Upgrading locally based companies

Supporting Ethiopia’s pathway towards stable long-term industrialisation

Sustainable Industrial Clusters (S.I.C.) / Environmental and Social Standards in the Textile and Garment Industry in Ethiopia

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  • Commissioning Party

    German Federal Ministry for Economic Cooperation and Development (BMZ)

  • Country
  • Overall term

    2021 to 2024

  • Other Stakeholders

    Foreign, Commonwealth and Development Office (FCDO) of the United Kingdom

  • Products and expertise

    Economic development and employment

Building capabilities of industrial parks, here Hawassa Industrial Park (one of six parks the project operates in)


Ethiopia has a population of more than 120 million of which the majority is young. At the same time, the urban unemployment rate is more than 30 per cent (pre-COVID-19). Therefore, the government prioritises sectors like manufacturing that can create jobs on a large scale. The light manufacturing sector including the textile and garment industry accounts for a large part of the country’s manufacturing exports. It continues to be labour intensive, employing up to six times more people (the vast majority women) than other manufacturing sectors.

While the manufacturing sector attracted 50 per cent of Ethiopia’s total foreign direct investment (FDI) in 2019, investment alone does not guarantee long-term job creation and economic growth. Besides Ethiopia’s challenging political context, it also faces a lack of financing, sector-specific technical skills and strategic coordination among actors as well as inadequate compliance standards and industrial work culture. As this hinders stable industrial growth, measures are needed to make the sector more competitive and stable in the global market.


Ethiopia’s manufacturing sector, with a focus on textile, garment and leather industry, is creating decent jobs and moving towards more stable economic growth.

Empowering women: Female operators benefiting from a social dialogue platform in a session in Buna Tetu (Workers’ Café)


The project promotes long-term stable industrialisation by:

  • Improving working and living conditions for the mainly female factory workers in the selected industrial parks by preventing gender-based violence and harassment at work, as well as setting up social dialogue platforms like workers’ cafés and grievance mechanisms.
  • Making industrial parks more climate sensitive with a relevant regulatory framework, mobilisation of investments and technical assistance to set up ecological industrial parks.
  • Improving social and environmental regulations and enabling compliance and government enforcement of them.
  • Enabling locally based businesses to supply to industrial parks and buyers/fashion brands abroad.

Last update: July 2023

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