Ethiopia’s economic reform programme and 10 years strategic plan aims to make Ethiopia a middle income country by 2030, thereby transitioning from an agriculturally led economy to an industrial one. The mining sector is one of the mail pillars of this plan.
Ethiopia’s mining sector show strong potential for long term development. Although large scale mining has to now be mineral, several large projects are in progress. In addition, the country has geological potential for the discovery of new and sizable deposits. Ethiopia has also an extensive and unique artisanal mining sector, which makes it an important source of job creation in addition to its potential as an important source of foreign currency and governance revenue.
If effectively managed, the mining sector can play a leading role in socioeconomic development of Ethiopia. Mining is an export oriented sector that satisfies increasing demand of from industrial production, agriculture and high-tech sectors and the potential to create local linkage for social and economic development.
Ethiopia’s mining sector has strong potential to contribute to the country’s long-term development, social progress and economic growth. Though the country is rich in mineral resources, including oil and gas, these remained largely untapped, adding mining’s potential to contribute to economic growth and poverty reduction in the country could not be over-emphasized.
The sector contributed to less than 1 percent of GDP, 14 percent of exports, 1 percent of government revenue and was only able to create 4,000 jobs in 2018. In its Growth and Transformation Plan, Ethiopia has set as a target for its mining sector to contribute to 10 percent of GDP by 2025, said Ermias Hailemariam, Director of Planning, Monitoring and Evaluation Department at Geological Survey of Ethiopia in the second international mining conference and exhibition held here last November.
Though the mining resource is a foundation stone on which any growth and development can be realized, it was remained untapped. To reverse the situation, the Ethiopian government has been taking various reform measures. Accordingly, the Ministry of Mines and Petroleum has a 25 year mineral sector development plan which aims to increase its contribution to GDP by 10 percent in 2030.
In order to achieve the set target and successfully leverage its mining sector for economic growth and sustainable development, Ethiopia will have to take best practice from more mature mining economies and make use of available frameworks and guidelines, said Dr. Marit Yiktaw, Economic Affairs Officer at UNECA.
According to the ministry of mining and petroleum, the ten year plan has five objectives. These are: increasing international and foreign exchange earnings, uplifting investment, enabling the possibility of value addition as a base for the industrialization of the sector, creating direct and indirect job opportunity, and building organizational set up.
Indicating that the amount of foreign currency earned through export and import substitution taken as a baseline that is 265 million USD by 2020, he said the ministry is targeted to achieve 17 billion USD after ten years.
The amount earned from the sector now is 400 million Birr. It also targeted to achieve 19 billion by the end of the plan period. By the end of the plan period, the number of jobs created would increase from 200,000 to 1.6 million, he said.
According to him, institutional competency & technology, legislation & policies, human resource competencies, human resource developments stability, stakeholders’ cooperation and monitoring and evaluations are the key success factors in the mining sector. Except few, African countries are not able to benefit from their mineral resources. According to Dr. Marit, the Africa Mining Vision which was adopted in 2009 by African Heads of States represents a paradigm shift, away from commodity export dependency towards enhancing Africa’s industrial base through greater local benefaction and value addition of minerals.
It remains a timely response by African countries to address the resource curse paradox that continues to negatively frame minerals-led development in the continent. It goes beyond improving mining regimes to establish how mining can better contribute to local, national and regional economic development, she said.
The new mineral policy extensively discusses the issue of creating linkages in the economy to support industrialization and is also inward looking as it focuses on creating linkages with manufacturing, agriculture, construction, and jewellery, as recommended in the AMV.
Through these deliberate attempts to link mining to industrialization, Ethiopia can distinguish itself among African countries by turning resources into blessings, especially in light of its ambitious industrial policies that could support the establishment of mineral based supply chains that can boost government revenues, exports and GDP growth, she said
He said that the mining industry is going to be in line with climate resilient, resources would have to be used efficiently to produce smart-energy systems through an integrated resource management approach for economic growth and environmental preservation for future generations.
Indeed, while traditionally, industrialization relied on fossil fuels, renewable energy resources, such as water, wind, and sun, can nowadays be harnessed by industrializing countries, she added.
ECA will continue to cooperate with Ethiopia in order to ensure the mineral policy is of the highest standards and is aligned with the principles of the Africa Mining Vision.
The think tank will also support the ministry in developing an implementation plan for the mineral policy to put into practice the vision, mission, goals and strategies into tangible and sustainable socio-economic development gains for Ethiopians.
The Ethiopian Herald December19, 2019
BY GIRMACHEW GASHAW
