Indispensable role of enterprises to realize the economic transformation


Despite the challenges the nation’s economy has currently faced due to the war erupted in the northern part of the country, enterprises have still better opportunity to boost the economy. As Ethiopia has abundant natural resources with bulky labor that is affordable and easily trainable, tapping the resource and creating job opportunity is a viable option to the enterprises, Asfaw Abebe, Director of the Ethiopian Enterprises Development said.

He further stated that, the sector has the capacity of substituting imported goods and boosting export performance which in turn enhances the nation’s potential of foreign currency earning.

Similar to supporting the war efforts morally and materially, paying attention to the sector is vital to reviving the economy and to that end expanding the establishment of small and medium size enterprises that utilize locally obtained raw materials is essential.

As to Asfaw, citizens of the country that is inhabited by more than 110 million populations consume both foreign and local products on the daily bases. Therefore, expanding manufacturing industries up to each woreda level is vital to substitute the imported goods and to satisfy the domestic demand. Exporting raw materials with no value addition only to obtain hard currency should be abandoned gradually and accelerating value added commodities is essential for transforming the economy and achieve structural change. Export also must consider the quality of products to be competent in the international market.

Side by side with these, promoting, appreciating and consuming local products through attitudinal change are vital. Because it is part of the import substitution scheme. Whenever citizens purchase goods for themselves and for parents should show reluctance towards foreign products such approach paves the way to embark on economic development similar to India and China.

Among the subsector’s products such as leather, textile, garment and shoes are prioritized. There are various reasons to prefer the sector. Ethiopia is known to its large number of livestock in Africa and the type of skin found in the high land areas of the country has high demand in foreign markets. Cotton products used as raw material for garment and textile are also locally obtained and currently, large cotton farms are being expanded. The industries are labor intensive and can create job opportunities to thousands.

It also plays crucial role in stimulating creativity, attracting local and foreign investment, substituting imports and meeting local demand as well as creating link between agriculture and manufacturing. As the products are highly demanded in foreign markets, they are imperative in boosting export performance. Besides, developing the habit of consuming locally manufactured commodities is as equally essential as invigorating production capacity, he stressed.

Asfaw further said that Ethiopians should change their attitude toward consuming imported food products. Instead, they need to prefer local products since the country has large amount of cultivable land that can produce huge amount of food crops both qualitatively and quantitatively. It also has abundant surface and underground water that have not been properly exploited yet. Moreover, excessive amount of rain water flows in vain especially during the relatively short period of rainy season. Hence, through developing irrigation farm based on the agro-ecology, producing various types of crops is possible.

Importing wheat is embarrassing for a country that agriculture is the leading economic sector. Thus, the ongoing winter season cultivation of wheat through irrigation farm should be strengthened. Currently, the practice is continued both in the low and high land areas of the country. The recent years’ experience indicated that if the production gets its momentum, it will be possible to become food self -sufficient. Substituting the importation of wheat attracts investors to engage in establishing food processing enterprises which necessitates the expansion of factories of such as pasta and macaroni and bakery which in turn creates job opportunities for thousands.

It is understood that currently food factories utilize wheat as a main input but due to the insufficient supply in the local market, they import some portion of their input from abroad. Hence, rising wheat production and productivity can reduce such trend of import dependency.

As to Asfaw, in some regions, the cultivation of fruit and Vegetable is expanding and supplying products to the market increased and this proved that within few years, it is possible to substitute the imported products. Sadly, though the nation’s main stay of the economy is agriculture yet, it imports juices from abroad. On the contrary, in the regions such as Gambella and Benishangul-Gumuz fruits that can serve to make juice like Mango are wildly cultivated and found abundantly but due to the absence of sufficient transportation system, most of the products are perished in the wilderness. Had there been juice processing plant in the nearby town, the wasted products would have been changed into juices and supplied to domestic markets and plays its part to substitute the imported.

In fact, in some parts of the country mango squeezing manufacturing is flourishing but it is still in its infant stage. Thus, supporting investors to allocate more money in the sector is vital.

Asfaw further elucidated that his organization has studied and planned how many industries to be established, how the venture gets legal support, how could it be financed, where the production place is obtained and from where raw material is supplied. The study is conducted with the cooperation of various stakeholders and significant numbers of investors showed their interest to participate in the venture.

Asked regarding the role of the private sector in expanding enterprises, Asfaw related that so far many have engaged in trade particularly in import and export and to him, they preferred trade because they assumed that the venture is zero risk but such rationale is not convincing. Rather, it made the nation’s economy import dependent and hampers the expansion of productive enterprises.

He further said that engaging in productive enterprises utilizing raw materials as inputs available in the local market, creates job opportunities for thousands, enhances self -sustaining economy and creates two way linkages between farming and agribusiness.

Most business men in the last three decades developed a mentality of get –quick –rich and to advance such interest they engaged in import business. Most business men who had political affinity with the ruling party intentionally engaged in such activities because the money they obtained was ill-gained through corruption.

The recently published study paper by Ethiopian Economic Association indicated that Ethiopia missed opportunity to be self -sufficient in cocking oil in the last two decades because the party affinity business men engaged in importing edible oil that had discouraged legal business men not to engage in edible oil production intentionally to leave the country to be dependent on imports.

Financial institutions also collaborated with the corrupted business men by not providing loan to investors showed interest to engage in edible oil production by utilizing locally produced oil seeds. Similarly, saboteurs engaged in exporting oil seeds instead of using it as input in local industries. Such practice critically hampered the nation’s opportunities to propel its economy for advancement through the expansion of productive enterprises.

The secret behind the economic advancement of countries such as India and Vietnam is relying on their own locally produced commodities. In the past, these countries used to import basic needs such as food, closing, shoes and others. Gradually, they developed a sense of proud in utilizing their local products and minimized their importation of foreign products. After three decades they become the leading exporters of garment and textile and shoes to the world market.

It is impossible to be competent in the global market without adding value on exporting commodities. Currently, productive enterprises have limitations in this regard and supporting them by providing incentive, access to loan and creating market value chain is essential.

The importation of products that can be produced locally affects the competency of local manufacturers. Therefore, substitution should be taken as a way out.

As to Asfaw, Ethiopia exports products worth of 3 billion Dollar every year and on the contrary, it imports goods worth over 15 billion Dollar. This indicates how the nation is indulged in trade deficit and this should alarm all citizens.

The January 4/2022

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