My Shoes will be the fourth foreign-owned leather shoe factory of 20 in operation and will increase capital outlay to $60m in three years
A Turkish shoe company laid its cornerstone on a 70,000sqm plot in Debre Birhan on April 24, 2015 for the construction of a shoe and leather manufacturing plant targeting exclusivity.
My Shoes Shoe & Leather Manufacturing Plc will initially invest
35 million dollars on the land which it leased for 80 years at 50 cents a square meter when it acquired its license in February 2015, according to one of its owners, Mehmet Yesildag, who is the major shareholder and general manager of the company.
The factory, which will have a production capacity of 30,000 shoes, will eventually push its capital to 60 million dollars after three years.
The company decided to invest in Ethiopia because of low cost of labor and energy and better tax incentives for export, said Mehmet.
Sixty-percent of the raw materials used for the production of the shoes will be imported mainly from Europe and the Middle East, whereas the remaining 40pc of the raw materials will be obtained from the local market. The company’s raw material cost is expected to reach 16 million dollars annually.
The destinations for the company’s products will be Spain, England, France, United States and Middle Eastern countries, from which it aims to raise annual revenue of 34 million dollars.
The design for the factory has already been completed and construction will begin in May, 2015 says Shiferaw Mamo, investment co-coordinator at the Debre Birhan investment bureau. The plant will rest on 60pc of the land. The company is expected to employ 1,962 people initially, eventually growing to 3,000.
Shiferaw says that Debre Birhan has a number of allures, including the low cost of land, much cheaper than the usual lease rate of around 2,000Br a square metre.
Currently, there are 20 leather shoe factories in the country, excluding small scale producers, said Birhanu Serjebo corporate communication director at the Ministry of Industry’s Leather Industry Development Institute. My Shoes will be the fourth fully foreign-owned shoe manufacturer in Ethiopia. The three that are already in production are George Shoe of Taiwan, Huajian International Shoe City Plc of China, and Oliberte, a fair-trade shoe maker from Canada, all of which fully export their shoes. Domestically owned factories are manufacturing mainly for the home market, while international companies manufacture for the international market, said Birhanu.
Huajian, established in January 2012, is the largest of all with a production capacity of 2.19 million shoes a year from its plant located in the Eastern Industrial Zone.
Ethiopia made 30 million dollars from the export of shoes last year, says Birhanu.
Even though it cannot be said that this sector is sufficiently attracting foreign direct investment compared to the country’s resource of livestock, the number of foreign investments in the shoe and leather sector is showing improvement, says Aschalew Taddese, foreign investment promotion team leader at the Ethiopian Investment Commission. Besides creating employment opportunities for the people, the opening of the My Shoes Shoe & Leather Manufacturing Plc at Debre Birhan will diversify and create fair distribution of investments other than concentration within Addis Abeba, he added.
[AddisFortune]