
fetch from the export of shoes,” Seleshi Lemma, head
of the Textile, Leather, and Garment Development
Department at the Ministry of Trade and Industry (MoTI),
told Fortune.
In 2006/07, Ethiopia secured six million dollars
from shoe exports, and has set a target to earn 50
million dollars in revenue this fiscal year.
The factory will have a production capacity of over
two million pairs of shoes per year, almost doubling
the combined 1.2 million pairs turned out by Anbessa
and Tikur Abay shoe factories, the largest current
state-owned operators.
Though Sheba, located 829Km north of Addis Abeba,
was established 14 years ago to process hides and
skins from Tigray, Wollo and Gonder, it began
operation in 2004. It now processes up to 8,000
sheep and goat skins per day.
“When this company was established in Wukro, it was
primarily intended to use Mitsiwa, one of Eritrea’s
ports that is only 400Km away, as an outlet,” a
member of one of the company’s project offices said.
“After the Ethio-Eritrean war broke out, we could
not use the port, and we could not produce until a
different business strategy was studied.”
A
strategy has been designed to export the shoes and
finished leather products through the Port of
Djibouti, 1,709Km from the plant, and make the
company profitable, he told Fortune. He
declined to disclose more details of this strategy.
However, an economist sees the strategy with
scepticism.
“It cannot compete with the other shoe exporting
factories, which have easier access to the port of
Djibouti,” he asserted.
Currently, there are six private and government shoe
exporting factories. There are also other 13
factories that have upgraded their capacities to the
level of exporting for the 2007/08 budget year.
Moreover, Germany’s Ara Shoes AG, Europe’s largest
shoemaker, has rented a warehouse in preparation to
produce shoes in Ethiopia. The government is
supporting the company by preparing a 10,000sqm plot
for the company’s local manufacturing plant.
Sheba has issued a tender to procure machinery,
moulds and other equipment estimated to be worth
more than 30 million Br to arm its factory. The
company also plans to hire more than 1,500 employees
in addition to the 150 employees staffing its
warehouse.
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