BY ABEBE WOLDEGIORGIS
Trade plays crucial role in boosting economy, creating enabling environment for business cooperation and regional integration. Agriculture is a back bone of Ethiopia’s economy. It contributes about 75 percent of the export volume. The products are exported mostly in their raw form without adding value and such situation puts the country in the disadvantageous position.
According to the Ministry of Finance, in the last budget year, Ethiopia earned 3 billion Dollars from export. As to experts, had the export products been exported with value addition instead of in their raw form, the money obtained from the export would have been doubled. Ethiopia exports agricultural products to the outside market such as coffee, spices, pulses, oil seeds and skin and hides in their raw form and obtained currency in average and less competitive price. But it can make it processed by roasting coffee, changing skin and hides in to leather and oil seeds in to edible oil so that can obtain more money.
The other option that make the country more advantageous in regional trade is maximizing its export to neighbouring countries through exploiting trade conventions in which Ethiopia is signatory. To that end, cooperating with multilateral partners is vital. Recently, The Economic Commission for Africa – a think tank with specialist expertise in African and international trade policy has announced that it recommitted to helping Ethiopia’s trade policy agenda that aims to foster industrialization and sustained economic growth.
Although Ethiopia remained outside the regional and global trading regimes for a long time, this is now changing. Not only has Ethiopia ratified the Agreement Establishing the African Continental Free Trade Area AfCFTA, it is also negotiating its accession to the World Trade Organisation /WTO/. However, neither the negotiations to join the WTO, nor the efforts to implement the AfCFTA Agreement has been smooth sailing. The political decision to change course and put Ethiopia at the trade policy decision making table has yet to be fully translated into a practice.
“The political resolve to be part of these regional and global trade regimes is clearly there, but it has not been matched by the technical capacity to translate this political will to concrete outcome,” ECA Director, Regional Integration and Trade Division, Stephen Karingi, said at a Roundtable on Multi-partner Support on Trade Policy to Ethiopia organized on the 10th of February by the British Embassy in Addis Ababa in collaboration with ECA. Karingi confirmed that ECA is ready to work with all the partners to support the Government of Ethiopia while the Ethiopian private sector realizes the country’s trade policy priorities at the national, bilateral, regional, continental and global levels.
The ECA has supported Ethiopia in trade policy development and conducted the first of its kind analysis on the economic impact of the country’s participation in the AfCFTA. Furthermore, the ECA has supported training programmes organized for leaders and senior staff of the Ethiopian Chamber of Commerce and Sectorial Associations and the Addis Ababa Chamber of Commerce. Recently, ECA commissioned the translation of the text of the AfCFTA Agreement into Amharic to make it closer to the people.
Opening the round table, Ethiopia’s State Minister for Trade Integration and Export Promotion, Mr Kassahun Gofe, said advancing the WTO and AfCFTA engagement were a key tool to consolidate the domestic economic reforms achieved so far. “In regards to the AfCFTA, it opens a new era of trade governance in Africa, and it must be viewed as an opportunity to implement necessary structural reforms in African countries,” he observed.
President of Ethiopian Chamber of Commerce and Sectorial Associations ECCSA, Mr Melaku Ezezew, welcomed the roundtable meeting as most opportune after a lull in action since Ethiopia ratified the AfCFTA. Melaku Ezezew, President of Ethiopian Chamber of Commerce and Sectorial Associations /ECCSA/, citing the failure of closed-door economic policies which have hurt Ethiopia’s trade competitiveness, therefore, the private sector needs to overcome the challenges of poor access to finance, a weak competition regulatory regime and inadequate institutional coordination which were all linked to poor policy development and implementation.
“Better regulation is a better environment to do business; better regulation is less transaction costs; better regulation is improved competitiveness for the Ethiopian business sector,” said Ezezew, noting that a bulk of the Ethiopian business sector was not informed about the AfCFTA and the WTO. Mr Paul Walters, Development Director at the British Embassy in Ethiopia told participants that the UK has long been a champion of the liberal, open and rules-based international trading system which can be cascaded with Ethiopia’s own vision for its future as articulated in its Home Grown Economic Reform programme.
“We firmly believe that Ethiopia’s future is in the AfCFTA and the WTO,” Walters said, affirming UK’s commitment to assisting Ethiopia build trade policy capacity and foster private and public sector engagement in trade policy development. Evidence suggests that, Ethiopia’s membership of the WTO and meaningful trading under the AfCFTA will increase economic growth, forex-generating exports, FDI and create jobs. Furthermore, this will also enhance the transparency and predictability of its business environment as Ethiopia conforms to international standards on issues like investor protection and customs processes. After removing the Dergue regime in 1991, the now defunct EPRDF regime ambitiously tried to change the economic land scape from command to that of the free market.
It introduced new laws which encourage the flourishing of both local and private investment. The bank and insurance sector which was monopolized by the government during the Dergue socialist era opened to the private sector and since then the sector has been flourishing. The finance sector also expanded its business areas all over the country and reached the emerging private business from small and medium size to the large investment particularly to the manufacturing and agriculture.
So far, the private sector is booming even though it faces some challenges. It created job opportunities to thousands, enable to transfer technology and knowledge, played pivotal role in boosting export and substituting imports. It also created linkage between agriculture and the manufacturing. It absorbed agricultural products as inputs, processed it and supplies to both domestic and foreign markets. However, many private investors claim that the shortage of hard currency in banks and the growing inflation restricted them not to unleash their potential in full scale.
To mitigate the crises the government has put direction to boost the nation’s foreign currency earning capacity through boosting export, encouraging Ethiopian diaspora to send remittance in the formal channel, tracing and putting culprits in to legal liability who engaged in money laundering and illegal trade among others. The recent permission of foreign banks to operate here expected to shore up scarcity of hard currency. To integrate the nation’s economy to the international market for the last 25 years, the government has been trying its level best to introduce laws that can fit Ethiopia a member of the World Trade Organization /WTO/ so that it can enjoy in pulling Foreign Direct Investment.
On the other hand, the government to liberalise the economy recently in its 2nd Home Grown Economic Plan, announced to enhance the transaction value of rural land so that investors get access to land and put their money on agriculture. In fact, it is undeniable fact that, in the last two years the nation’s economy has suffered from COVID19 and the war broke out in the northern most point of the country which cost human as well as animal life and incurred infrastructural damage. According to experts, to reinvigorate the economy it may take decades. ECA is made up of 54 Member States and plays a dual role as a regional arm of the UN and as a key component of the African institutional landscape.
THE ETHIOPIAN HERALD TUESDAY 21 FEBRUARY 2023
