The Ethiopian economy has been dependent on agriculture for several centuries. However, since the agriculture sector has been practiced is being practiced in a backward manner, the nation could not manage to fulfill its food security, let alone earn enough amount of foreign currency through exporting value-added commodities. Having understood this, the government has been striving to introduce export-oriented manufacturing industry.
What are the opportunities concerning manufacturing sector? How could the manufacturing sector enhance the nation’s economy? What are the challenges facing the sector? What should the government do to encourage investors who want to engage in the manufacturing sector?
The government would press ahead with stepping up its efforts of transforming the economy through constructing industrial parks.Domestic investors would be part of the industrialization scheme, Industrial Parks Development Corporation (IPDC) CEO, Lelise Nemi said.
She states that the amendment of rules and regulations is being made to encourage domestic investors to engage in the manufacturing industry.
‘‘The involvement of domestic investors in the manufacturing sector wasn’t satisfactory. There are factors which have been hindering local investors from playing their role. Lack of fair loan provision and lack of facilities are among the challenges,’’ she notes.
According to the CEO, Ethiopia has been constructing industrial parks that could transform the nation’s economy to higher level. Enhancing agro-processing industries is among the top plans of the government.
So far, industrial parks such as Bole Lemi, Kombolcha, Hawassa, Adama, Mekelle and Debre Birhan have commenced operation and domestic and foreign investors are engaging in various investment endeavors to maximize the foreign currency earning.
Besides, taking the huge agricultural potentials into consideration, additional industrial parks mainly focused on agro-processing sector are set to be constructed in Afar, Benshangual-Gumuz and Gambella states, according IPDC.
For her part, Tiruwork Tizazu, Import and export Trade Promotion Directorate, Acting Director at the Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA) says that Ethiopia has been striving to realize the goal of transforming its subsistence agriculture to export-oriented manufacturing economy.
‘‘Our economy wouldn’t be changed unless we change our policy
from agriculture -led to export-based industrialization. Cognizant of this, the government is tirelessly working to shift the economy from agriculture to manufacturing. The industrial parks being constructed in various parts of the country are major indicators of the push towards this end,’’ according to her.
To achieve the plan, she notes that the government has prioritized the task of improving the quantity and quality of infrastructure, promoting the birth of industrial parks, enhancing productivity in agriculture and manufacturing and coming up with skilled and experienced human power.
As to her, the government has been striving to ensure an average growth rate of 20 percent per annum of industrial output in the Second Growth and Transformation Plan and the industrial sector is set to enhance its industrialization from 15.1 percent in 2015 to 22.3 percent by 2020.
Tiruwork underlines that lack of skilled manpower, lack of roads and power fluctuation are among the challenges facing the Ethiopian manufacturing and the government is working to address them.
Mewael Desta, Economics Lecturer at Mekelle University says that the Second Growth and Transformation Plan (GTPII) (2015/16-2019/20) envisages developing the manufacturing sector as the most worthwhile option for guaranteeing structural transformation.
He adds that with the ever-increasing population, advancing in manufacturing sector would be viable solution to realize the intended goal.
‘‘It would be difficult to feed more than 100 million people through subsistence farming. The export items are mostly unprocessed agriculture produces that wouldn’t be competitive in the international market. Therefore, the industrialization process should be stepped up. Agro-processing manufacturing industries need to be proliferated to make our nation the industrial hub in Africa’’
Micro and small scale enterprises have been playing massive role in enhancing industrialization and lifting people out of abject poverty, Mewael notes.
‘‘Micro and small scale enterprises have contributed a lot in poverty reduction through creating job opportunity for low income community and unemployed youths. Hence, they should be expanded as they are driving forces in enhancing manufacturing,’’ according to him.
Ethiopia targets to substitute its agrarian economy by export-oriented manufacturing by 2025. It is endeavoring to export value-added manufacturing commodities. As part of the scheme, the feasible industrial policy is attracting foreign direct investment which could add skill, experience, capital and technology. This would be huge asset for the country to realize its renaissance.
The Ethiopian Herald July7/2019
BY TSEGAY HAGOS
