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The production of chemicals, especially fertilizers, soap and detergent are among the sectors that received the highest priority in Ethiopia’s Growth and Transformation Plan (GTP). The objective is to develop sufficient production capacities to satisfy local demand and substitute imports. However, currently the only chemical with significant export potential is hair preparations.
Exports have mainly gone to Sudan in the past. The possibilities of exporting to other markets are limited, as the largest importers of the product (the United States, United Kingdom and Germany) tend to buy from nearby suppliers, documents reveal.
According to the Ethiopian Investment Commission, Foreign Direct Investment from China, India and Europe has reached the subsectors of the chemical and construction industries ranging from soap and detergent to chemicals used in the leather and leather industries. building.
Among the diversification options identified, organic chemicals are the top once, as their demand is the largest in China and the EU alike.
Cement has been prioritized in the GTP with the main objectives of meeting local demand and developing the capacity to serve export markets. Until 2014, exports of $ 1.7 million and $ 1.5 million went to neighboring Djibouti and Somalia, respectively. However, recently regarding a major shortage of cement products for local consumers, the government has decided to stop exporting cement.
Ethiopia has other natural resources such as iron, copper or nickel, which are in very high demand in China and the EU. The construction and mining sectors are also expected to contribute significantly to Ethiopia’s GDP during GTP II, from 2015/16 to 2019/20.
To make the industry internationally competitive, GTP II envisaged investments in capacity development to incorporate new technologies and skills. Capacity building for the infusion and adaptation of skills and technologies and critical infrastructure gaps are among the challenges for additional exports of construction materials.
The Ethiopian government is working hard to strengthen and exploit the export potential in the chemical and construction industry. In addition, the government is adopting new laws and conducting education and training campaigns for manufacturers and exporters in the sector.
Consequently, the Institute for the Development of the Chemical Industry and Construction Supplies (CCIIDI) announced that it plans to earn around $ 1.3 billion from the export of chemicals and construction products over the next ten years.
Yonas Abate, director of the Rubber and Plastic Industry Development Directorate at CCIIDI told The Ethiopian Herald that the institute has included several tasks to be performed in its plan to boost the performance of manufacturers and achieve the plan of earning up to 1,300 million dollars in exports in ten years. time.
Every chemical and construction manufacturing industry nationwide is expected to allocate between five and ten percent of its products for export in order to achieve this goal; He said and added that the strengthening of the Public-Private Partnership (PPP) will also be the priority task in the coming years.
Noting the lack of product surplus, increased local demand, the shortage of foreign exchange faced by manufacturers and a lack of productivity as the basic challenges in the sector, Yonas said that manufacturers should work more in collaboration with the institute and other stakeholders to solve the challenges. and produce a significant change in import substitution.
As for him, if both manufacturers and the government work aggressively to increase the export potential of inputs and chemical and construction products, this will allow to significantly reduce the 49 billion dollars that the country is expected to spend in the next ten years in importing chemical and construction products.
On Thursday, the institute organized an event under the theme “Creating Globally Competitive Industries” where representatives from more than 200 exporters, potential new export industries, embassies and state officials participated. On the occasion, the Minister of Commerce and Industry of the State for the Development of Export Trade, Misganaw Arega, affirmed that the country must increase its export potential to achieve the 2025 Sustainable Development Goals.
Hoping that joining the Africa Free Trade Area (AfFTA) and the World Trade Organization (WTO) is a good opportunity for Ethiopia, he noted that the private sector should be an engine to maintain the nation’s goal of being the center of export excellence in Africa.
Since the ratification and implementation of Ethiopia’s AfFTA membership in March 2018 and March 2019 respectively, the country’s competitiveness in the global market has been increasing.
In addition to increasing the competitiveness of the global market, free trade allows countries to specialize in certain goods from which they can obtain the advantages of economies of scale and lower average costs; This is especially true in industries with high fixed costs or that require high levels of investment. The benefits of economies of scale will ultimately lead to lower prices for consumers and greater efficiency for exporting companies.
With the transition of political power in April 2018, Ethiopia has expressed its willingness to work together with members to move forward and hopefully complete the accession process to the WTO by the end of 2021.
“While the world is changing rapidly, it is time for Ethiopia to reap the dividends of peace in good faith to flourish in prosperity, security and opportunity. I have no doubt that today’s meeting of the Task Force will contribute to achieving this. aim, becoming a critical turning point in the history of Ethiopia’s accession “to the WTO,” said reformist Prime Minister Abiy Ahimed in his Nobel speech.
Noting that the prime minister’s speech can inspire both the government and manufacturers to work to fully exploit the export potential in the sector, Misganaw called on exporters to harness this advantage for the common good.
Misganaw also noted that the government has made a paradigm shift by increasing the export potential of manufacturers. Noting that the government is implementing a law allowing 45 percent of the total foreign exchange allocated by the National Bank of Ethiopia to manufacturers and agriculture, he pledged private investors to genuinely support the government’s ambitious plan to improve your export potential.
Appreciating the event as the first of its kind, Tihitina Legesse, Managing Director of WARYT Mulutila International PLC for her part, explained that the PLC is working hard to achieve successful achievements in the export of furniture to African and Asian countries and others. in the near future.
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As for it, what manufacturers expect from the government is the provision of incentives through the adoption of a synergistic policy. He suggested that incentives such as lower interest rates and the surcharge would encourage local manufacturers to push themselves to export more.
According to her, her company is working to be a center of excellence and a training center for other manufacturers. The private sector must play a role in developing the county’s economy by generating tax revenue and building the country’s image by producing quality products that meet international standards.
Regarding the manufacturer’s search and idea, Samuel Halala, Director General of CCIIDI added that problems related to electricity, tax rate, tax exemption and manufacturing area will be resolved soon. He also called on heads of state to bring lists and problems from manufacturers in their region in order to support them.
As for him, Ethiopia has also built and inaugurated several industrial parks and agro-industrial parks. Along with creating an international market chain, inspiring Ethiopia’s export potential in the chemical and construction industry is vital for the country to develop its export-oriented industry.
All agreed that the more the country creates the maximum potential to generate quality products of chemical and construction inputs for local and foreign markets, the more capable it will be of generating the greatest amount of foreign exchange to facilitate an economic boom.
