Ethiopia needs to harness private sector potentials: UNCTAD


ADDIS ABABA—United Nations Conference on Trade and Development (UNCTAD) recommended that Ethiopia has to foster Productive Capacities for Industrialization (PCI) via tapping untouched capacity and utilizing private sector potential thereby fostering economic growth and development.

In a press release recently dispatched, it is cited that a workshop was organized by UNCTAD in collaboration with the ministry of Industry in Addis Ababa to discuss issues of industrialization in the country.

The press release thus stated that Ethiopia’s ambitious development strategy has driven the country to become one of the world’s fastest-growing economies. From 2004 to 2019, Ethiopia generated average gross domestic product (GDP) with ten percent growth a year. However, the growth has shown sluggish pace due to COVID-19 pandemic, recent political unrest and severe drought, with a moderate rebound expected as of 2022.

As to UNCTAD’s Productive Capacities Index (PCI), Ethiopia had an overall PCI score of 23.53 in 2018, ranking 169th in the world. Ethiopia’s PCI score is comparable with the LDC group average but trails the average score of the land-locked developing country (LLDC) group.

The release stressed that in recent years, industrial policy and public-sector investments in key sectors have allowed Ethiopia to expand its productive capacities in some areas. For example, the country has steadily closed its gap to African averages for the transport and human capital components of the PCI , the release stated adding that at the indicators level, Ethiopia registered significant improvements in Gross Fixed Capital Formation, through the effort of government-led investments in infrastructure.

Nevertheless, relative to African averages, Ethiopia has room to improve in the energy, ICTs, structural change, private sector and institutions components of the PCI.

UNCTAD underscored the need for Ethiopia to urgently address its productive capacity gaps particularly its needs to enhance the role of the private sector in economic growth and development, as well as reinforce institutional performance in creating conducive business environment. These are central objectives of the latest Ten Years Perspective Development Plan (2021 – 2030), adopted by the Government in early 2022.

Explaining its believe, UNCTAD said that revitalizing the private sector and expanding its role in economic development, Ethiopia needs to adopt strategies that support businesses throughout their life cycle, allow them to grow into competitive, medium- and large-sized enterprises.

In parallel, Ethiopia needs to build strong institutions, capable of formulating, implementing, and enforcing policies in a bid to reduce the impact of uncertainty and promote economic activity thereby generating productivity and economic growth and ensuring inclusive and sustainable growth.

UNCTAD supports Ethiopia by providing policy guidance for developing a dynamic and innovative private sector and strengthening institutions to build productive capacities, sustain economic growth, and broaden socioeconomic development.

The March 5/2022

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