29 Dec Ethiopia’s Ten-Year Plan to Industrialize
The Ministry of Trade and Industry recently announced that it is planning to enable the country earn as much as nine billion USD in the coming ten years from the export of manufacturing products. One of the strategies in this regard is to attract Foreign Direct Investment.
Besides, it is also working to make the country among the top 50 countries in the world in terms of the ease-of-doing business to boost its quest for industrialization.
Approached by The Ethiopian Herald, Shimelis Arega, Senior Communication Expert at the Ministry of Trade and Industry said the ministry is striving to improve the country’s ease-of-doing business by increasing its score from 48 to 80 percent. In addition, it has also given due emphasis to modernizing the manufacturing industry.
He further stated that increasing quality inspection of export and import products from the current 650,000 Metric Ton (MT) to 1,058,781 MT and 1,950,000 MT to 3,485,630 MT respectively by 2022 is also part of the ten-year strategic plan of the ministry to achieve its desired goal in the sector. Five million new job opportunities will also be created in the sector,” he added.
Indicating that the ministry is also working to ensure market competitiveness, he said as per its ten-year plan, the Ministry is planning to increase the current share of the manufacturing sector in the industrial from 6.8 to 17 percent. In addition, it envisions increasing the average production capacity of the sector from 50 to 85 percent.
The major opportunities that help Ethiopia achieve this lofty ten-year plan include the U.S’s African Growth and Opportunity Act (AGOA) which is set to benefit Sub-Saharan countries’ manufacturing industries in the coming five years; the European Union’s Everything But Arms (EBA) tax and quota-free market opportunities for developing countries, as well as Generalized Special Preferential trading arrangements with Japan, China, India, and Turkey.
“Being able to export 90 percent of our products in all of the African Free Trade Agreement (AFTA) signatory countries without tariffs and quotas in the next ten years is also a golden opportunity for us to achieve our goal,” he said. “This will unquestionably make us the major manufacturing centers in the African continent.”
As to him, there are a number of advantages the investors gain by investing in Ethiopia among which are the construction of the Grand Ethiopian Renaissance Dam (GERD) which could help to tap the country’s abundant electric power supply potential, active labor force,
the green legacy campaign, market access in many parts of the world. In addition, the country has become one of the preferable investment destinations in Africa.
The ministry has identified and given due attention to two group product types in its ten-year plan based on their demand in the global market, technology requirements, job opportunities and potential for diversifying exports.
Accordingly, the first group of products identified as priority areas for the first five years of the plan are agro-processing (food, beverage, sugar, meat and milk, honey and wax), leather and leather products, textiles and apparel, construction inputs (cement and metal), basic chemical inputs, pharmaceutical and medical equipment, paper production (pulp production) and printing, wood products, agricultural inputs (fertilizer and pesticide), plastic / PVC, ICT and Electronics (assembly work).
In the second group, the major focus will be given to industrial products that require knowledge and skill, resources, and infrastructure as well as high-level of connectivity in the second half of the ten-year plan.
These include chemical products, metal and engineering products (automotive equipment), manufacturing machines (textiles, leather and paper), plastic/ polymer, medical equipment and electronics manufacturing of various components.
As to him, building a reliable and up-to-date TBT/ inquiry point information system, developing a research-based marketing chain, improving legal frameworks (proclamations, regulations and directives) as well as improving the ease-of-doing and starting business have been identified as the main implementation strategies of the plan.
The Ministry has already started various activities that aim at developing a research-based marketing chain, bringing, adopting and transferring state-of-the-art technologies and products that reinforce production and productivity at the international level, establishing a digital and modern marketing system and eliminating market information gaps with the help of systems and technology.
As to the Ministry, Ethiopia has important natural and human resource that can highly attract investors. With regard to natural resources, the availability of three million hectares of fertile land and suitable climate for the production and cultivation of cotton cultivation, large-scale agro-processing (vegetables and fruits, oilseeds and pulses), and livestock farming are among the resources that can be used as a springboard for the growth of light industries.
By the same token; the availability of over 300 million tons of iron, 50 million tons of copper as well as 30 million tons of zinc reserves in addition to other chemical and human resources are also opportunities available for investors that are aiming to participate in heavy industries.
Owing to these facts, the ministry has also planned to stimulate the development of the manufacturing industry by ensuring the participation of domestic investors. In addition, priority has been given to the manufacturing industry that uses domestic resources in a competitive manner to meet both domestic and export demands in the coming ten years.
In a bid to create a large number of job opportunities, increase the contribution of the manufacturing industry to the GDP and align the development of the industry with the sustainable and green economic development strategy, the government is planning to give a lot of incentives to investors.
Besides the effort to attract new investment, the plan is also aiming to boost the production and productivity capacity of existing manufacturing firms.
The ministry also identified some of the possible challenges to achieving the plan. Strong competition in the international market in terms of product quality and quantity, the complexity of international trading systems and laws, the impact of COVID-19, limited access to finance and foreign exchange and the fact that AGOA will come to an end by 2025 have been mentioned as major challenges of the ten-year plan.
The ministry also invites foreign investors to work in joint-venture with Ethiopian investors particularly in value addition and other investment areas. Improving the quality of exportable products, and focusing on high-tech industries have also identified as efficient solutions to increasing the competitiveness of the manufacturing industry.
Over all, expanding the manufacturing industries that replace strategic inputs, increasing the number of small and medium-sized manufacturing industries from 2,000 to 11,000, improving the quality of the product, increasing competitiveness, attracting quality investment and focusing on high-tech industries are the main goals for the next ten years in the manufacturing sector, as to Shimeles.