In developing countries like Ethiopia, substituting imported commodities and technologies by locally manufactured goods have always been recommended as an important step towards recovering foreign exchange earnings and developing local technologies that are scientifically sound and up to global standards. Although a lot has been decided on replacing imported commodities by local ones, the activities conducted in Ethiopia in this regard were very slow and limited in scope.
The Ethiopian government has recently noted that the rate of the country’s GDP could stumble towards 5 to 6 percent due to the onset of the COVID-19 virus. I have the opinion that it may be even lower than anticipated as the virus triggered economic down turn could be elongated over time.
In terms of scaling up import substitution at this point in time, particular attention is to be paid to the agriculture and manufacturing firms in the production of spare parts for local industries and producing household managed simple but advanced agricultural implements.
The government has launched extensive import substitution program to produce wheat through mechanized irrigation as part of the national import substitution program and hopefully this will be extended to raw cotton and the production of edible oil.
I presume that as an important process of economic recovery and uninterrupted socio-economic development, import substitution would imply short and long term processing that goes in pace with scientific and technological innovative measures to be undertaken in the country.
In the short term, any type of cost recovery scheme or import substitution activities need to focus on meeting local needs on materials required to roll back the pandemic and also to enable middle level manufacturing industries to produce consumer products for local consumption and for possible exports. At this time of crisis, public and private industries need to be empowered to produce not only clinical masks, gloves and protective outfits but also standardized beddings and breathing gadgets required to treat patients in isolation and ICUs.
Companies engaged in the production of arms and related materials may temporarily be able to produce various items like oxygen tanks and wheeled service roller tables for use by the doctors and nurses. Public companies may produce testing booths with lower costs instead of importing them in exorbitant prices at the international markets.
So, promoting import substitution in the battle against COVID-19 saves not only the badly needed foreign currency but would also help to save time and red tape processing at ports of entry.
Beyond the advent of COVID-19, import substitution needs to be the main component of the country’s industrialization strategy. Going forward, in cooperation with the universities in the country and Ministry of Science and Technology, Ethiopia could be able to manufacture various types of engines that can be used for manufacturing tractors and combine harvesters and other modern agricultural machineries in Ethiopia. This would help to enhance agricultural production and productivity.
What I am driving at is that import substitution should serve three purposes including adequate response to the adverse effects of the pandemic, rapid industrialization and meeting the food security needs of the country.
Import substitution, if implemented properly will also help to reduce the unemployment rate in the country by soliciting employments for the youth in the country.
In considering the prospects of import substitution, three important things including quality vocational trainings in TEVTs as well as researches on modeling and designing of products need to be considered. It is also very important to ensure the resource base and supply chain for the major components of products to be included in import substitution.
Ethiopia can also utilize appropriate technology centers in the country for producing a wide range of goods and technologies that have so far been imported from abroad. I do not think that enough attention has been given to the centers by the government. It is regrettable that some of the most important technological products have so far not been disbursed to
rural communities where they are badly needed.
Substituting imports certainly involves conducting various researches on technologies that go far beyond the current pandemic season. The economic impact of the pandemic cannot be address in a pattern of normal business routines and this would mean that these technologies should be developed in most of the universities and TVET under the coordination of the Ministry of Innovation and Technology which would be responsible for monitoring, evaluating, certification and final large scale production on at designated manufacturing industries.
The public should also be sensitized on the triple advantages of purchasing commodities with reliable international standards as a step forward in curbing consumer xenophobia. For instance, at the current state, quality foot wears fulfilling international standards are being produced by private companies and small scale enterprises some of which are already exporting their products to several countries. At any rate, import substitution would remain a core activity in the rapid industrialization of the country.
The Ethiopian Herald April 30/2012
BY SOLOMON DIBABA
