BOTTOM UP! · 1 bottom up! promoting a sustainable cotton & garment value chain from ethiopian...

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BOTTOM UP!PROMOTING A SUSTAINABLE COTTON &

GARMENT VALUE CHAIN FROM ETHIOPIAN

COTTON TO EUROPEAN CONSUMERS

APRIL 2019 – 2022

PARTNERS

• SOLIDARIDAD EUROPE

• SOLIDARIDAD ETHIOPIA

• DANISH ETHICAL TRADING INITIATIVE

• AID BY TRADE FOUNDATION

• MVO NEDERLAND

BACKGROUND

• BETTER MILL INITIATIVE (2015-2019)

• COTTON FEASIBILITY STUDY WITH H&M

• PILOT INITIATIVE COTTON (EP, H&M)

TO CONTRIBUTE TO A SUSTAINABLE, INCLUSIVE AND TRANSPARENT VALUE CHAIN THAT

GENERATES BUSINESS GROWTH, IMPROVES WORKING CONDITIONS, AND PROMOTES

LABOUR AND ENVIRONMENTAL STANDARDS AND RESPONSIBLE PURCHASING PRACTICES IN

THE COTTON AND GARMENTS INDUSTRY IN ETHIOPIA AND EUROPE BY 2021.

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OVERALL OBJECTIVE

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OUTCOMESSECURED TRACEABILITY, QUALITY AND

INCREASED VOLUMES OF VERIFIED

SUSTAINABLE COTTON BY 1 PRODUCER

UNION, 3 COMMERCIAL FARMS AND 2

GINNERIES BENEFITTING 2,000 FARMERS

AND 2,200 WORKERS

IMPROVED ENVIRONMENTAL & SOCIAL

PERFORMANCE, ADOPTION OF

STANDARDS, LOCAL UPTAKE OF COTTON

AND TRANSPARENCY OF 8

MILLS/FACTORIES BENEFITTING 17,000

WORKERS

ENSURED WIDER UPTAKE, KNOWLEDGE,

AWARENESS AND IMPROVED POLICIES

SUPPORTIVE OF RESPONSIBLE

PRODUCTION AMONG 3 GOVERNMENT

INSTITUTIONS, 2 PRIVATE SECTOR

ASSOCIATIONS & 8 FACTORIES/MILLS

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ENSURED PURCHASING OF SUSTAINABLE

(VERIFIED) GARMENTS FOR THE EU

MARKET BY 2 INTERNATIONAL BUYERS

FROM 8 MILLS/FACTORIES

IMPROVED AWARENESS, TRANSPARENCY

AND/OR WIDER MARKET UPTAKE OF

SUSTAINABLE GARMENTS FROM ETHIOPIA

BY AT LEAST 175 BUSINESSES FOR THE

EU MARKET

IMPROVED KNOWLEDGE AND AWARENESS

AMONG 1.2 MILLION CONSUMERS IN

GERMANY, DENMARK & THE

NETHERLANDS ON SUSTAINABILITY

ISSUES IN THE COTTON AND GARMENT

VALUE CHAIN

Funded by the Development Cooperation

Instrument of the European Union

MVO NEDERLAND

SOURCING GARMENTSAND TEXTILE IN ETHIOPIA

OPPORTUNITIES AND CHALLENGES

Marjolein van Gendt, MVO Nederland

New report:

Sourcing textile and garments in

Ethiopia – A new sourcing destination

MVO NEDERLAND

STRUCTURE▪ POTENTIAL OF THE SECTOR

▪ COMMERCIAL CHALLENGES

▪ SCP CHALLENGES

▪ THE FUTURE

MVO NEDERLAND

DEVELOPMENT OF T&G SECTOR

Potential of sector

MVO NEDERLAND

ETHIOPIA: AFRICA’S NEW GROWTH ENGINE

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Potential of sector

Greater social stability

Youthful potential

Privatisation

Promising start-up ecosystem

Strategic location

MVO NEDERLAND

COMPETITIVE ETHIOPIA

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Potential of sector

MVO NEDERLAND

COTTON

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Commercial challenges

MVO NEDERLAND

IMPORT/EXPORT DIFFICULTIES

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Commercial challenges

MVO NEDERLAND

LOW WORKFORCE PRODUCTIVITY

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Commercial challenges

MVO NEDERLAND

WAGES

Sourcing textile and garments in Ethiopia - A new sourcing destination13

SCP challenges

Source: Wageindicator.org. 3000 Ethiopian Birr roughly equals 100 USD.

