Shifting Trend in Furniture Industry

The making of household materials using wood has been part of Ethiopian history for centuries. Furniture manufacturing has also seen a rise in the last decade. With the ever-growing construction of hotels and residences of different types, furniture business has been entertaining quite a surge in demand in recent years. However, the expected benefits of this rising demand have been lost to imports with little appetite for locally manufactured furnishings. However, a slowly shifting interest of the public to locally manufactured furniture might see a more expanding local sector with a potential for exports, writes EBR’s Trualem Asmare.

It is believed that furniture design in Ethiopia dates back to the Axumite dynasty, one of the ancient civilizations in the world. Ethiopian furniture has lived as a reflection of the history of the country in a designed materialistic form. Furniture plays a crucial role in interior design in Ethiopia with a historical-cultural mix being augmented by western trends. The matter is also influenced by trade relations with Arabia, India, and Rome that has lasted for centuries. One can now see the evident various types, designs, shapes, and materials of furniture.

As much as the use of the different kinds of woods to create home furniture has been part of the country’s history, its advancement doesn’t represent its age. Ethiopian furniture has been dependent on imported raw materials and products. According to Melaku Alebel, Minister of Industry, the country imports 30Pct of the finished furniture it demands from abroad. However, when considering the volume of imports of inputs and semi-processed materials, the figure is much higher. Hotels, apartments, and governmental offices are among the groups of the major customers of imported furniture.

Abinet Moges, Property Developer, constructs apartments and sells them for profit. When EBR approached him in mid-May, he was overseeing the construction of a ETB110 million-worth apartment block on the road from Gollagul to Dinberua in Yeka District. After a year of constructing the mixed-use building, Abinet bought furniture for the residences from a local manufacturer that imports partially processed furniture and assembles them locally.

“Each residence unit, of which there are two per floor, cost ETB360,000 to furnish,” Abinet told EBR. Furnishing the offices and retail space is not part of his plan. He has spent a total of ETB3.7 million to furnish the residences of the apartment.

Abinet says he would never consider filling his apartments with entirely locally manufactured furniture. “They seriously lack aesthetic quality and strength.”

Currently, one can find local manufacturers that add value to imported furniture. On the higher end is Bright Office Furniture which adds about 67Pct of value while Wanza Furniture claims to add 54.4Pct value. Others like 3F, Technostyle, Sunjun Bo, Dream, GM, and Nile Industrial and Commercial add around 30Pct of value. These companies sell both locally and for export markets.

In 2017, Ethiopia imported more than ETB675 million in furniture with the figure doubling to more than ETB1.2 billion in 2021. China, Malaysia, and Turkey are the top three countries that have benefited from growing exports to Ethiopia.

There are numerous challenges for Ethiopia to cover its demand with locally manufactured furniture. Lack of skilled man power, limited technology supply and use, and deficient raw materials supply are at the forefront. Further, local manufacturers do not have the working space and required machinery to comprehensively produce pieces of furniture including beds, tables, cabinets, chairs, tables, and other fixtures. Moreover, there are only three medium-density fiberboard (MDF) factories while none produce high-destiny fiberboard (HDF), according to Habtamu Aragie, Deputy Director of the Chemical and Construction Inputs Industry Development Institute. The number of such factories is challenging the supply of quality raw materials which are essential building blocks of most furniture pieces.

“In an attempt to cover 90Pct of the demand with locally manufactured furniture, there is a plan to set up to two MDF and three HDF factories,” Habtamu told EBR.

Local manufacturers recognize the benefits of producing furniture locally. But the supply chain is not managed with knowledge and appropriate expertise. The production, processing, and supply of raw materials is not done with care, hence damaging their quality and resultantly the final product. However, there are slowly shifting trends both on the demand and supply side.
It is understandable why local manufacturers opt to import partially-processed raw materials from abroad and assemble them in-house, according to Amlakcher Seyoum, Owner of Salma Furniture. But things are somewhat changing in recent times.

Founded in 2014, Salma Furniture uses raw materials from local suppliers. It has been furnishing banks, hotels, and residences for years now with Mastercard Foundation one of its renowned customers. Furnishing a single branch of a bank costs around ETB430,000.

‘Two years ago, the market was not profitable much,” says Amlakcher. “Now, banks and other clients are expanding the market for us.”

For other businessmen in the sector, shortage of raw materials is not the issue. Rather, the stability in the price of inputs is challenging their business. For Shimelis Negere, General Manager at Shimelis and Friends Woodwork SC, daily increases in the prices of raw materials is challenging his efforts to fully utilize raw local materials instead of imports.

Before establishing the share company two years ago, Shimelis had his own furniture workshop which mostly utilized imported inputs. But as of recently, there seems to be a gradual growth in interest towards furniture made using local raw materials. The problem is that “you cannot get local materials whenever you want and with the quality required.” As such, their company still utilizes imports despite the growing force of local inputs.

Tihitina Legesse, Vice President of the Ethiopian Furniture Manufacturers Association and Managing Director of Waryt Mulutila International PLC, is witness to the slowly growing interest in furniture made of local raw materials. For Tihitina, this growing utilization of local raw materials is also a prudent business decision. Manufacturers can usually only add 30Pct of value when using imported semi-finished inputs as compared to 80 to 90Pct when local raw materials are utilized.

‘’Using local raw materials also helps in availing the final product in a shorter period of time,’’ Tihitna told EBR.

Tihitna also recognizes the changing trend in the public’s view. Previously, people were primarily of the opinion that only imported furniture is quality. But, she also recognizes the long way ahead if the sector is to compete regionally, let alone globally. To that end, she highly recommends increasing the number of raw material suppliers.
“The number of raw materials suppliers currently is so few that the whole process is subject to price hikes and corruption,” Tihitna argues.

Training the youth in woodwork and the use of technology and latest machinery will also help in boosting the promising potential of the sector, almost all industry players agree.
The furniture industry in Ethiopia seems to be growing slowly. There are several reasons for this growth. Firstly, the cost of labor in Ethiopia is relatively low, making furniture production affordable. Secondly, the number of skilled workers is slowly growing. And finally, there is growing demand from both domestic and international consumers for high-quality Ethiopian furniture products with some leading local brands penetrating the global market, making furniture one of the country’s export items.

The global furniture industry is booming, with a value of over USD220 billion in 2016. The industry has seen steady growth in recent years and is projected to continue growing at a rate of 3-4Pct annually. This growth is being driven by rising income levels and increasing demand for home furnishings globally.

The global furniture market can be segmented into four main categories: residential furniture, office furniture, contract furnishing such as for hotels, and retail or consumer goods—ready to assemble products. Residential furniture accounts for the majority of the market share, 62Pct, followed by office furniture at 27Pct. Contract furnishing accounts for 9Pct, while retail goods account for 2Pct of the global market.

Geographically speaking, Europe dominates the global Furniture Market with a 43Pct share followed by North America at 32Pct. The Asia Pacific region holds 23Pct.

Ethiopian furniture makers look poised to grab a larger piece of the pie but need increased supply of inputs. The endeavor perhaps calls for a pooling of resources of current manufacturers to jointly create factories that will supply their own plants. With history and abundant nature on their side, the players in the industry look on to better days ahead.EBR

10th Year • May 2022 • No. 107