The manufacturing industry in Ethiopia seemingly plays a significant role in the nation’s economy. The growth of the sector within industry has an indispensable role in building national technological capacity, industrial capability and creating broad based job opportunities coupled with improving income.
Similarly, the development of the manufacturing industry helps to improve the total factor productivity and competitiveness of the overall economy. The industry has been focused on playing its role in the overall economic development of Ethiopia.
Owing to this fact many agreed that through adapting the country’s manpower and land with limited capital supply and increasing private sector participation, small and medium-sized manufacturing industries have been integrated together and become the basis for large-scale manufacturing industries and the government energetically devoted to expand the sector all over the country. However, the outbreak of war ignited by the junta in the northern part of the country critically harmed the sector.
According to Melaku Alebel, Minister of Industry, the terrorist group carried out the attack to destabilize the government and the livelihood of the people, to increase joblessness, reduce production and weaken the economy. He also said that the attack on the industry and various companies serving the industries aimed at subjugating the Ethiopian people particularly the Amhara and Afar people; however, to reverse the situation efforts were being made to bring the affected industries into operation.
As to him, the owners of the affected industries are working hard with the collaboration of the Ministry of Industry and other stakeholders. Professionals in the industry are also engaged in repairing and operating the factories. After the Ethiopian National Defense Force (ENDF) together with all security forces evicted the terrorist group from the Amhara and Afar regions, the Ministry of Industry has been working closely with stakeholders to assess the extent and nature of the damage besides the need for assistance. Following this, measures to restore the manufacturing plants are being undertaken.
Accordingly, 27 companies have started partial production out of the 87 companies that were fully and partially affected by the terrorist group. The Ministry has conducted a detailed study to ensure their full operation and to bring other non-operating industries back to normal operation.
By the same token, three companies which are under Kombolcha Industrial Park and were damaged by the terrorist group are fully operational and have started exporting their products last weekend.
Meanwhile, the ministry also announced that the office has earned 238.267 million USD from the manufacturing sector during the past six months of the current fiscal year. Due to the aforementioned reasons, the ministry was able to achieve 89.8 percent of the target from its plan of 265.4 million USD. It has 50.77 million USD increment while it is compared with the same period of last year’s performance.
According to Minister Melaku, the government has been working exhaustively to strengthen the industry over the past six months. He said the sector has been able to achieve better results in terms of foreign exchange earnings and import substitution.
The government is also focusing on attracting foreign direct investment and production, financial support, tax exemption, provision of tax relief and training support in order to ensure gradual economic structural transformation. Subsequently, the sector is expected to contribute to the country’s economic growth through creating job opportunities for citizens. However, the ministry disclosed that the industry has not been as successful as it should be in terms of job creation, import substitution and foreign exchange earnings.
It also disclosed that there are many industries that have been closed due to ruin, on the verge of closure for various reasons like lack of resources, power supply and finances.
There are a number of factors that hinder the success of the manufacturing industry. The ministry also stated that the inability of public institutions to provide quality service that is designed for the growth of the sector can be taken as the major problem. In order to solve the problem, the Ministry has discussed with regional and city administration industry bureau officials, the House of Peoples Representatives Standing Committee of Trade and Industry and stakeholders.
State Minister Shisema Gebreselassie on his part said that the discussion has paramount importance to solve challenges of the manufacturing industry across the country. As to him, the home grown economic policy that has been implemented is expected to play a crucial role in bringing recovery in the post war period.
The economic reform serves as a tool to improve the legal and tariff issues which have been a hindrance for industrial development. It also serves to bring attitudinal change, resolve skills constraints of industry actors, and the inability to provide a better infrastructure as per the sector demand.
He also explained that all stakeholders in the sector ought to participate actively in this activity to bring meaningful and remarkable change in the manufacturing industry as it has a vital role in the economic development.
As it is known the war ignited by the Junta incurred a heavy toll on the economy and the damage crippled the infrastructure and industrial sites. Recovering and reconstructing the damage needs a huge amount of money which is beyond government’s capacity. Hence, resource mobilization from local and abroad is vital. In addition to these, appealing the matter to the international community is vital. Because the scope of the problem is broad and touches all concerned groups globally including the United Nations. The ongoing efforts to provide humanitarian support to the displaced people by the diaspora also help the victims to start a new life.
The assignment given to the health institutions to reinvigorate the destroyed hospitals in Afar and Amhara regions also showed progress and some repaired hospitals and health centers began their service in their full capacity.
Therefore, it should be understood that the reviving of health and educational institutions in both regions means the reviving of economic sectors including manufacturing. Apart from discussing and working in harmony with the investors and stakeholders, the Ministry also made agreements with international companies in order to solve the market problem of the manufacturing industry.
According to the document from the Ministry, it has signed an agreement with Global Trading & Sourcing ETHIOPIA (GTS) to address the supply and demand shortages in the manufacturing industry. GTS is an international apparel buying house based in Ethiopia.
The agreement is significant to fill the gap between suppliers and buyers through bridging the shortage of inputs and commodities in the manufacturing industry and consolidating their ties.
In order to build a sustainable and competitive high, medium and small manufacturing industry, it is necessary to compete in the digital market in the manufacturing industry. It also enables to promote, encourage, coordinate, and conduct training and exchange information online based on the agreement.
It is an independent, collaborative and neutral apparel buying house working with buyers and suppliers to create solutions and processes that enable efficient procurement activities. It is also important for manufacturers as it creates global market linkages.
BY HIZKEL HAILU
THE ETHIOPIAN WEDNESDAY 9 FEBRUARY 2022