ETHIOPIA – A new Chinese company, Shaoxing Li Enterprise, is to inaugurate in May a woven polypropylene bag factory, said to be the largest in Ethiopia so far, with a capital of 520 million Br and a designed production capacity of 27,000tn a year.

The factory is located on a 16-hectare plot of land in Amhara Regional State in North Shewa around Hagere Maryam, 64Km from Addis Abeba. The company got its licence in September 2011.

Named after its owner, the company will initially produce 7,000tn a year using polypropylene and polyethylene as raw materials all fully imported from the Middle East. The products include ordinary sacks, jumbo bags as well as hand-bags and shopping bags. Shaoxing Li has been in production for 10 years in China and Vietnam.

Once it starts production, the factory will be the biggest large-scale woven bag factory in the country, Yonas Abate (Eng.) Plastic & Rubber Industry Development Institute director at the Ministry of Industry (MOI) told Fortune.

Currently, there are 13 similar factories in Ethiopia with a combined annual output of 15,000tn, Yonas said. Among the 13, the largest two, Oxford Plc and Inova Plc, have production capacities of 8,100tn and 8,000tn of bags annually, but actually manage to produce only six thousand tonnes between them. The problem, according to Yonas, is power shortage. The two factories are engaged in indirect export, supplying their products to the World Food Programme (WFP), which uses them for packaging deliveries to other African countries.

The increase in agricultural production, the sugar and cement factories scheduled to be launched in the short-term, and the Yayu fertilizer factory, will create increasing demand for polypropylene bags, said Yonas.

Already the Chinese company, here because of Ethiopia’s relative peace and cheap labour, has begun to complain.

“Power interruptions and unavailability of network are becoming a difficulty for the factory,” said Rongrong Lin, deputy general manager of the enterprise.

The prominent challenge in the sector, which is hindering the factories from producing at their total designed capacity, Yonas said, is electricity supply and interruptions, as the sector needs a high power supply. The second problem is foreign currency shortage and excessive delays in getting access to it for the import of raw materials. The absence of trained manpower in plastics technology is also a problem, he added.

Shaoxing Li Enterprise needs 10 megawatts to operate at its full designed production capacity. It has already been given access to two megawatts of power, with the MoI having requested two more for it, Yonas explained.

Technological transfer, foreign currency reserve and employment opportunities will be the positive impacts of the new factory.

May 13, 2015;