MVO NEDERLAND

ILO FOUR FUNDAMENTAL PRINCIPLES AND RIGHTS AT WORK

• Child labour

• Forced labour

• Discrimination at

work

• Freedom of

association and

the right of

collective

bargaining

Sourcing textile and garments in Ethiopia - A new sourcing destination14

SCP challenges

MVO NEDERLAND

FUTURE

Working on

improvements:

▪ UNIDO

▪ GIZ

▪ Better Work

▪ Solidaridad (BMI

and Bottom UP!)

▪ CmiA

▪ Enterprise

Partners

▪ European Union

▪ DEG

▪ ILO

▪ IFTLGW

▪ USAID

▪ Private

companies like

H&M

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MVO NEDERLAND

MORE INFORMATION

Marjolein van Gendt

m.vangendt@mvonederland.nl

New report available online soon at

mvonederland.nl:

Sourcing textile and garments in

Ethiopia – A new sourcing destination

Beconnected Industrial

Geert van den Hoek

Beconnected in Ethiopia

2014Start Beconnected Africa in

Ethiopia

First buying house in Ethiopia

2015Beconnected Industrial

State of the art #1 Labeling & Printing factory in Ethiopia

Geert van den Hoek

Beconnected Industrial

Beconnected Industrial

Beconnected

ERVE

Why we chooseEthiopia?

Next sourcing country? Risk

NO BLD (Rana Plaza)

Worker favoring labor law

OpportunitySupply chain

Control production

CostsWages

Initial strategy forEthiopia

New optionvs. Asia

Basic garments

NominationsBrands

Volume

Grow industrySmall factories

Vertical factories

Last five years &Industry now

Textile & Garment units

<200 units

Most factories local & small

Export performance

< $180m

Reasons for industry slowdown

Industry developmentMaturity of industry

Speed of developments

Pricing & productivity

Low outputs

Long lead-times

Infrastructure

Ethiopia is landlocked

Transport cost

Transport duration

“Ethiopian” situation

Ease of doing business

Bureaucracy

Political stability

Adapting & new strategy

Product portfolioNew products

Invest

New businessExport (Kenya / Tanzania)

New nominations

New businessInternational factories

CMT

Current developments

Solve bottleneckIn-house accessories

Domestic accessories

Export growthBrand strategy

New brands

Industry parksFunctional & running

Expansion of Asian operation

InvestmentsNew parks

New investments

Beconnected now and future

SituationGrowth

Profit

Future plansExpansion

Further investments

ExperienceSolid supplier base

Competitive products vs Asia

Prediction growthEthiopia

GrowthIndustry parks & logistics

FDI & new factories

Efficiency improvements

Value ChainFabric mills / Dyeing

facilities

Trims (zippers, buttons, etc)

Brands & buyersH&M, TCP, PVH, Levi’s,

Decathlon, Auchan, LIDL, Carters, Gerber, etc.

You? What’s the next step?

More information

Geert van den Hoek

geert@beconnectedindustrial.com

www.beconnectedindustrial.com

www.beconnected.com

www.erve.com

MVO NEDERLAND

QUESTIONS&

ANSWERS

PUTTING YOUR COMPANY IN THE LIMELIGHT WITH CMIA

DATE: 02.05.2016

From Field to FashionEthiopia‘s potential for sustainablecotton textile supply chainsAlexandra Perschau, December 2019

The Cotton made in Africa initiative creates sustainable supply chains

09.01.2020COTTON MADE IN AFRICA – Bottom UP! Webinar December 2019 30

CmiA invests licence fee in Africa

- Farmer trainings - Certification - M&E- Community projects

Farmers produce sustainable cotton

- No GMO- Reduced toxic load

& carbon footprint- Rain water only

CmiA cotton is traded by nominated cotton traders worldwide

CmiA cotton is processed in retail partners´ supply chain

Retailers/brands pay a licence fee to use the CmiAproduct label~ 90 million CmiAtextiles in 2017

