Ethiopia has been focusing on developing its industrial sector despite facing challenges. The government has primarily focused on agriculture, tourism, and ICT with the aim of increasing the sector’s share in the total national product and attracting foreign investment. The country’s policy aims to cover at least 80% of industrial needs with domestic production, increasing the sector’s share of the domestic economy to 60%.
The new industrial policy encourages substitute products by shifting the focus from commodity products to substitutes. Ninety-six industrial products have been identified in the strategy of proxy production, including food and beverage, cloth and clothing, leather, chemicals, construction materials, metal, and engineering.
Ethiopia has successfully replaced imported malt, pasta, buckwheat, edible oils, and fruit juices with local products at a high rate. This has led to more sustainable competitiveness in the economic sector and improved the country’s overall economic growth.
The agriculture sector contributes to the country’s economic output, but only 15% of the total national product. The policy aims to increase its share by attracting foreign investment and encouraging domestic and foreign investment. Currently, 40% of industrial production needs can be met by domestic capacity, making the country dependent on foreign imports.
A ten-year plan aims to cover at least 80% of industrial needs with domestic production, increasing the sector’s share to 60%. The new industrial policy encourages substitute products, with 96 industrial products identified, including food and beverage, clothing, leather, chemicals, construction materials, metal, and engineering. This has led to the replacement of imported malt, pasta, buckwheat, edible oils, and fruit juices with local products.
The country has successfully replaced imported malt with local products, including pasta, buckwheat, edible oils, fruit juices, and rich foods. Clothing, footwear, and chemical production have also been expanded. The 2016 plan to save $2.31 billion was achieved, with food and beverage products being the largest sector. Other sectors like chemical, manufacturing, technology, leather, and clothing have also seen significant savings.
Ethiopia has started a joint plan with the Ministry of Agriculture, Ministry of Trade and Regional Cooperation, and industrial owners to address issues related to horned cattle production. Clothing and textiles have been the first sectors to be involved, covering 100% of the replacement of student and military uniforms in the country.
Other sectors include paper wood products, medical bandages, Jeans shoe soles, and various leather products. However, there is still much work to be done in leather production, particularly in preserving the skin of horned cattle. The Ministry of Agriculture, Ministry of Trade and Regional Cooperation, and industrial owners are working together to address these issues and ensure sustainability in the country’s economy.
The Ethiopian government has been focusing on recording proxy product activity results, but there is a gap in using domestic production. To bridge this, the government has directed institutions to prioritize domestic production. The ten-year plan aims to earn $9 billion from exports, but most of the income comes from industrial production, mainly agricultural. Industries are working on quality and expanding access to foreign markets.
The Ethiopia Tamrit Movement has increased investment in the productive sector, with 1,119 investors entering this year. The government has also implemented measures to increase capital flow, providing 6.3 billion birr to small and medium enterprises and 54.3 billion birr to large industries. However, the current production capacity is not sufficient, and further attention is needed.
The Ethiopian government has made efforts to improve the quality and quantity of inputs, reduce tariff pressure, and support local investors. A result-oriented incentive system has been implemented, allowing domestic investors to enter and work in industrial parks. Small and medium enterprises have seen a significant increase in establishment, with 3,262 new enterprises established in the country this year. The Ministry of Industry has divided industries into three categories: those that can return to work with support, those that require replacement of spare parts, and those that have been completely destroyed. The country’s largest industries are not more than two thousand.
The new decree allocates up to 100 million birr to medium industries, requiring significant preparation for production and sales space. Despite security breaches affecting the manufacturing industry, most were in rural areas. The Ministry of Industry has divided industries into three categories: supportable, spare parts, and complete destruction.
Ethiopia has seen 392 industries start working, with some ready to export to foreign markets. Investors have requested extended loan repayment periods and tax-free privileges, and the government supports these efforts. In the Amhara region, those who stopped working due to conflict are being brought back to work. Quality control activities are being carried out for imported products, especially food and food-related products, to ensure their safety and health.
However, there is a visual problem with domestic production, as many domestic products are hosted in Thai and Chinese markets. Government procurement institutions are urged to use local produce, but there is still work to be done to change attitudes. Ethiopia’s micro and small enterprises sector has shown encouraging results, creating employment opportunities for graduates and graduates from higher education institutions. Over 800,000 jobs were created in the completed fiscal year, with over 11,000 new enterprises planned for the manufacturing industry.
Skilled manpower is also being provided to the manufacturing industry, with 28,000 practically trained students joining after graduation. The goal is to reliably increase the share of graduates in the workforce.
BY GIRMACHEW GASHAW
THE ETHIOPIAN HERALD WEDNESDAY 18 SEPTEMBER 2024
