Ethiopia has become preferred destination in the manufacturing sector because of government facilitation of efficiency-enhancing investment solutions including industrial parks that are ready for ‘plug and play, large pool of trainable work force available at competitive wages, cheapest energy rate on a global standard; geographic proximity and preferential access to key markets, abundance of high-quality industrial raw materials and others.
Though the country has a high potential for the development of industry sector, the contribution of the sector for the GDP remains very low due to structural issues such as limited financing, inadequate infrastructure, skill gaps and other challenges.
These challenges led to the launching of “Let Ethiopia Produce Initiative” since May 2022 at national level. The initiative aims to enhance the sector’s contribution to the national economy through addressing the challenges that producers face at all levels in the manufacturing process in tapping into the abundant potential of the country.
The initiative focuses on overcoming structural bottlenecks through better coordination, strong monitoring, and evaluation systems and it goes beyond boosting productivity by engaging key stakeholders and driving improvements in quality, exports, and import substitution.
Aligned with Ethiopia’s Home- Grown Economic Reform agenda, macroeconomic adjustments, and the Ten-Year Development Plan, the initiative also aims to facilitate technology and knowledge transfer to support sustainable industrial growth.
Starting from its commencement the initiative has been playing a great role in increasing Production and productivity of the sector. Factories that were idle due to various reasons have resumed operation.
State Minister of Industry Tarekegn Bululta said that government is implementing measures to encourage domestic manufacturers following the commencement of the initiative and the measures are making a significant contribution in increasing industrial productivity. The sector’s production capacity has improved and it has been able to attract additional domestic and foreign investment, creating significant job opportunities.
The Macro Economic Reform that is under implementation since July, 2024, has improved the performance of the manufacturing industry by improving foreign currency exchange and financial access, the state minister said.
The biggest bottleneck of the manufacturing industry before the launching of the reform was the shortage of foreign exchange. However, the reform has helped to solve this challenge as idle industries have turned back to the production. Through joint efforts after the reform, the production capacity of manufacturing industries has increased by more than 60 percent.
Government has allocated 76 percent of its loans to the private sector to solve the financing problems of the manufacturing industries.
Unlike before the reform, now the country launched the production of electrical poles, cables and transformers used for various construction infrastructure including materials used for Addis Ababa corridor development projects have been produced domestically.
He pointed out that the manufacturing industry is expected to increase its foreign exchange earnings by exporting its products and it generated USD 276 million in revenue in the past nine months. It shows 18 % increment compared to the same period of the previous year.
Explaining incentives that have been provided for manufacturing industries he noted that beyond tax relief and facilitating a loan a new investment strategy is being prepared to encourage them.
Speaking at opening of Let Ethiopia-Addis Ababa Produce Expo held at the Addis Convention Center last Weak Mayor of Addis Ababa City Administration Adanech Abebie said that manufacturing sector is among the sectors that are given special attention under the reform.
City administration has been working to make the metropolis a hub of manufacturing industry through providing finance for capital goods, working place and professional training and solving their infrastructural problems.
Following the Let Ethiopia Produce the city administration has been creating a lot of conducive environment to encourage entrepreneurship in the sector. As a result, it was possible to re-launch a number of previously idle industries. Also the manufacturing industries have been playing a role in generating foreign currency and stabilizing the economy of the country.
City administration has been finalizing the construction of modern Industry cluster budgeting a billion of money in Akaki Kality to enhance the manufacturing capacity of the existing industries and attract new manufacturing companies.
Deputy Mayor of the city administration Jantirar Abay on his part said that currently the manufacturing industry in Addis Ababa has achieved a production capacity of 64 percent, surpassing the national average of 61 percent.
He said that the initiative has enabled 68 previously idle industries to resume production by resolving longstanding challenges.
Explaining the commitment of the administration, he said that it has put direction to all lower level cabinet members to deliver efficient services in the provision of land and other supports for firms. As a result a vast size of land was provided for manufacturing industries in the last nine months.
Currently, more than 3,700 manufacturing industries are operating in the city and they have been improving their manufacturing capacity because of the conducive environment created under Let Ethiopia Produce Initiative. The City administration has been striving to reach the national target of 85 percent production capacity by the year 2030.
Chief Executive Officer of Siket Bank Damtew Alemayehu sharing the above idea said that the bank is positioning itself as a central player in Ethiopia’s industrial renaissance, claiming a significant role in transforming the country’s manufacturing landscape through providing financial support. At a high-level panel discussion themed “Financial Provision for Industrial Productivity”, the bank highlighted its evolving strategy to empower local manufacturers and accelerate industrial productivity.
“These may seem like simple steps for legacy banks, but for a newly transitioned institution like ours, they represent bold progress,” said Damtew. He emphasized the bank’s vision to be a catalyst for inclusive growth in Ethiopia’s shifting financial landscape.
“As our body does not operate without Liver, manufacturing industries do not operate without financial provision; believing this fact the bank has been working to support manufacturing industries to enable them to enhance their manufacturing capacity”.
The panel attracted key figures from federal and city administrations, private sector leaders, development partners, and industry experts. The discussion aligned with Let Ethiopia- Addis Ababa Produce which champions a shift from import dependency to homegrown production and
Panelists discussed the broader role of finance in Ethiopia’s industrial development self-reliance.
While spotlighting the bank’s own transformation from a microfinance institution into a bank they noted the transition allowed has enabled the bank to expand its reach and offer more sophisticated services tailored to the needs of various businesses.
Testimonials from manufacturing industries said that the initiative enabled them to enhance their productivity. Prime Tech CNC Machine Manufacturing Company is among the testimonials. The CEO of the company Hunde Eba said that the government’s support for the production of imported products in large quantities and with quality is encouraging.
He said that the company is manufacturing CNC machines that maintain their international quality through technology-supported processes. The machines are capable of shaping and producing metal, plastic and wood products for the desired purpose he stressed.
The CEO explained that the products are currently being supplied as inputs to various building and construction sectors.
He mentioned that the company, which has the capacity to produce more than 10 machines in a month, has created permanent employment opportunities for thirty people. The initiative has created an opportunity for the company to supply its products to Uganda beyond the domestic market, and that work is underway to supply them to various African countries soon.
BY TAMERU REGASA
THE ETHIOPIAN HERALD WEDNESDAY 23 APRIL 2025
