Ethiopia has been spending billions of USD on imports, and the government’s recent initiative to replace imports with domestically produced goods is showing promising outcomes. Accordingly, the government has taken robust measures to improve import substitution, thereby promoting a healthy economy.
The primary aim of this initiative is to enhance the competitiveness of the manufacturing sector by locally produced goods that were previously imported. The abundant natural resources, large number of trainable labors, and numerous energy supply options are key advantages to enable the nation achieving import substitution.
Hawassa University Market Administration Lecturer and Researcher, Prof. Birhanu Burji told the Ethiopian Press Agency (EPA) that the import substitution initiative has achieved significant results, indicating that the nation is on track to meet its targets.
Highlighting the considerable progress that has been made in import substitution, he said that the initiative is playing significant role in maintaining trade balance. This initiative is playing a crucial role in reducing the country’s reliance on imported goods, thereby fostering self-sufficiency in locally produced items. The initiative is also significant approach to ensure sustainable growth and create job opportunities for citizens.
On the other hand, the import substitution initiative is essential to provide incentives for manufacturers to boost production and support the economy, eventually creating an industrially prosperous nation. Focusing on the local market is crucial for stabilizing the economy and alleviating the soaring inflation rate.
Citing the experiences of countries like Brazil, Argentina, and Mexico that have made significant strides in food import substitution and are now transitioning to substituting electronic products after successfully halting food imports, Birhanu said that Ethiopia needs to exert maximum effort to fully substitute imports.
The report from the Ministry of Industry indicated that the industry’s market share has been increasing and efforts are underway to boost import substitution to 60 percent in compliance with the 10-year national development plan. A total of 96 products have been identified for import substitution, including textiles and apparel, leather and leather goods, hides, chemicals, construction materials, manufacturing technology, and food and beverage items. Following the campaign Ethiopia’s import substitution strategy has begun to yield results.
The country aims to substitute products, primarily in the food and beverage sector, which constitutes about 80 percent. Praising the initiative, Addis Ababa University Economist Atlaw Alemu (PhD) stated that the initiative allows the nation to utilize its own human resources and local inputs, which is vital for reducing import costs.
By June, Ethiopia has managed to substitute around 2 billion Birr worth of products, which is encouraging. Consequently, the nation has saved about 1.9 billion USD over the past nine months in substituting textiles and apparel, leather and leather goods, hides, chemicals, construction materials, manufacturing technology, and food and beverage items. The ‘Made in Ethiopia’ campaign is achieving notable success in import substitution, in addition to reducing costs related to imports.
The initiative is still in its early stages so that it is vital to capitalize the overall efforts. Having abundant human and natural capitals, Atlaw believed that Ethiopia has the potential to succeed in import substitution by harnessing untapped resources.
BY HAILE DEMEKE
THE ETHIOPIAN HERALD WEDNESDAY 18 DECEMBER 2024
