Nowadays, complaints regarding shortage of foreign currency are aired from various corners. The problem coerces industries to produce bellow their production capacity because of lack of inputs which are imported from abroad.
It is remembered that the Ethiopian Workers’ Associations Confederation explained its dismay for shortages of foreign currency in banks. The shortcoming critically affects manufacturing sector which are heavily dependent on imported inputs. Some productive sectors warned that if the situation continues as it is, they are going to be forced to close their firms and lay off their workers.
Among the manufacturings which suffer from shortage of hard currency are the plastic, rubber and related products industries can be mentioned as the case in point.
In its press release recently, the Ethiopian Plastic and Rubber Producing Association announced that the producing industries are currently critically suffering from shortage of hard currency which is essential to import inputs. The sector in addition to producing goods it is connected through value chains and the weakening of the sector has retrospect effect on other sectors. As a result, it brings its own impact on the nation’s economy.
The association comprises 4,500 workers engaged on producing plastics and rubber in which indirectly created job opportunities for more than one million citizens.
According to the association’s officials, the sector has turnover that worth 100 billion Birr capital hence, unless the problems of shortage of hard currency resolved, economic and social crises will be exacerbated.
As to the association, preliminary assessment more than 85 percent of the manufacturing industries are producing half bellow than their capacity which is attributed to the currency shortage, Mintesinot Lema, plastic and rubber producing association president said.
He further said that the problem is being aggravated from time to time. The association attempted to import inputs used for industry production, but due to the absence of hard currency, unable to do so.
Therefore, they appealed to the government to create conducive environment to obtain the foreign currency.
Unless the situation is reversed for the better, they might be forced to lay off their workers and close the factory, Mintesinot said. He further said that recently, he got a chance to have a discussion with the State Minister of Finance Eyob Tekalign (PhD) and he was informed that as situation allows the problem will be solved. But as to him, the problem requires urgent response.
As to the association’s president, instead of letting importers to import the inputs, it rather is better to provide the hard currency to the industries and allow them to import the inputs directly by themselves.
Recently, the National Bank of Ethiopia introduced directive with regard to utilizing the hard currency and stipulates priorities to be given to industries and producers but the plastic and rubber sector did not benefit in this regard.
Commenting on the newly introduced directive the association’s president said that the directive stipulates to prioritize the plastic and rubber industries next to medicine and children foods but due to the existing shortage, the currency is provided to the importation of neither to industries’ inputs nor to children foods.
After exhausted effort exerted by the association, it was possible to secure small amount of hard currency from private banks and tries to import some amount of inputs but the problem is still continued.
As to Mintesinot, when the National Bank of Ethiopia announced that 70 percent of the hard currency to be provided to plastic and rubber producing factories and children food importation, he was happy nevertheless no one implemented the directive. As a result, the factories remain suffering a lot.
Therefore, implementing the directive should be a priority agenda to the government so that, stabilizing the shattered economy will be realized.
Previously, the Commercial Bank of Ethiopia was allocating up to one billion Dollar for manufacturing industries’ input importation. However, the recently introduced directive stipulates the Commercial Bank of Ethiopia (CBE) to deliver 70 percent of its hard currency reserve to National Bank of Ethiopia (NBE) which is resulted in impotence to allocate sufficient amount of hard currency to the manufacturing firms.
The president further said that he recognized that of late, the government is facing various challenges in various forms and realized no need to expect more forex from the government but at least if 200 up to 300 million Dollar is obtained, it would be possible to import crucial inputs so that enhancing the producing capacity of the firms would be practical.
The shortage of hard currency not only affects the plastic and rubber producing factories but also other sectors. The closing of up to 20 packed water producing factories and those producing bellow their capacity can be mentioned as the case in point.
The Plastic Producing Industries Association President Samson Ketema on his part said that, unless the problem of shortage of hard currency is resolved and importation of inputs attainable, others also might face critical problems similar to water packing industries. The imported inputs are not substituted by local ones therefore; by any means obtaining the currency is a vital issue.
As to Mintesinot, the shortage of supply of packed water witnessed recently in the capital is attributed to the shortage of supply of inputs.
The president further said that if the plastic and rubber producing industries are closed, other sectors which use their products as inputs will follow their footsteps. Unless obtained the plastic bottles, packed water industries would unable to produce packed water and ultimately the product might be unavailable in the market.
Currently, some industries produce by only 10 to 20 percent of their capacity and such situation is a severe problem for the nation’s economy and sustaining the industries production in such manner is unthinkable. Holding the workers for more than one or two years is impossible.
Therefore, unless the deficiency of hard currency is mitigated, the private sector might be curtailed from its various activities.
As to Mintesinot, most Ethiopian export products are packed by PP plastic sheet which is produced by plastic sheet manufacturing and when the plastic industries are affected by shortage of inputs the export sector similarly will be affected.
The major threat is not only on the producing industries but also on the whole business sector. For instance, farmers use PP plastic bags as containers for their crops during the harvesting season. Hence, unless the shortage of hard currency is resolved the whole sectors of the economy will be harmed.
The plastic factories all over the world have 70 to 80 years of working experience but they are rapidly growing. Ethiopia is highly attached with the plastic products. The utilization of plastic bags all over the world is changing from time to time and containers made up of iron, woods, cotton and others are mostly substituted by plastic containers because the demand is growing. The associations’ leaders claim that when the plastic sector is affected because of shortage of inputs others too are affected since many of the products such as farming tools, construction materials, packaging materials, transportation materials and house hold utensils are mostly made up of plastics.
More than half of the parts of vehicles, motor bicycles and airplanes are made up of plastics products. These all indicate how the sector is interconnected with the other sectors.
Most people thought that plastic is attached only with plastic bags and plastic bottles but the reality is sharply different from such assumption. As to Mintesnot, in most countries even T shirts and shirts products seem cotton but they are made up of pollster which is the byproduct of plastic. Particularly, shoes are 100 percent made up of plastic and chairs, sofa, bed and others are also made up of plastics. These all indicate the value of plastic.
BY ABEBE WOLDEGIORGIS
THE ETHIOPIAN HERALD WEDNESDAY 13 APRIL 2022
