Ethiopia's export revenue from the manufacturing sector over the last three years lags behind the target by close to 45pc, according to the Ministry of Industry (MoI) assessment report released last Wednesday, September 25, 2013.
The total revenue over the first three years of the Growth & Transformation Plan (GTP), earned from the export of textile, leather and leather products, agro-processing, chemical and pharmaceutical products, totals to 744.3 million dollars. This is against the target of 1.37 billion dollars announced when the GTP was launched in the 2010/11 fiscal year.
The Ministry attributed the decline in export revenue to the selling of products meant for export to the local market. This is in addition to the smuggling of these same products to neighbouring countries through contraband acts of both local and foreign companies.
"What is meant to be exported should be exported. We will follow that up," Ahmed Abetew, the minister of Industry, said at a press conference at his office.
In 2010/11, the Ministry's planned revenue was 353.2 million dollars, but only 207.7 million dollars was collected. The following year, MoI planned revenue of 471.3 million dollars, but the achievement was only 255.4 million dollars. It got worse in 2012/13, with the Ministry planning even higher revenue of 542.4 million dollars, but getting only 281.2 million dollars. The annual shortfalls over the three consecutive years have, respectively, been 41.2pc, 45.8pc and 48.4pc.
The GTP indicated target revenue of 1.6 billion dollars for the 2013/14 fiscal year, but the Ministry has lowered its actual target to 1.3 billion dollars. This is taking into consideration the challenges of the past three years, according to the Ministry's report, particularly the frequent power outages affecting producers.
"Our power management is so poor that factories are highly prone to power interruption," he said.
Currently, the country generates 2,100Mw of electricity, among which 135Mw is sold to two neighbouring countries,SudanandDjibouti. It charges these countries 70 cents for a kilowatt hour.
The Ministry is seriously dealing with the power corporation to find ways to provide dedicated electricity lines to factories, said Tadesse Haile, state minister for Industry.
Another reason export targets are failing to be met is that only a quarter of the foreign companies that have been licensed inEthiopiahave begun production. Factories are also operating at an average of 60pc capacity, said Ahmed.
Incentives are already underway to increase the production capacity to 80pc, says the Minister. These incentives include the duty-free importation of spare parts and readymade shades in industrial zones. The 156ha Bole Lemi Industrial Zone, in Bole District, Addis Abeba - where George Shoes, a Taiwanese company based in China, has become the first to take a 15,000sqm space - is an example of such a zone.
"The support we provide, particularly to the local companies, has been minimal," Ahmed admitted.
Claiming that industrial production is high, the minister stated that it will achieve its GTP target within the remaining two years.
"The performance is poor, but not to the point of being miserable and disappointing," he said.
The Ministry wants 60pc of manufactured products to be exported. Dominated by agricultural products,Ethiopia's export value has grown by an average of 22pc annually over the past decade, but it can only finance a quarter of the total import bill, according to the 2012 World Bank report.