The Reporter (Addis Ababa)

11 February 2006

Ethiopia: Business & Economy: Competing in the Foreign Market

analysis

The country is in the process of implementing an export-oriented market strategy. But a commendable result has not been shown in the past due to the fact that it used to export mainly primary agricultural products. Due to this, the country has faced a negative balance of foreign exchange. However, the condition could be improved if industrial products and machineries are to be exported because higher foreign exchange earning will be obtained.

Exporting industrial products could be one of the major sources for the country to earn foreign exchange. In order to accomplish this strategy, it is important to recognize small-scale industries and thereby promote and encourage entrepreneurs. Hence to foster economic growth a new venture of exporting items like baking tray machines which helps baking both bread and ingera (home-baked traditional bread) has been started recently. In the words of general manager of 'Z techno', Zewdu Gebeyehu, "I have started exporting this product a year ago and when it got acceptance that encouraged me most and I continued with the venture".

Zewdu, having secured his patent right from the Science and Technology Commission four years ago, has now become one of the leading technology inventors in the industry and, in this regard, he has shown a tremendous improvement since then.

The machines that he makes are different from those imported. According to Zewdu, electric baking with one oven consumes a power of 3kw compared to the imported ones of 5.7kw. Moreover, the electric baking machines which have two and three oven produced locally by Zewdu consume 4.5kw and 17.1kw respectively compared with the ones imported, which consume 11.4kw and 17.1kw respectively.

In addition, the machines produced locally save time and energy wasted in preparing food items. "Baking more than two pieces of bread and injera separately, which used to take over four hours, will not take more than two hours with the possibility of cooking both the bread and injera at the same time," said Zewdu. Apart from saving time, it reduces energy consumption by 50%. Furthermore, since they are erected in a standard way it is possible to move from place to place easily.

According to him, the machines have been distributed to different cities of the country as well as to neighboring and European countries. After exporting the machines, he had feedback from consumers, which helped him to enrich and improve the quality and the design of the machine. "When I started selling and exporting the machines, most foreigners admired it and encouraged me to think of other improved machines," he added.

The enterprise has so far created job opportunity for 18 people. He said that since he hasn't got enough space to produce the machines and due to lack of other inputs it has become difficult for him to diversify his enterprise and, as such, forced to hold some pipeline plans.

Zewdu said he had some master plans of introducing other machines that are not produced in the country. For instance, he intends to produce agricultural machineries which will substitute the imported ones and thereby stop the drain in foreign exchange. Since agriculture is the mainstay of the economy, producing these machines locally is important in order to increase productivity and become profitable. In general, the benefit of producing the machines locally will reduce the cost of maintenance and will also curtail those machines from being sent for maintenance abroad.

In the country, more than 50 percent of the population is living below the poverty line and the main reason for this is that they have no skill to create new technologies. Zewdu stressed that most of the poor accept their poverty and sit without doing anything and consider it to be their fate. Besides, most of the employees working in government and non-governmental organizations usually sit idle after their working hours. As a result, half of their working day is wasted. But if they strive to do something during their spare time, they could have produced something worthwhile because "nothing is impossible under the sky," he commented.

Promoting small-scale enterprises established by entrepreneurs will induce invention and innovations of technologies in addition to developing the existing ones. This will help the country to reduce dependency on imports and leads to the export of goods that are produced locally. Hence, the country will achieve a sustainable growth by having better quality of products that are suitable for export and help business to be competitive globally.

Moreover, the mushrooming entrepreneurs will reduce unemployment, thereby encouraging the society to develop new technologies that will further initiate the people to improve their living standard. According to Zewdu, he considers that the government didn't create a favourable environment for his business. During his earlier age, he was keen to observe and look at things which he considers were a stepping stone for his recent work.

Furthermore, Zewdu said that as entrepreneurship is an engine of growth, in order to create self-confidence among entrepreneurs, the government has to provide industrial areas, suitable materials, machines, and has to assist them to enhance their sphere of activities. Moreover, it has to supply machineries on a credit basis in order to encourage entrepreneurship since it is a skill under threat and a profession which must be developed.

In general, it could be said that such kind of mushrooming business firms, particularly the small and medium ones, are short of capacity and are unable to become competent on the global market. Hence, on the part of the government, there is a dire need to build their capacity and facilitate increased participation in the economy by creating condition for improving their productivity and competitiveness, which would enable them catch up with in the area of globalization.

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