Landmark fund launched to help protect textile industry jobs in Ethiopia

Addis Ababa, October 30, 2020 (FBC) – A landmark fund set up between the UK and Germany in collaboration with the government of Ethiopia could save thousands of jobs in Ethiopia’s textile and garments industry, while helping to support the country’s economic recovery from COVID-19.

With $6.5 million invested at launch, the partnership aims to help safeguard a critical industry and protect the livelihoods of those working within it.

Through the fund, textile factories in Ethiopia’s industrial parks can apply for wage subsidies – similar to the furlough schemes operating in many countries including the UK and Germany – and incentives to reward businesses that are able to adapt in response to COVID-19.

The funding announced yesterday will kickstart the facility and the partnership may further expand its reach through additional support in the coming months.

Ethiopia’s textile and garment industry is a leading provider of jobs in the country’s manufacturing sector.

Nigussu Tilahun, commissioner of Ethiopia’s Jobs Creation Commission said: “The FDRE Jobs Creation Commission estimates that close to 1.4 million wage employment opportunities are under threat and approximately 1.9 million people in vulnerable employment will lose their income due to the economic shock of COVID-19. This facility and other similar programs are crucial as they will support the factories being affected by the pandemic and help protect jobs in industrial parks, while slowing down the harsh economic impact.”

At the start of the pandemic, textile and garment factories in Ethiopia’s industrial parks employed 95,000 people, with women accounting for 70 per cent of these jobs. Job losses would have a significant impact on vulnerable households.

The wage subsidy will cover a portion of total employment costs for textile factory workers in Ethiopia’s industrial parks. The fund will protect jobs, enable textile factories to keep running and support factories to build back better. Meanwhile, the innovation incentive will reward factories that have been able to demonstrate their ability to make their businesses more resilient in the face of COVID-19, including through the development of new production lines and partnerships.

To be eligible for the support, businesses will need to show they have experienced an economic shock and that they have a business recovery plan. Businesses will also need to commit to certain principles like adhering to International Labour Organization core labour standards.

The Commercial Bank of Ethiopia will be responsible for assessing applications and disbursing the funding to factories. Continuing the international collaboration at the heart of the fund, UK Aid-funded FSD Africa will implement the project in partnership with First Consult, a leading Ethiopian consulting firm.

Lelise Neme, commissioner of the Ethiopian Investment Commission, said: “This Emergency Job Protection Facility will help elevate manufacturing companies to sustain their businesses and reduce the impact on their financial performance.”