Introducing viable domestic home-grown initiatives and a 10-year import substitution strategy, Ethiopia has been undertaking wide-ranges of activities in the manufacturing sector in a bid to promoting import substitution.
The recent macroeconomic reformis highly promised to bring about a huge significance tothe country’s growing trend of import-substituting industries, offering industries in this space an opportunity to scale up their operations and capture significant market share.
Despite challenges, the manufacturing industry is attracting additional investments, for example, in the ‘Let Ethiopia Produce’ initiative close to 481 industries have resumed operations especially in Amhara and Tigray states.
Ministry of Industry (MoI) State Minister Tarekegn Bululta told the Ethiopian Press Agency (EPA) that establishing import substitution strategies and policies, the country is expediting the manufacturingproduction capacity by prioritizing on import substitution commodities.
Mentioning the minimal stage of the industry to GDP share which counted for 7%, Tarekegn emphasized that the country is employing multi-sectorial approaches for manufacturing industry development.
The government is also paid due emphasis to the sector by setting short, medium and long term national plan to increase the manufacturing industry import substitution production capacity from 40% to 60%.
Identifying about 96 industrial products, he said they are taking bold measures on tariff stress, promoting local investors participation, lifting restrictions and empowering and transferring small and medium enterprises.
According to him, over 72,000 jobs are created from 272,000 manufacturing industries in the just concluded fiscal year.
In addition to viable legal frameworks, the policy has given due emphasis to security issues and clustering infrastructure, logistics to increase competitiveness of the manufacturing sector by producing imported products locally, he pointed out.
The recently announced national macroeconomic policy is believed to address the local manufacturing sectors challenges and promote import substitution.
Seconding the macroeconomic reform, Fair Fax Africa Chairman Zemedeneh Negatu posted on X that the recently announced economic adjustment would have multiplier effect on the economy. Tohim, the economy could be up to 10 times boost over the next few years.
“As the head of a large global company that has invested in the country, I fully support the reforms,”he said mentioning the goals such as bringing structuraleconomictransformation, maintaining macroeconomic stability, (especially by reducing inflation, increasing FX liquidity,) minimizing distortions caused by the oligopolistic structures, expanding the nascent domestic private sector and enable it to compete not only domestically but also abroad, and supporting value-added global exporters.
Taking into account his experience in managing many very large and complex investment transactions during periods of economic reforms in Latin America, in particular Brazil and Argentina, and other emerging markets, Zemedeneh wrote that a lot of hard work is needed over several periods to fully realize the benefits of economic reforms while mitigating risks and minimizing the impact on the livelihood of millions of people particularly at the low end of the income structure,
In this regard, analyzing the solution toolkits used by other countries with similar reform experiences will be helpful. In general, he stated, Ethiopia’s economy is starting to transition to a new and exciting phase appropriate not only for its current size (5th largest in Africa) but, most importantly, to its projected position in the coming decades as being amongst the 20 largest in the world with a 6.2 trillion USD GDP.
BY ASHENAFI ANIMUT
THE ETHIOPIAN HERALD FRIDAY 2 AUGUST 2024
