It should be emphasized that Ethiopia has been playing a paramount role in taking the country to the next level of accomplishment putting a wide spectrum of fruitful approaches into effect. On top of that the private sector has been playing a large role in breathing new life into the country’s economy in different shapes and forms more than ever before.
Reasoning from this fact, the country has been attaining the sought after goal and reaching new heights at the earliest possible time.
Ensuring the competiveness and effectiveness of the manufacturing industry is critical to build a shock-resilient economy, the Ministry of Industry (MoI) recently said expressing its desire to reexamine the sector.
It is recalled that the MoI held a panel discussion in the recent past with relevant stakeholders on maximizing domestic production, export competitiveness and import substitution as well as scaling up industrial capacity and other related issues.
At the event, Industry Minister Melaku Alebel said that attention has been given to the manufacturing industry not only to create jobs, but it is considered as core sovereignty issue.
“Ethiopia has been heavily importing high-level food and food related items, clothing, chemical, engineering and metals from abroad and to balance the situation, the country prepared import substitution strategy.”
So far, the country identified some 96 imported items to substitute in local capacity in the future and it has fully shunned importing some products and exporting these items to neighboring countries.
Melaku further noted that the “Made in Ethiopia” Movement requires investing in skilled labor force, quality inputs, infrastructure quality development, improving logistics systems, standardizing certification processes and others. The movement has been registering results in increasing products’ quality and shed the light for the need for continued improvement via technical support, standardized production processes, and strong regulatory systems.
The export of goods, including oil seeds, crops, gold, and coffee, grew by 4% compared to last year’s performance, generating more than 10 billion USD.
Ethiopia also saved 2 billion USD through import substitution in agriculture and industry, with over 40% of products now being produced locally. Banks registered a 24% profit increase, and savings accounts grew from 38 million Birr to 100 million Birr. Currently, 47 million people use mobile banking services, PM Abiy elaborated.
Over 3.8 million jobs were created, with around 3.4 million locally and 332,000 abroad. Additionally, 60,000 citizens were employed through remote work.
Deputy Director General of Ethiopian Diaspora service, Belayneh Atnaw revealed to the Ethiopian News Agency (ENA) that this figure represents a 50% increase compared to the previous budget year.
“Over the past five years, we’ve seen an average of about 4 billion USD annually in remittances. This year’s surge to over six billion USD is a promising trend for future remittance collection,” Belayneh stated.
Noting that rise in remittances is not the only positive development; the deputy director said Ethiopian Diaspora Service has also been actively engaging diaspora members in the country’s economic growth. Belayneh pointed out that 273 diaspora members have been engaged in various investment sectors.
Regarding expenditure and revenue, the government collected approximately 466 billion Birr and spent about 716 billion Birr, resulting in a budget deficit of 2.5%. However, contraband, illegal trading, and tax evasion remain major obstacles to tackling inflation.
The government collects taxes from 64,000 individuals and companies, amounting to 7% of the nation are GDP, and granted more than 10 billion Birr in tax exemptions for food items. The nation has not taken any commercial loans and has reduced its international debt to 17.5%, according to the premier.
The industrial sector also saw success, registering 10.1% growth and the production capacity of existing industries reached 30% due to critical government interventions. Under the “Made in Ethiopia” movement, over 390 factories commenced production, and 217 factories became operational in Tigray State.
The production of smart poles marks a significant milestone for Ethiopia’s local manufacturing industry, which has seen growth from 30% to 40%, as said by the Ministry of Industry (MoI).
MoI Minister Melaku Alebel highlighted the government’s focus on the manufacturing sector to enhance local production capacities and reduce import dependency through reforms and policy frameworks.
The minister elaborated that the development of smart poles, a recent phenomenon in the country, has gone through various complex phases. He emphasized that this achievement is a major milestone for the manufacturing sector, demonstrating its capability and potential.
It also creates enabling environment for raising financial capital development and reducing risk. As to him, Capital market is “The New Territory to The Growth Momentum of Ethiopia” alike the homegrown economy, the system is designed to forwarding the national economy in the years to come.
Besides, he noted, the capital market allows private investors to utilize the system to assist the Ethiopian economic growth thereby facilitating the necessary requirements and special approach to attract foreign direct investment.
AXIS Co-Founder, Mark Duffy for his part said, “Capital market will benefit Ethiopia through sharing technology, experience, and knowledge from various companies. I have many years’ experience in the area and have been sharing my knowledge to Ethiopia over some years in the past so as to encourage economic growth. In my country (Ireland) gaining a plenty of advantages following the utilization of capital market.”
He advised that Ethiopia needs to careful preparations on the sharing of external experiences, and the likes to implement the capital market properly and ensure the national interest.
Ethiopia’s Minister of Industry, Melaku Alebel, and Chairman of China International Development Agency, Luo Zhaohui held a productive bilateral discussion in Beijing recently.
During the occasion, the Minister firmly asserted Ethiopia’s remarkable economic achievements in various fields, proudly stating that the country has successfully created numerous job opportunities for the youth.
Furthermore, the Minister underlined the priority areas where partners’ intervention is crucial to address gaps, using Ethiopia’s green legacy initiative as a prime example. He also emphasized the importance of identifying and addressing global challenges through joint actions. Finally, he called upon partners, including China, to collaborate in addressing global challenges through coordinated planning and consultation. Luo Zhaohui on his part expressed China’s strong commitment to supporting Ethiopia’s economy across all sectors.
He noted that significant efforts have been made to train professionals, enhancing their capacity to play a leading role in strengthening Ethiopia’s economy.
The government has been formulating viable policies that prioritize the private sector’s economic engagement and pave the way for a competitive business environment, a noted economic expert said.
Global Chairman of Fairfax Africa Fund Zemedeneh Negatu recently told the Ethiopian Press Agency (EPA) that the country is carrying out policy shifts to break up the monopolistic business model to competitive approach and to materialize economic stability.
The formulation of a viable policy framework is also a significant milestone that has played a huge role in Ethiopia’s economic transformation and building a vibrant private sector.
Zemedeneh, an economist by profession, further noted that the country has untapped investment opportunities in agriculture, technology, infrastructure and other priority sectors that could lure the attention of foreign companies.
Commending the government’s commitment to maximize the economic role of the private sector, he underscored that financial policy change is also critical to reverse the old model of easy money-profit making to a value added economic model. “Ethiopia has an untapped productive market potential, growing local market and affordable labor cost to attract private investment in the manufacturing industry.”
Citing various countries’ development experiences as benchmark, the economist stressed the need to strengthen the Public- Private-Partnership scheme as a key to enhance the product and productivity of the manufacturing sector and help it to grow from the current early stage of development.
“Ethiopia also requires a well-articulated education system and industrialization and infrastructure are also the hugely-contributing factors for a stabilized macroeconomic environment, to arrest the soaring inflations and help foreign investors to make the right decision.
According to Zemedeneh, the government is taking bold steps with various initiatives including the ‘Made in Ethiopia movement in a bid to attract foreign investors’ involvement in Ethiopia’s economy and pave the way for private sector development, promote import substitution and foreign exchange earnings.
BY ADDISALEM MULAT
THE ETHIOPIAN HERALD WEDNESDAY 17 JULY 2024
