3 February 2018

Ethiopia: Uninterrupted Input Supply for Manufacturing Industries

Photo: Nadege Imbabazi/The New Times
(file photo).

After pursuing an agricultural development led industrialization policy, Ethiopia is striving to transit to manufacturing industry led economic development. The grand plan, Growth and Transformation plan (GTP II) also envisages to raise the country's economic development to this scale.

One of the requirements for the smooth progress of manufacturing industries is a reliable supply of inputs. Any interruption in the supply or fluctuation of price of inputs is likely to hamper the growth of the sector. For this end the government has established a corporation dedicated to ensure the sustainability and stability of inputs supply for industries.

Communication Affairs Executive with the Industrial Input Development Corporation Melaku Taye, says one of the challenges against the manufacturing industry is quality, quantity and supply chain of inputs. To address the possible challenges the enterprise supplies the inputs by purchasing inputs from local market or importing from abroad on competitive price. He indicated that the enterprises supplies input for industries that range from small and medium up to large levels.

The major inputs supplied were cotton, hides and skins as well as metal. Accordingly during the first half of the current Ethiopian Fiscal year the enterprise has purchased and supplied industries and other clients with manufacturing industry supplies and produces valued at Birr 984 million. The enterprise is also diversifying the types of input supply during the last six months to textile, hides and skins, industrial salt and agro-processing inputs.

Melaku indicated that by supplying inputs the enterprise has managed to modernize the market system which is vital in alleviating the problems in the operation of manufacturing industries. Producers can also benefit by supplying their produces at one center and at international market price.

According to Melaku the enterprise has a vital role in providing inputs for the industries, selling semi-finished products, providing hides and skins, purchasing and providing inputs that needs agro-processing. And also agricultural inputs are not enough due to lack of capacity and to alleviate the problem it is better to hire knowledgeable experts on the sector, and rent-seeking activities hiders the enterprise to achieve its goal, he explained.

The enterprise is very helpful in the transition of the country's economy from agriculture led to industry led one: in maximizing product and productivity, to alleviate the marketing problems, to have fair marketing practices and to tie up small enterprises with manufacturing industries, He further noted that actors in the value chain system can also benefit more as the enterprise can keep on buying their produces under all circumstances where prices could fluctuate. Since majority of the inputs required by the manufacturing industries are locally produced, the enterprises activities are going to encourage the productivity of local producers.

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