“I Want to be the Top Industrialist Woman in Africa.”
Amelework Gidey is Founder and Managing Director of Technostyle, a company known for over 20 years as a furniture importer and distributer. She is one of the leading female entrepreneurs in Ethiopia’s emerging manufacturing sector. With the acquisition of the foam and furniture manufacturing division of MNS, a Turkish based textile manufacturer and exporter, Technostyle has been expanding through backward integration of its core businesses since 2015. This has given the company a better competitive edge as it now controls a good proportion of the supply of raw materials. Amelework is President of Ethiopian Furniture Producers Association. She is also amongst the 11 brave women who promoted and led the formation of Enat Bank, one of the few women-initiated and largely-women-owned financial institutions in Africa and the Middle East.
From a humble beginning more that 20 years ago, Technostyle currently employs over 400, including expats from Turkey, Italy, and Kenya. The company’s annual turnover has surpassed 600 million Birr. With planned expansion projects, the company aspires to further create jobs for about 700 people. She has already taken a plot of land in Legetafo, in the state of Oromia, for the purpose. With the realization of the project, Technostyle is well positioned to expand into export markets. She has already gotten product approvals from foreign buyers, including large furniture retailers in Dubai. Two showrooms are also operational in Kenya and Uganda.
Amelework rolled out a bold vision for Technostyle—excel to be the number one furniture manufacturer and distributor in East and Central Africa by 2025. She sat down with EBR editors to discuss her business journey, challenges, and prospects. Excerpt:
Tell us how you became a businesswoman?
I was born and raised in Rayana Kobo, a town in northern Ethiopia (North Wollo) from a very hardworking and disciplined family. They paid dearly to support their children and afford them a very good education.
Ever since, I have aspired to be a strong woman and envision becoming the best in whatever field I engage in. I studied sociology at Addis Ababa University at the undergraduate level and further went to California to study international business at the master’s level. But, before finishing my MBA, I had to establish a family and move to Nairobi, where I lived for seven years. In Kenya, I worked for a furniture company and developed a strong enthusiasm to pursue the business.
I came back to Ethiopia in 1996 and started my own furniture company with three staff and ETB60,000 in registered capital. We started with a distribution business and later grew to importing one or two containers of furniture. What we started with that humble beginning has now grown to over 400 employees. We did not have enough money to import bulk orders directly from manufacturers. So we used to buy pieces from different suppliers. We also used to take furniture from local producers on a credit basis. We grew fast because of Ethiopian private banks. The growth and expansion of the banking industry created a big opportunity for Technostyle and other furniture suppliers. Six years ago, we shifted to manufacturing and began import substitution. Now, we are preparing for export.
You studied sociology but become a businesswoman. The discipline focuses on social and human issues. With such a background, haven’t you ever been tempted to engage in civil society and charitable activities?
Studying sociology was a good opportunity. The study had well-rounded courses, enough to introduce me to several fields. But the driving force for what I have become now, is what I have had in mind since childhood: the dream of becoming a successful businesswoman. And my parents instilled in me good values like hard work, being God fearing, and to always do things in the right way, no short cutting. Discipline is the core value needed to succeed in business.
Tell us about your business philosophy.
Good values are primarily implanted during childhood. So, my upbringing and parenting mattered most to what we do and have become later. My parents have done that to me and I am doing the same to my children. My children are also hard working and disciplined. They are shareholders in the company but they never ask for money. They just work and contribute to the growth of the company. Children become what family gives them during childhood.
There were many ways to become a millionaire through shortcuts. But I resisted temptations and chose to engage in real value creation in furniture manufacturing. I believe in building a strong institution.
Some educated, successful, and empowered women are not successful family women.
I believe there should not be such competition with family. A husband and wife are partners in life and should always collaborate. The problem in Ethiopia is not between successful women and their husbands. It’s the blurred perception that we have as a society. As more and more women get educated and become more assertive of their rights and roles, the same isn’t happening in the society.
How much is your current capital?
From a humble beginning in 1997 with only ETB60,000 in startup capital, the company’s capital has been steadily growing at a rate of 20Pct annually. Our turnover in the first year was ETB800,000. Our current registered capital is ETB57 million, and turnover has surpassed ETB600 million. In line with our vision of becoming the number one furniture manufacturer and distributor in East and Central Africa by 2025, we are expanding and heavily investing to build our capacities. Currently, we are also building a G+12 showroom around Meskel Square.