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1

2

3

4

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Cotton made in Africa (CmiA) works with 20+ partners in Sub-Saharan Africa

Addis Ababa

Afar

Tigray

Amhara

Benishangul Gumuz

OromiaSomali

SNNPR

Gambella

Burkina Faso

Côte d‘Ivoire

Ghana

Cameroon

Zambia

Mozambique

Tanzania

Uganda

Ethiopia

Nigeria

COTTON MADE IN AFRICA – Bottom UP! Webinar December 2019

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Ethiopia‘s vision for the national cotton sector (National Cotton Development Strategy NCDS 2017-2032)

Addis Ababa

Afar

Tigray

Amhara

Benishangul Gumuz

OromiaSomali

SNNPR

Gambella

21%

3%

46%

30%

Area in 2016/17 per type of farming systems % of total production

Comercial Irrigated

Small Irrigated

Comercial Rainfed

Small Rainfed

Source: ETIDI Presentation 2018

76% rain fed fed 24% irrigated

• Government considers cotton as raw material for the job engine textile industry

• Target: from 80,000 ha area (2017) increase to 1 Million ha in 2032• Sustainability emphasized, but many challenges exist and will even increase

if growth is realized at the envisaged pace

COTTON MADE IN AFRICA – Bottom UP! Webinar December 2019

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Actors and projects on (sustainable) cotton production

National

• Governmental: MoI, MoANR, EIIDE, ETIDI, EP

• Association: ECPGEA

• Ginning/Agri-Business

• Investors (often combined Agri + Textiles)

• NGO(s): PAN Ethiopia, Solidaridad Ethiopia

International

• Standards: CmiA, Organic, BCI

• Brands & Retailers: H&M, IKEA, etc.

• International NGOs: PAN UK, Solidaridad NL

• Donors: DIFID, GIZ

COTTON MADE IN AFRICA – Bottom UP! Webinar December 2019

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Different existing and emerging approaches for sustainable cotton in Ethiopia

Solidaridad / Bottom Up

CmiA Organic

Who? Solidaridad AbTF / ECPGEA PAN Ethiopia/ Shelle MellaCooperative

Where? Afar/ Tigray North Gondar/ Amhara Arba Minch/ SNNPR

Farming-System Large Farms + smallholders / rain-fed + irrigated

Smallholders/rain-fed smallholders/ irrigated

Nr of Farmers & Lint Cotton

Ca. 200 + (3 Large Farms);65 tons

Ca. 15.000 farmers;10.000 tons

Ca. 200 (>4.000 trained in IPM)Ca 60 tons

Perspectives Objective 2000 smallholder farmers

Region currently not accessible for audit – nocertified cotton currentlyavailable

Growth potential; purchaseat premium price securedon national market

COTTON MADE IN AFRICA – Bottom UP! Webinar December 2019

Ethiopia about to formally apply for Better Cotton Initiative (BCI) New Country Start-Up Process.

• Biodiversity issues, such as missing crop rotation

• Soil fertility management related to delayed adoption of Conservation Agriculture

• Tillage methods supporting soil erosion

• Use of unacceptable pesticides, e.g. Endosulfan

• Unsustainable irrigation practices

• Problematic labour conditions for farm workers

• Seed cotton quality aspects, including (re-)use of (damaged) polybags

• Additional challenges on ginnery level, esp. health & safety and waste management

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Key sustainability gaps encountered in Ethiopia

COTTON MADE IN AFRICA – Bottom UP! Webinar December 2019

Opportunities• Field to Fashion potential Demand for sustainable cotton from international brands supports required change of current status quo

Political will to support system change International expertise available/accessible to support smallholders and large farms

Challenges• Improved linkages & communication

between actors in the supply chain needed

• Coordination of activties of various actors

• Building technical knowledge and management capacities required

• (Substantial) Investments in „hardware“ needed

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Summary of opportunities and challenges

