Ethiopia is known to have the potential to be competitive in the manufacturing sector, with its natural resources and abundant young population being among the enabling factors that create a favorable environment for the manufacturing industry.
The sector has been identified as one of the main economic pillars by the government after the national transformation, and it is believed that these favorable conditions will increase the manufacturing industry’s production capacity, production and productivity and increase its competitiveness. That is why an industrial policy that ensures sustainable competitiveness and productivity was prepared and implemented, taking into account international and national conditions.
Since its implementation, many changes and improvements have been seen in the industrial sector. As Prime Minister Abiy Ahmed (PhD) stated in his explanation to the House of People’s Representatives a few months ago; the country’s production capacity, which was 47%, has reached 61% this year. This is a very big achievement; it still needs to grow; many new industries have also come into operation. This year alone, more than 55 new factories have started operating. More than 120 new factories have issued new licenses.
The expansion of industries plays a significant role in substituting imported products with domestic products, creating job opportunities for citizens, and even earning foreign currency. It will also play a significant role in the structural transformation of the economy and the growth and revitalization of other sectors.
According to data, one Dollar spent on the manufacturing sector will contribute 3.6 Dollars to the other sector. One direct job created in the sector will create seven to nine indirect jobs in other sectors; thus, the sector serves as an engine of growth.
The Ministry of Industry recently reviewed the performance of the nine-month plan for the 2024/25 budget year in the presence of the ministry’s officials and experts.
Speaking at the forum, Minister of Industry, Melaku Alebel said that over the past three years, the Made in Ethiopia Movement has achieved tangible results. This has led to improved productivity in the past nine months. The productivity of manufacturing industries across regions has also been growing.
He noted that the production capacity of some regions’ industries is higher than expected; the production capacity of manufacturing industries has reached about 64%. This indicates that their capacity is increasing; and the success recorded in the past nine months was due to the effective work done in terms of putting new industries into operation.
He also indicated that effective activities have been carried out in substituting imported products with domestic products. In the past nine months of the fiscal year, substitute products worth more than 31/2 billion Dollars were produced domestically, which is an improvement compared to the same period last year. Substitute products produced in the same period last year were worth 11/2 billion Dollars. The efforts being made to produce substitute products in the country, including textiles, clothing, food and beverages, as well as machinery, are achieving encouraging results.
On the other hand, although the planned output of products for export was not achieved, the performance of the last nine months was more than 18% higher than the same period of the previous year. He mentioned that job opportunities have been created by putting new industries into operation; they would work with determination to ensure that the manufacturing industry plays a positive role in the country’s economic growth in the remaining months.
Finance Minister, Ahmed Shide, who was present at the forum, noted that this fiscal year marks the beginning of the implementation of comprehensive macroeconomic reforms, which makes the fiscal year special. The implementation of comprehensive macroeconomic reforms in the last nine months has a special meaning in terms of economic policy. Foreign exchange transactions have been determined in the free market; and said, “We are at a time when we are making great efforts to increase our income.”
He indicated that the nine-month performance was successful in macroeconomic reform. Excellent results were recorded in the agricultural, industrial, and mining sectors in terms of regular operations.
In particular, he noted that the strategic frameworks led by the Ministry of Industry, the Made in Ethiopia Movement have been well-defined and the sector is being given coordinated and organized leadership. The Minister also indicated that the efforts being made to improve and increase the productivity of industries are yielding very good results.
Tilahun Abbay, Executive Director of Strategic Affairs at the Ministry of Industry, said, in the past years of reform, the government has been paying special attention to the industrial sector at the policy level and is doing a lot. As a result, activities have been carried out to revitalize the country’s industrial sector, which has been stagnant for years due to various reasons, to move it to a new phase.
As a result of the successful work carried out under the Made in Ethiopia nationwide movement, 24 manufacturing industries that had stopped exporting have resumed operations. In the past nine months alone, manufacturing industries that have started exporting have generated 14.3 million Dollars in foreign exchange earnings.
Tilahun stated that the manufacturing industry sector accounts for no more than seven percent of the total national product and plans to increase this share to 17.2% in the next ten years. Efforts are being made to increase the productivity of industries to 85%. The manufacturing industry sector is achieving encouraging results every year despite various challenges.
The new industrial policy is designed to encourage substitute products, shifting the focus from the previous focus on consumer goods.
He said; “The industry will continue to work to increase its share in the national economy reliably. For this, the Made in Ethiopia movement will continue to focus on indirect production. Attracting additional investment and strengthening existing ones, increasing job creation at the expected level, and modernizing service delivery will be issues of concern.”
In recent years, especially in the macroeconomic reform and the ten-year development plan, the government has taken industry as a major direction, the Minister of Industry said; he indicated that a suitable and strong structure is being established for the sector through policy, strategy, and the Made in Ethiopia movement. Many activities are being carried out through the Manufacturing Industry Council established to create a favorable environment for the sector.
The Minister explained that in order for the country’s economy to grow sustainably and become competitive, efforts are being made to solve the problem of supply of inputs to manufacturing industries. “If our economy is to become sustainably competitive, the problems related to logistics must also be resolved quickly.”
The main reason why a seaport is important for the manufacturing industry is related to economic competitiveness. Efforts are being made to solve the problem of a seaport as a country so that manufacturing industries can import the inputs they use for production and easily export their products, he said.
“Industry is not easy to see; it is very complex and difficult, and it is like turning a ship. As a result, the results will not be seen all at once,” he said, adding that the country’s industry is largely catching up. “The high level of attention given to the industry at the national level has contributed to this, and that we need to do a lot to build and strengthen institutional capacity in the current favorable situation.”
As he explained, the investment flow in the sector has been growing; 202 billion Birr of investment was attracted in 2024/25; with the special attention given to domestic investors, more than 50% of the current producers have been made domestic investors.
He noted that in view of the country’s development potential and the goals of the 10-year development plan, there are still issues that require attention and the efforts of all parties, especially the global competitiveness of the industry, which is facing many obstacles.
As the global situation becomes unpredictable, various events occur every hour. For this, it is necessary to increase competitiveness and further improve the support provided to manufacturing industries, taking into account the current situation as a country. The manufacturing industry should be made to play a positive role in the country’s economy.
Pointing out that the remaining months are very short in terms of the annual plan, the Minister emphasized that everyone has a national responsibility to work with determination in these remaining months.
BY BACHA ZEWDIE
THE ETHIOPIAN HERALD TUESDAY 6 MAY 2025