We are a large tax paying company and every year we are awarded gold medal for that. But it is different now since we shifted to manufacturing. Unlike importing, manufacturing does not pay off immediately. But our industries are gradually starting to be profitable. Investing in manufacturing is like planting an apple tree. Once the tree is grown, you will keep harvesting the fruit for a long period. It’s very challenging. So you need to be very patient. I sold my personal properties to make this investment. Many people thought I was crazy when I did that. But I am planting a tree. I am building this company to last for generations.
Have you started exporting?
First, we started manufacturing office furniture, with the ETB12 million loan we took from Enat Bank. It was located in Akaki district but I had to demolish the factory, because the land was needed for the city railway project. We lost the machinery, raw material, and paid a considerable amount of bank interest in vain. However, the land was fenced and kept idle for many years.
Fortunately, a Turkish company named MNS asked me to buy its foam factory, which the investor was told to close down because his business license only allowed textile manufacturing. At the time, I didn’t even have one million Birr. I wrote a letter to the Ministry of Industry about my intentions. The Minister, who was a Board Member of the Development Bank of Ethiopia (DBE), had heard a lot about my strength. He knew that I am a hard working person having expertise in the sector. I had nothing but a strong will and vision. The bank encouraged me and the loan was approved, seven years ago. We then acquired the foam factory and expanded it into an office furniture factory as well. Together with the foam industry, we have built four factories in Legetafo.
What are the major challenges in the process?
There was a skill shortage, so we brought expats and trained our local workforce. In fact, we invested more than what we already had, to excel. We first started producing exportable foam mattresses for four- and five-star hotels. Then we went on to produce home and hotel furniture. Finally, we are becoming an end-to-end furniture company. A furniture company must feed itself. We really worked hard to create a world-class furniture factory.
My employees are extraordinarily hard working. We have Kenyan, Turkish, and Italian staff in our team. Top economists and marketing experts also work with us as advisors and consultants. It is simple to bring products from overseas and sell it here. However, it takes a large investment, time, and a lot of hard work to create a sustainable industry.
With the capacities that we have built now, we can start exporting today. But we want to create a sustainable production capacity with a solid input supply before entering the export market. Export must be a continuous process. Our products are accepted in Dubai. I want to invest further in backward linkages to ensure an uninterrupted raw material supply and production. That means expanding into wood, textile, metal, and accessories production.
I heard that you have supplied furniture to the PM’s office. Is it true?
That is not true. When I stopped importing and shifted to manufacturing locally, I could not win bids as such because government purchasers think locally produced furniture are of inferior quality. But, this is not true.
However, there was one incident. The Ministry of Science and Technology was almost ready to award a furniture procurement auction to foreign suppliers. I challenged them. The Minister at the time was Abiy Ahmed (PhD) and I went to his office. He asked me if my company could manufacture office workstations. I said yes. We then produced the sample and the Minister liked it. We were then awarded the entire project.
I have never received any preferential treatment from anyone, especially from the government, because I am a woman. I never do business like that. I earned success with blood and sweat.
How much have you invested in the factories so far?
There is no furniture factory like ours in the whole of East Africa. We have invested ETB300 million and we are planning to invest more. We have taken loans from Enat Bank, DBE, Commercial Bank of Ethiopia (CBE), and others. One of the reasons why our factories could not be profitable in the short run is because private banks’ charge high interest on loans. It is killing us. But I do everything genuinely, so I can go with my head held up high. I never do any shady business. I work for my name, not for money.
What should government do to expand manufacturing in Ethiopia?
Government must ensure easy access to land and finance. Interest rates should be lower for manufacturing. DBE is highly supportive of me. And I have never defaulted.
Some people argue corporate tax rates should be decreased for investors in manufacturing and agriculture.
If you aim high, Ethiopia’s tax regime is relatively favorable compared to some countries. Government builds infrastructure only when it collects taxes effectively.
But tax holidays are necessary for manufacturers, until their factories enter full-scale production and are able to generate profit. The manufacturer also reinvests the money. Improved tax holiday programs are especially necessary for Ethiopian investors.
