Bangladeshi firm DBL Group has announced on May 27, it will build a $100 million textile plant in Ethiopia, with the support of the Swedish clothing giant Hennes & Mauritz (H&M).

“It is a milestone for us to build an integrated textile factory entirely focused on export,” said Mohammed Abdur Rahim, Vice-President DBL Group, cited by yarnsandfibers.com

The new plant will be built in the Tigré (North) region and should generate 3,500 jobs.

H &M has committed to buy most of the plant’s output in the long term and help DBL Group introduce sustainability standards to its Ethiopian factory.

To finance the construction of this plant, DBL Group obtained a $15 million loan from Swedfund, the state-owned Swedish development fund, and another $55 million loan from the Ethiopian Development Bank (EDB).

Over the past years, Ethiopia has attracted many foreign textile-clothing companies including Turkish textile giant Akber, Indian ShriVallabh Pittie (SVP), Chinese Zhejiang Jinda Flax, Korean Myungsung Textile Company and Taiwanese George Shoe Corporation. To do this, Ethiopia capitalized on its cheap workforce, an improved power supply network and good roads and ports.

According to a study from the market research firm, Bernstein, costs for making clothes are twice lower in Ethiopia as compared to China.

Also, data from Ethiopia’s ministry of Industry shows that the textile and clothing industry has generated in 2014 $1.2 billion foreign direct investment.