Though Ethiopia has portrayed encouraging growth in enhancing export trade and maximizing its foreign currency earnings, there are still predicaments which are casting a shadow on the sector from showing further developments.
How had been the Ethiopian export trade functioning over the last two decades? What are the major export items? What are the challenges the sector facing? What should be done to address the impediments? Ethiopian has been depending on agricultural items for its export trade for several decades. But since most of it’s export items were lacking value addition, the nation was not benefiting from its export sector as much as it is entitled to.
Recently, the Federal Auditor General Standing Committee explained on its report to the House of Peoples Representatives that the Ministry of Trade and Industry (MOTI) has to enhance the export items in terms of quality and quantity. It as well was advised to implement modern system that could solve problems confronting the sector.
The committee stressed that the challenges should be singled out through efficacious research and practicable policy must be outlined to modernize the export trade. For his part, Misganaw Areg State Minister of Trade and Industry says Ethiopia needs to export quality and competitive commodities that could easily elbows its ways throw the international market.
In addition to this, he enumerated strangleholds posing challenges on the sector such as disagreements between producers, exporters and purchasers, weak public service provisions, lack of raw materials and skilled human power. He stressed such challenges harming the sector beg for urgent solution.
To improve foreign trade through addressing the identified bottlenecks, the National Export Council ,which was established under the Prime Minister Office, has been given a mandate to set direction and supervision, he states. As to him, new strategy will be designed taking the experience of successful countries as a benchmark to improve the sector.
According to the Central Statistics Agency (CSA), Ethiopia had exported 2.6 billion USD worth of commodities to the global market in 2018. The major export items include coffee, tea, spices, oil seeds, live animals and vegetables. However, since almost all export commodities are not processed, their global market demand and competiveness were not satisfactory.
Hence, Mewael Desta, Economics Lecturer at Mekelle University underlines that Ethiopia should start processing its export items to maximize its foreign currency earnings. ‘‘There is huge difference between exporting raw coffee, oil seeds and animal products and processed ones. When you send produces after value addition, the demand will increase as items would be competitive in the international market. Thus, the nation could ensure profitable foreign trade system,’’ Mewael notes.
Having understood the importance of manufacturing-oriented export sector as enabling factor to realize the goal of becoming middle income nation by 2025, the government has been constructing industrial parks in different parts of the country and most of them were established in a bid to transform the agriculture sector, the lecturer explains.
As the 2018 CSA’s data indicates, China tops as the major importer of Ethiopian goods covering 10.1% of the global total. Somalia, United States and Saudi Arabia follow the list by 8.5%, 7.9% and 7.2% respectively. Mewael recommends that Ethiopia has to expand its trading destinations and the African market has not yet been exploited.
‘‘Beyond diversifying its export items and value addition, Ethiopia must find other new markets. There is a huge potential in Africa. This need to be harnessed by producing quality and unique products,’’ he points out. To sum up, Ethiopia needs to address the challenges besetting the export sector and it should diversify the items by adding value and improving the supply chain to modernize and transform its export trade.
The Ethiopian Herald Sunday Edition, December 22/2019
BY TSEGAY HAGOS