COTTON MADE IN AFRICA – Bottom UP! Webinar December 2019

THANK YOU

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COTTON MADE IN AFRICA – Bottom UP! Webinar December 2019

Alexandra Perschau

Director Standard & Outreach Africa

Gurlittstr. 14

20099 Hamburg

Germany

Tel: +49 (0) 40 2576 755 31

alexandra.perschau@abt-foundation.org

www.cottonmadeinafrica.org

MVO NEDERLAND

QUESTIONS&

ANSWERS

General Information

H&M’S SUSTAINABLE SOURCING STRATEGY IN ETHIOPIA

Gabriel Prodip Sara SeyedSustainability at H&M Ethiopia

General Information

Federal government structure9 regions; 2 chartered citiesParliamentary system

Governance structure

GDP- 84.35 USD BnGDP growth rate: 10%Area: 1.1 million square kilometers

Economy

Population: ~105 Mn (2017), second most populous country in AfricaPopulation growth (annual %)- 2.5%Life expectancy- 65 years

Demographics

▪ Prime Minister: Dr Abiy Ahmed

▪ Head of Government

▪ President: Sehale-Work Zewde

▪ Head of State

Federal Democratic Republic of Ethiopia

General Information

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Regional Comparison:

• Top 5 FDI Destinations in Africa

• Consistently in Top 5 list for past 3 years

Egypt

Ethiopia

Morocco

Congo

South Africa

Ethiopia

1st

2nd

3rd

4th

5th

Source: World Investment Report 2019

General Information

Ethiopia has undergone significant changes over the last year; opening up of the economy is currently underway

General Information

1 Targeted investment in priority areas

KEY GOVERNMENT STRATEGIES TO ATTAIN VISION

DEEP DIVE FOLLOWS

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2

4

Development of world-class industrial parks fitted with sustainable infrastructure

Conducive enabling environment

Tailored incentives

The country has set the vision to become the leading manufacturing hub of Africa and a preferred destination for FDI by 2025

General Information

Textile and Apparel • Potential to develop a competitive cotton or textiles industry: potential for backward and forward linkage• 54 million trainable workforce with competitive wages, cheap electricity• Strategically located with easy access to international value chains with access to a state-of-the-art container port

(Djibouti)• Duty-free and quota free access to the European Union (EU) and U.S. markets through the African Growth and

Opportunity Act• Investment Opportunities

• Ginning, integrated textile mills, spinning, weaving and/or knitting, dyeing and printing,• Production of garments; the manufacturing of knitted and crocheted fabrics, carpets, and sportswear, among others

1 Strategic priority areas have been identified for FDI attraction and export promotion

General Information

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General Information

Industrial Parks:

Catalyst to drive Ethiopia’s

industrialization agenda

15 parks are conceived and 7 are

Functional

2 Several plug-and-play Industrial Parks are being developed through out the country

General Information

Africa’s 1st park with zero

liquid discharge facility (ZLD)

2 Sustainability is integral element of the parks

General Information

Electric-powered Railwayto ease logistics Africa’s 1st electric-powered railway

Development of world-class industrial parks fitted with sustainable infrastructureMassive investment has also been made in infrastructure development in support of industry (1/3)

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General Information

Ethiopian Airlines – Cargo hubLargest cargo network and terminal in Africa

Massive investment has also been made in infrastructure development in support of industry (2/3)

2

General Information

What We Can do Better..

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General Information

Enabling Stakeholders …

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MVO NEDERLAND

QUESTIONS&

ANSWERS

MVO NEDERLAND

CONTACT

Stijn van Geel, Solidaridad Europe stijn.vangeel@solidaridadnetwork.org

Kalayu Gebru, Solidaridad Ethiopia kalayu.gebru@solidaridadnetwork.org

Marjolein van Gendt, MVO Nederland m.vangendt@mvonederland.nl

Frans Tilstra, MVO Nederland f.tilstra@mvonederland.nl

Alexandra Perschau, CmiA alexandra.perschau@abt-foundation.org

Janine Dortmundt, DIEH jd@dieh.dk