With an ambition to overcome Ethiopia’s economic stagnation that caused by the implementation of rigid policies over past decades, the government has introduced a new long-term economic transformation framework. This framework came out of a detailed assessment of previous plans, including the Growth and Transformation Plan (GTP) I and II, carried out by the previous administration.
Introducing the transformation framework to the private sector, Minister of Planning and Development, Fitsum Assefa (PhD), emphasized that Ethiopia’s economic transformation has been slowed down mainly because of the dominance of primary economic sectors, particularly agriculture. She underscored that manufacturing must assume a larger share of GDP, with the government committed to accelerating manufacturing development through targeted initiatives.
Reflecting on Ethiopia’s economic trajectory compared to the South Korea’s development, the Minister noted that both nations were at a similar economic status 60 years ago. However, Korea has since achieved extraordinary progress. “We need to learn from the setbacks that make our manufacturing development stagnant. Considering this, the government is providing the private sector highest record incentives in history,” she remarked.
As part of this transformation effort, the investment policy has been restructured and now begun to favor manufacturing. In the past three months alone, the Ethiopian Investment Commission has licensed 108 foreign investors, most of them are focused on manufacturing. The participation of local investors in full-fledged manufacturing is also growing significantly, according to the Commission’s report.
The government’s homegrown economic reform and macroeconomic measures have also received positive gestures from international partners and foreign investors, with ambassadors from European Union, China, Austria, Russia, and the Czech Republic lauding these initiatives during recent economic forums. Representatives of the private sector have also expressed optimism, projecting that Ethiopia could achieve significant economic transformation within the next two to three decades.
Speaking at the Financial and Private Sectors Dialogue on the State and Outlook of the Ethiopian Economy, Ethiopian Chamber of Commerce President Sebsib Abafira appreciated the 25-year transformation framework, highlighting its role in stimulating private sector growth in manufacturing and other secondary sectors. He noted that policy reforms over the past six years have alleviated major investment and financing challenges, creating enabling environment for middle and large enterprises to thrive for enhanced manufacturing sector.
East African Holding Director Bizuayehu Tadele also praised the prioritization of manufacturing in the framework. He mentioned the company’s Lemmi National Cement Factory, which became operational stimulated by the incentives introduced under the reforms, as evidence of the government’s commitment. “If the support for manufacturing continues, I believe the transformation is achievable,” he stated.
Similarly, MIDROC Investment Group Deputy CEO Akalewold Admasu added the need for a cultural shift in work ethics to complement economic reforms. “Asian countries achieved rapid economic transformation by first changing their work culture. We must learn from similar stories,” he said, pledging his company’s alignment with the government’s focus on expanding manufacturing industries as a tool for transformation.
The economic transformation framework has thus set the stage for Ethiopia to transition from an agriculture-led economy to a manufacturing-led one, with both domestic and international stakeholders showing confidence in its potential.
BY YESUF ENDRIS
THE ETHIOPIAN HERALD FRIDAY 22 NOVEMBER 2024
