The management of the state-owned Commercial Bank of Ethiopia (CBE) continues to wane in its botched efforts to sell off textile plants foreclosed from Turkish investors after defaulting on billions of Birr in loans.

The Saygin Dima and Selendawa textile plants owe the CBE over one billion Birr combined.

The CBE put Saygin Dima Textile Factory on the auction bloc last month for the second time in recent years with a floor price of 787.5 million Br. No interested buyers showed up at the bid opening date on December 15, 2021. The Bank had attempted to auction the company off five years ago, yielding similar results.

Saygin Dima became operational in the late 2000s after a joint venture agreement between the federal government and Turkish investors. The CBE disbursed 574 million Br in loans to the textile factory, but the government withdrew from the joint venture six years later, claiming "unsatisfactory performance" by the company. Saygin Dima was operating at less than half of its production capacity, though its management planned to produce, daily, 30tn of yarn, 40,000m of fibre and 50,000m of finished thread.

The Turkish investors had agreed to buy out the government’s share in Saygin Dima, valued at 625 million Br, advancing a 10pc payment upfront. The buyout never fully materialised.

Located in the Sebeta-Dima area, 24km southwest of Addis Abeba, CBE’s Acquired Assets Administration Office first auctioned the plant, with a four-storey building, in 2016. Two years ago, the Bank tried to sell the textile plant on the 17ht plot through negotiations to a Turkey-based Feda Textile. But officials of Sebeta Town Administration demanded that the buyer pay the arrears in lease payment, leading Feda to pull out from the deal.

"It was not part of the deal,” Abiy Gebrekristos, manager of Acquired Assets Administration Office at the CBE, told Fortune.

The fate of Selendawa Textile Factory remains more obscure. After no less than nine attempts to sell the company frustrated, the CBE tried a negotiated sale last week. Located in the town of Dire Dawa, the CBE put Selendawa Textile Factory up for auction four times with a floor price of half a billion Birr. No buyers showed interest.

Established through a joint venture arrangement between Turkish investors and the federal government in 2013, Selendawa is a processing plant for yarn on 18ht of land. However, the company has been operating on 10pc of its daily production capacity of 50tn of yarn, 12,000m of fibre, and four tonnes of netted fabric.

For people such as Leben Girma, who worked as a human resource manager at Eltex Textile & Garment Factory for eight years, the lack of due diligence carried out to let these investments made is the main reason for the failure of the assets in attracting buyers.

“The investors brought in aged machines that have poor quality with low productivity,” he said.

Saygin Dima and Selendawa have now ceased operations. Combined, the two textile factories had close to 1,500 employees.