H&M has signed a long-term sourcing agreement with a new textile factory in Ethiopia that promises to provide up to 4,000 new jobs. Established by development financier Swedfund and DBL Group, a Bangladesh-based exporter of ready-made garments, the Mekelle-sited facility cites “decent working conditions, job creation for women, and environmental considerations” among its goals. The joint venture has been a couple of years in the making. Despite a storied history of textile, leather, and shoe production—a relic of Italy’s occupation between 1936 to 1941—Ethiopian manufacturers found themselves outpaced in recent decades by nimbler, cheaper Asian suppliers. A strong domestic industry, Swedfund says, is key to reviving jobs in the sub-Saharan nation, which the World Bank counts among the poorest in the world.

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Besides H&M, which has signed on as a long-term buyer, the project will also involve other local and international partners to “enhance the know-how around sustainable production of ready-made garments” in Ethiopia, according to Anna Ryott, managing director at Swedfund.

The Swedish retailer will also contribute its expertise with large-scale textile production in a “sustainable way,” she said.

“We have managed to form a unique partnership in Ethiopia with deep professional knowledge in every part of the process in order to fulfill the high sustainability requirements,” Ryott said. “It is a great example of how to work to achieve efficient job creation, and in this project it is particularly focused on women.”

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“Job creation is crucial to help people find their way out of poverty and the cooperation with such a great partners like H&M and DBL will make this a role model for other similar projects,” Ryott added.

DBL will be the sole owner of the factory, which it says will be focused only on export.

”H&M is pleased that Swedfund is co-financing a project with DBL Group,” said Helena Helmersson, global head of production at H&M. “H&M wants to contribute to a long-term sustainable textile industry in Ethiopia taking social as well as environmental dimensions into consideration. It is important to us that both DBL and Swedfund are putting these questions on top of their agenda when doing investments.”

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