Furniture is imported into Ethiopia in billions of Birr every year. Close to ten companies are under preparations to invest in local furniture manufacturing. Government should provide experts for such new factories, just like what it does for textile producers. Then, Ethiopia can effectively substitute furniture imports.
But currently, private banks provide loans at 18Pct interest, while exporters access loans at 7Pct and 10Pct. The exporters import the raw materials we need and sell it to us at a profit margin of up to 40Pct. We have to pay all this interest because we cannot access foreign currency easily. This is where the government should focus on. If government wants the manufacturing sector to grow, it should take policy decisions that will make industrial products cheaper. When the price of locally manufactured goods is less compared to outside goods, then importing will be less attractive. Currently importers are favored.
What is the capacity of local furniture manufacturers?
Existing factories have enough installed capacity to meet local demand. But it is difficult to produce all the required inputs and raw materials locally. There is no ‘self-sufficiency’ concept in furniture. Even Italy imports some parts from other countries. Ethiopia can produce at least 90Pct of the required raw materials locally. Government must focus on building local capacity.
Furniture is a household industry. It does not need foreign direct investment. Currently, there are amazing furniture companies emerging. In the future, Technostyle might leave furniture manufacturing for raw materials production. We can supply raw materials for small- and medium-scale furniture enterprises, so that they produce the end products.
Then you will sell the furniture under your brand?
That is my plan. We will train and build their capacities so that they produce with our standards. This is how the furniture industry grew in Turkey, Italy, and other countries.
How much of the total demand is met by local manufacturers?
I would say less than 50Pct. We are studying it because it is a very dynamic sector. As the construction sector is growing, the furniture industry is also growing. However, there is fluctuation.
In a number of sectors, associations become toothless because members compete with one another, rather than uniting to push the government to introduce policies favoring their industry.
In our case, we do not compete, we collaborate. We are working to transform importers into manufacturers. There are no furniture manufacturers to compete with. Technostyle escaped the competition by moving ahead. We are the top competitor among the 12 strong furniture manufacturers in East Africa. Nobody wants to give that credit to a successful woman. It is bad culture. I was one of the 11 visionary founding women of Enat Bank. Each one of us was assigned to excel in our respective sectors. Mine was to excel in furniture. We have succeeded.
I am also one of the founders of Berhan Bank.
Tell us about a special challenge you have faced.
Shortly after I established Technostyle, another company took all of my 12 employees, including the manager. I re-started from scratch and survived. A documentary about the challenges I survived will be produced to educate young women.
Do you have plans to support women?
I want to train 100 women furniture manufacturers like me in Ethiopia. I will be their raw material supplier. That is my ultimate plan. I like changing people’s lives.
How do you evaluate the performance of Enat Bank, in terms of empowering women?
I am so happy. Enat Bank started empowering women economically, but it is like any other commercial bank. The founders are women but many men are shareholders and clients.
The future is good for Enat Bank. If Ethiopia opens up the banking sector to foreign banks, they will prioritize working with Enat Bank, as it will benefit their social responsibilities.
There are still many challenges for women to start business, one of which is finance. Enat Bank is trying to solve that. Most of the collateral is in the hands of men. So, we have to work to empower women from the grassroots. Women have to start businesses on their own, too. Women must have title deeds in their names. In fact, our social structure needs to change as well.
What do you think are major challenges that hold women back?
The younger generations of women are highly business-minded. The attitude change is occurring faster than we imagined. What women need now is to be a risk taker. Unless they take risks to take credit, start businesses, fail, take lessons, and get back up, they cannot succeed in the business world.
Women are still seen as housewives, making them economically dependent. The society needs to provide extra encouragement for women. Men have more business opportunities through informal networking. Women must finalize what they start. Enat Bank had to have been successful to change the mindset of those who doubted us.
Some argue affirmative action is no longer necessary because they see what Ethiopia has done over the last 30 years as enough.
Affirmative action is necessitated because of the historical injustices faced by women. Still, we are living in a society where women are not allowed to go to school in some rural areas. There are very few women at the top of businesses. So affirmative action must continue, at least for the next ten years. Women must access free education. In Kenya, women access loans at 2Pct less interest than men. We need more women in the economy and in policy making.
