Summary
Established in 2008, Adama Spinning Factory is a privately owned, 100% cotton yarn manufacturer with a state-of-the-art spinning facility that has an 11-ton per day capacity. In 2013, the company expanded production into reeling and sock knitting, with a 2,000 pair per day capacity.
The factory produces different counts of cotton yarn by using locally cultivated lint cotton sourced from the Awash valley and around Gondar.
The company’s strategic location provides it with the requisite infrastructure, including reliable electric power and water, proximity to cotton growing areas, availability of abundant labor, and easy access to Addis Ababa-Djibouti road and railway.
The company holds IS0 9001 QMS certification and is WRAP Principles compliant.
Investment Thesis
As a priority government sector and one of the fastest growing industries in Ethiopia, a sound investment case could be made for investing in textile manufacturing companies such as Adama Spinning Factory.
As demand continues to grow, there will be an increased need both for production facilities, but also companies that can support and facilitate cotton production at the top of the value-chain. An RLI strategy could be to pair an investment in Adama Spinning Factory with capacity building for local cotton farmers to ensure consistent and quality input for the factory, while simultaneously promoting income generating activities for refugee and host smallholder farmers in the region.
With the government’s continued commitment to industrial park development as employment generating and localized production mechanisms, there will continue to be an increased in demand for fabrics and raw cotton inputs. Furthermore, the government has provided special incentive packages, including tax breaks, for priority industries which currently includes textiles, as well as for operations in under-served markets like Adama.
Refugee Impact
As with most companies in Ethiopia, there is significant opportunity for the RLI network to raise awareness of refugee-integration opportunities and benefits. There remains a significant gap between the right-to-work laws enacted by the federal government and the business community’s understanding of these rights, as well as their own capacities for engaging refugee populations. This awareness gap can also be seen in the refugee populations themselves who may not fully understand their rights to gainful employment in the formal economy.
Operational capacity building would allow Adama Spinning Factory and other textile manufacturers to grow their operations, which in turn could lead to increased employment opportunities for refugees and IDPs. With the right coaching and guidance, they could target hiring within refugee communities.