The size of foreign trade is a determinant factor for a given country for its economic performance and status. Countries with high foreign trade volume are advanced countries with better economic performance.They improve their respective countries’ balance of trade by encouraging exports eventually curtailing imports.
Like many countries, Ethiopia has working to enhance foreign trade which is still in deficit. Though the foreign trade has grown faster, it still accounts only a small percentage of the economy.
Ethiopia’s exports are mainly agricultural products though manufacturing, horticulture and mining items have been introduced. The composition of exports needs to be essentially more diversified.
Following the introduction of livestock and livestock products, manufacturing goods including leather, textile, horticulture and electronic products in the foreign trade, the share of coffee, Ethiopia’s principal export, has been diminished. But, still it is the major export item constituting about 26 percent of the exports.
Currently, exports’ relative share of GDP has been increasing though the pace needs to be advanced. For this, the efforts to expanding country’s export destinations and diversifying export items need to be intensified.
With this notion, the government has allocated 1,000 hectares of land for agro- industrial parks mainly designated in the cereal and pulses growing states planning to develop 250 hectares of land. As to the Ministry of Trade, based on the agro-ecology of the parks, pulses, oil-seeds, poultry, meat, milk, honey, vegetables, fruits and coffee processing factories would also be set up.
These days, the share of non coffee exports has shown significant change. But, as to the potential of the country’s agriculture and the evolving industry sector, much more improvement is anticipated in generating revenue.
The performance of foreign trade activities is unsatisfactory over the past years. The revenue last budget year was 2.91 billion USD. Though it has little increase from the previous year, it was below the target. Among the challenges, for the low performance of the foreign trade are the impact El Nino induced drought resulted in country’s agriculture outputs decrease, quality, lack of efficient market infrastructure, contraband and related challenges, among others.
As the foreign trade engages many actors, the challenges also need concerted efforts of all actors.
As part of this move the country is implementing quality reform programs in major foreign trade item including coffee and sesame that have the lion’s share in revenue making.
Among the major measures the government has been taking to boost foreign trade is the expansion of industrial and agro-processing parks as they primarily focus on export value-added items to global market. Out of 11 industrial parks, four parks have already gone operational.
A case in point, the nation is earning 1.5 million USD monthly from textile and garment export from Hawassa Industrial Park. In fact, the country has also envisaged gaining 400 million USD from textile and garment export this fiscal year.
Besides enhancing the competitiveness of agricultural commodities in the global market, the agro- processing industrial parks would also have a paramount importance in creating the linkage between agricultural and industrial sectors thereby accelerating economic transformation.
As part of diversifying export items, the government has offered attractive incentive packages including tax holiday, loan, custom clearance and logistics for competitive foreign mining companies with the desired capital, technology and expertise.
A National Export Coordinating Committee, which comprises various ministries and other pertinent governmental stakeholders, was established aimed at enhancing Ethiopia’s export competitiveness and diversification.
Notably, the role and contribution of Ethiopia’s missions and consulate generals are key players in enhancing foreign trade. They should explore new market niches for our products in their respective host countries through organizing trade missions, bazars, and exhibitions as well as sustaining the outstanding ones.
In order to install fair, efficient and effective trading system in the country reviewing trade codes is essential. Revising the existing Trade Codes is underway in line with global practice to enhance country’s participation in the international market.
It is worth mentioning here that the new branch office of Eastern and South Africa Trade and Development Bank (TDB) in Addis Ababa would help public and private companies to access financial support for their foreign trade engagement.
Ultimately, the expansion of manufacturing and agro processing industrial parks has been the strategy for the second GTP. As improving foreign trade performance is the centerpiece of the strategy in the plan, addressing the drawbacks with urgency is crucial.