What do you think is the way out of the foreign currency crisis?
Government should solve the challenges industries are facing, rather than attracting new investments. Some 30 factories can satisfy the local furniture demand, if they operate at full capacity. Most factories in the furniture sector are facing a lack of land, financing, skill, and market. The government should provide more incentives to these companies to solve their problems. The Ethiopian government is not supporting them, where as foreign furniture companies in Ethiopia are provided full support by their governments at home. Plus, the Ethiopian government receives them with a red carpet and provides them with more than 70Pct of the working capital they need. This happens while Ethiopia discourages its own investors, which could bring about sustainable economic growth. The focus on foreign investors and lack of proper and adequate incentives to domestic investors is ill-advised.
Government can select 30 local furniture manufacturers, to closely work with the construction industry and procurement system. Government invested significant amounts of money to build the technical skills of textile factories. Furniture can grow dramatically, with less investment, if Ethiopia does the same.
The furniture industry is a large economy. Because of poor policies, Ethiopia has become a dump site for poor quality furniture imports. Furniture is wasted every year, without serving for at least five years. If the government supports local manufacturers, imports can be sufficiently substituted in few years’ time.
Do you support feminism?
I did not lose anything in life because I am a woman. I believe in collaboration between men and women. I usually only read or do what adds value to my knowledge, skill, profession, and industry.
What is your vision?
Our vision is to become the leading furniture manufacturer and distributor in East and Central Africa by 2025. I want to be the top industrialist woman in Africa.
We are getting closer to 2025.
I am also getting closer to my vision. I am sure we will achieve it. Not many companies are ahead of us. Many foreigners who visit our factory say “it is a shame for Ethiopia to import furniture while such a huge factory is already built.” We know the leading furniture manufacturers in the world. We participate in all of the four major international furniture exhibitions annually, in China, America, Italy, and Turkey. We know the quality of each manufacturer and see where we are as well.
I have a very clear plan to achieve my vision. Currently we are working on a metal engineering factory which rests on 12,000 square meters of land.
We are also creating a joint venture with Moroccan and Italian companies, to manufacture mattresses for hospital and star-rated hotels.
What is your biggest success?
The decision we made to enter manufacturing is my biggest success. We are reinvesting our retained earnings every year. My children and I will not take any of our retained earnings for the next six years. We were furniture importers for over 20 years. We shifted to local manufacturing as of six years ago. And I consider the decision made to start manufacturing as one of the best decisions that I made.
Our company will become a share company soon. If my key partners can invest in the company, it will be more sustainable. If we don’t do that and keep struggling alone, we will be swallowed when the big players come in when Ethiopia joins the World Trade Organization (WTO).
What is your weakness?
Sometimes I lose patience. Due to my extreme passion, I usually want to do things as fast as possible. Sometimes, I work extremely hard, to a point I do not even give due attention to my health.
What are the difficult challenges you have faced?
Life is full of challenges and it only gets worse in business. From accessing credit to starting manufacturing, I have passed through countless challenges. At some points, I have found myself with the lowest level of hope, fearing that we may not survive the challenges.
My challenges were worsened because I always chose to do business the genuine way. I never take shortcuts to get land or anything else. Yet, I could not be here, if there was no challenge. Challenge is nothing but your road to success. I started all of my investment projects without having money. Money follows vision. All banks respect me because they know my vision and I service my debts on time.
How do you handle your Corporate Social Responsibilities?
We educate children. We collaborate with the Ministry of Health in the fight against the COVID-19 pandemic. We participated in the rehabilitation of internally displaced people. We also financed and participated in the renovation of slum houses for the poor people in Addis Ababa last summer.
In 2019/20 alone, we allocated over ETB6 million to corporate social responsibilities. In fact, every day is our social responsibility day. We support people that deserve support but it is in our principle not to make the assistance publicity stunts.
Currently, we are in the process of training women with hearing-limitations, to work in our factories. We will also work with technical and vocational colleges to establish a center of excellence for people with disabilities. If we train them, people with disabilities can truly be professionals. EBR
9th Year • Nov 16 – Dec 15 2020 • No. 92