Nowadays, Ethiopia is working hard on changing its agrarian based economy to the industry driven one building world class industry and agro-parks in various states of the country in the shortest time possible. For example, some industry parks have already gone operational and others are under construction too.
But, so far inaugurated industry parks have been attracting only a number of globally known textile and apparel companies. Hence , one must ask why the domestic investment is insignificant in manufacturing sector?.
One reason could be all local investors prefer service business than the manufacturing one. This is because the manufacturing sector does not bring quick economic returns. But, it brings ever lasting prosperity and development to a given investor and country as its economic returns last for many years.
Indeed, the government and the pertinent bodies have been exerting various efforts with a view to attracting local investors in manufacturing, but, they need to do a lot in-terms of promoting the country’s competitive incentives packages for these investors. in an amicable and attractive fashion than ever before.
As part of encouraging local manufacturers, the government has already mandated the development bank to offer 100 percent financing loans to purchase machines without collateral, in return ,they are expected to play a big role in replacing the imported goods and boosting the foreign trade.
Local investors also need to get involved actively in pharmaceutical manufacturers as the nation is now importing its 85 per cent medicines from various countries. The same is also true for chemical manufacturers.
For the last two decades, Ethiopia has been putting in place every necessary infrastructure in a bid to attract a large number of foreign and local investors. And also unlike many African countries, it has been allotting over 60 per cent of its budget for infrastructure development.
Apparently, without modern infrastructure networks, development is unthinkable. These days, more or less, the nation has modern highways, railways, airports, and the like. This by itself has a big role in attracting potential local investors.
Above all, day in and day out the country is also working for economic integration with neighboring countries. Therefore, sooner or later, East Africa will be a huge regional market for local manufacturers.
Also, the nation needs to exert relentless efforts in helping local manufacturers to flourish as high tech manufacturing through overcoming the challenges related to attitudinal problems and skill development in the sector.
Moreover, one must not forget that local manufacturers have pivotal role in accelerating the economic transformation and ensuring sustainable and inclusive development in the country as they create tremendous job opportunities for youth and women apart from supporting to own high tech and industrial society.
Every fellow citizen needs to bear in mind that the industrial transformation could be sustainable and accelerated when the central focus is on knowledge and technology transformation.
A number of international organizations have been providing the following policy recommendations which could contribute to the development of the manufacturing in Ethiopia: Increasing productivity through skills development. Improving access to finance for firms especially for SMEs ,Addressing binding constraints including access to land and electricity , improving tax administration and simplifying the tax system. Improving trade logistics, customs procedures and trade regulations, to promote export and FDI. Simplifying business entry regulations and processes to promote a dynamic and thriving business sector. And also using a strategic and phased approach to develop Industrial Parks based on best international practices.
All in all, the country needs to speed its industrialization to reduce poverty ,ensure fair wealth distribution and realize lower middle-income status by 2025 attracting local investors in manufacturing business than never before.