Practically all societies at the early stages of their development have viewed industrialization as the main vehicle for improving living standards. It is not surprising, therefore, that governments have played an active role in promoting industrialization.
The role of the government in accelerating industrialization varies greatly according to ideology, political structures, administrative capacity and the level of development. But despite this variation, governments have often been central to the industrialization process, whether as economic ringmaster in laissez-faire economies of the past century or as a central planner and provider in economies of the east. Most developing countries have tended also to rely on the private sector and on markets in their effort to industrialize.
A recent body of literature has argued that the institutions are the fundamental cause of differences in economic development. It has been argued that such factors as innovation, economies of scale, education, capital accumulation are not the causes of growth, but the growth itself, and that the political and economic institutions are the fundamental cause of differences in economic development.
Literature shows that institutions played an important role in facilitating technological progress.
For the past couple of decades, the major economic goal of the Ethiopian has been to transform its economic base from agriculture to industry. As a result, a number of industries are emerging in the country and laying the foundation for structural transformation. The government has also been providing
various supports to industrialists to create a conducive environment for the sector to thrive. Accordingly, it has established various institutions that specifically focused on promoting industrialization. One of such institutions is the Chemical and Construction Industry Inputs Development Institute (CCIIDI).
CCIIDI is working with a vision of making the country’s industrial sector competitive at the international market by expanding industries, transforming technologies and filling skill gaps as well as providing integrated industry inputs.
The institute supports manufacturers producing standardize and quality products of soap, paints, fertilizer and petrochemical, pulp, paper, fundamental chemicals, tire, plastic manufacturing industries and construction inputs such as cement, ceramics, glass, furniture, marble, granite
and terrazzo manufacturing industries.
Institute General Director Samuel Halala said in the first half of the budget year, the institute specifically focused on providing capacity building for factories to implement kaizen, an approach to creating continuous improvement based on the idea that small, ongoing positive changes can reap significant improvements.
The Institute has been providing various supports in order to improve the role of the chemical and construction industry sector in the economy. The sub-sector’s contribution to the economy has now exceeded eight billion Birr. The government’s priority to acquiring/saving hard currency, tariff intensives, the increasing participation of foreign investors in the economy, and the engagement of new manufacturers are some of the factors that boosted the contribution of the sector to the national economy.
The chemical and construction industry has significantly boosted its production capacity. Expertise assessment of the industry, improved input supply, market linkage and quality of exportable products are some of the factors contributing to the development. The chemical industry’s total production cost of the chemical industry sector is reached to 17 billion. In the first half of the budget year, 70 per cent of the plan to substitute imports has also been achieved.
It was also managed to reach very important agreements with development partners and countries to raise capital for the sector. “For instance, by the support gained from the government of Japan, we have reached an agreement to acquire technology assistance that enables us to recycle old tires. Eight million Euros worth agreement was also
signed with the European Union to reduce emission from cement factories.”
At this time, though it was possible to create a capacity of producing 17.1 billion tons of cement, the country’s cement production doesn’t exceed nine million tones. Lack of human power, shortage of foreign currency, power outage and absence of inputs are some of the hindrances. Because the factories are not producing with their full capacity and due to ever-increasing construction demands, the volume of cement export has also been reduced. Consequently, the income earned from export has also declined.
On the other hand, in the first half of the budget year, the chemical and the construction industry sector has created 4,987 jobs for citizens, of which 1,464 are women.
Suzo Industry is a factory engaged in producing pulp papers. Factory representative suggested that papers used in different government organizations are not properly damped. Thus, the government needs to formulate regulatory mechanism and used papers should be transferred to factories that produce other products by recycling them. Apart from inviting foreign investors, the government needs to identify the challenges of investors and solve it.
Citing that the factory has been getting 80 per cent of its raw materials from abroad, Sika Abyssinia Construction Chemical representative, the company is not able to import raw materials due to shortage of raw currency.
Samuel said the institution has been striving to solve these challenges as per capacity. The institute will continue strengthens its supervision and support to address the problems faced so far.
The Ethiopian Herald May 7/2020
BY GIRMACHEW GASHAW
