BY ABEBE WOLDEGIORGIS
It is said that Ethiopia has abundant natural resources and if it is well exploited can change the life of citizens to the better and boost the economy. If its mineral resources are well explored and exploited as well as its crops production is upgraded and changed in to money, the nation can become among the influential country at continental and international level. However, to realize this, it needs not only to create productive forces but also productive industries.
Nevertheless, shortage of inputs and hard currency and weak linkage between industries and less productivity of human resource hampered the economy not to move forward. Capacity limitations on implementing policies and regulations, problems that arise due to absence of security, negatively affected the production capacity of the industry sector. Moreover, international economic crises witnessed in the last three years coupled with COVID 19 and the war occurred in the northern Ethiopia further crippled the sector.
Tarekegn Bululta is the State Minister of Growth and Competitiveness Sector at the Ministry of Industry. As to him, based on proclamation number 1263/2021which governs the structure of government institutions of the Ministry of Industry is separated itself from the Ministry of Trade and organized independently. The objective of the preparation of the proclamation is that to stimulate the productive sector and to pay more attention to it. In addition to this, it has an aim to support local investors to join the productive industries to craft helpful policies and strategies to the sector and to let them organized independently. Therefore, the reorganization brought six institutions to combine in to one.
For instance, previously, textile, leather, food and beverage, chemical, iron and steel were organized independently and function unilaterally but now they are combined in one and work as one entity and support the productive industries by providing training and making research. After the endorsement of the proclamation, they entered to production activities under the auspicious of the Ethiopian Enterprises Development Institute.
Currently, the Ministry of Industry has two agent institutions under its mandate which are the Producing Industry Sector Institute and the Ethiopian Enterprise Development Institute following the reorganization of the Ministry of Industry as a result of the proclamation. It introduced new regulation and allocated the necessary human resources to the mentioned two institutions. Such measures proved that better opportunities will be created to the industry sector.
As to Tarekegn, the producing industry sector plays pivotal role for the nation’s economic growth. Therefore, unless special attention is paid to the sector, it is hard to compete in the international market. In the past, the sector faced many challenges and came across various short comings. Hence, introducing new laws and regulations was taken as a way out to redress the problems.
There will be high expectation from the industry sector in the coming ten years from the government side. It is intended to obtain 9 billion Dollars from the export sector in the next 10 years. It is also intended to create job opportunities to 5 million youth. It is also planned to raise the scale of import substitution to 60 percent which pushes the nation to attain independence from imported goods. Such measures also give the way for boosting export.
The other endeavor regarding the sector is enhancing the rate of productivity. Most industries are producing with only 50 % of their capacity due to various reasons. Therefore, it is intended to raise their productivity rate to 85 % and in the coming ten years, it is planned to raise the productive capacity of 11 thousand enterprises to the level of 85 %. But the implementation needs structural reform. In addition, it needs working in collaboration with other stakeholders for the reason that the sector’s activities should not be left to only the Ministry of Industry.
For instance, an investor needs land in order to establish industry but he can’t get the land from the Ministry of Industry. He has to work with other entities in a cooperative manner to obtain land. He also needs finance and to meet his demand, he has to contact and work together with the relevant institutions. Industrial activities also require well trained human resource and to that end, the industry owner has to work together with universities and technical colleges to meet his labor demand.
On the other hand, industrial production needs viable market to supply its products and searching market destiny in foreign countries is essential. Broadening local market also is essential and to that end, working in a coordinated manner is critical. When legal disputes occur among the stakeholders, resolving it is also vital. The recent “Ethiopia must produce” motto experience indicates the vitality of coordination.
He further said that, through cooperation with the Ministry of Revenues, some of the constraints affected the industry sector are mitigated. The Ministry of Finance introduced new laws helpful to the sector. Cooperation also has undergone with Ethiopian Electric Authority. Next time, rules with regard to accountability will be introduced. But there are still fundamental problems which are unresolved yet and among others, the industry sector is dependent on imports with regard to inputs. For instance, to produce clothes, textile is imported from abroad. Machineries and spare parts are also imported. Some industries also depend on foreign skilled labor. Until skill is transferred to local professionals, foreign experts should stay here. These all need foreign currency.
Paradoxically, the nation still suffers from shortage of hard currency. In the future, reducing imports that are used as inputs in industries will be realized step by step through building the nation’s capacity of import substitution. For example, in Gondar, there is huge amount of cotton production hence, by expanding industries and utilizing the resource entirely, import substitution will be possible.
As to Tarekegn, the industry sector has various sub sectors. For example, food and beverage sub sector has huge potential to be developed and to create job opportunities to thousands. Most of its inputs are obtained locally. Therefore, adding value to locally produced beverages and food should be considered. Wheat products must be processed and changed in to flour, biscuit and pasta and must be exported through time. Producing some nutritionally reach products must be taken as option because such venture put the nation in to advantageous position.
Recycling iron and steel products also helps minimize import. As to the Ministry of Mining, there is abundant untapped iron resources found underground and exploring and exploiting the resources must be strengthened so that resolving the problem will be possible. These all enhance the nation’s competition capacity in the international market.
Shortage and scarcity of cement products witnessed in the market are being resolved through the coordinated efforts with the Ministry of Trade and Regional Integration and stabilizing the price also undergone. In creating shortage of cement products in the market the role of brokers should not be denied and if the problem is addressed, the situation might be changed to the better. When the newly emerging cement factories which are under construction enter to production, stabilizing the price will also possible.
He further said that, producing below the average capacity is the problem of all industries. According to the Ministry of Industry the technology and engineering subsectors utilize only 30 percent of their producing capacity and 60 percent of food industries are at cottage level and produce at home. They failed to produce and supply their products qualitatively and quantitatively.
The cement industries, during the maintenance and service months, spend long time to repair the machines. As a result, their production is reduced and their product supply becomes in shorter. Similarly, they faced shortage of hard currency and shortage of spare parts. As to Tarekegn, the recently launched “Ethiopia Tamirit” movement is intended to bring industrial revolution here based on other countries’ experiences. Some counties succeeded while others failed.
It has three major objectives and the first one is to pay attention to the industry sector, the second is following up activities to be given to the sector by the government and the third one is to enhance cooperation among all stakeholders thereby bringing structural change. In so doing, the industry sector will play a leading role in the economy. As to the State Minister, the movement has been bringing tangible result and presidents of most Regional States joined the movement and provided the necessary support to the sector.
THE ETHIOPIAN HERALD TUESDAY 28 MARCH 2023
