14 July 2018

Ethiopia: Foreign Currency Crunch Stunts Chemical, Construction Inputs Export

Photo: Addis Fortune
(File photo).

The spiral foreign currency shortage has hampered the export of chemical and construction inputs.

According to the Chemicals and Construction Inputs Development Institute, the chemical and construction inputs manufacturing sector exported products worth 28,200,423 dollars in the 2017-18 fiscal year. The sector planned to generate 62 million dollars and achieved only 45.48 percent of the target.

In the 2016-2017 fiscal year, the sector generated USD 17.2 million from export. Samuel Halala, director general of the Chemicals and Construction Inputs Development Institute, told The Reporter that the foreign currency earning has increased by 63.1 percent.

Samuel said there are several challenges that are facing the chemical and construction inputs manufacturing sector. He told The Reporter that the political unrest that unfolded in the last two years in the country affected the cement and mining industry. "The instability particularly in the Oromia Regional State disrupted production of cement. The factories were unable to transport their products," he said.

Shortage of foreign currency and raw materials, and erratic power supply are some of the major factors that affected the productivity of the sector.

Samuel said despite the list of challenges there are positive developments. "The institute is established to support the sector. Not to generate foreign currency by itself. But if we see the amount of products produced in the sector we see positive results," he said.

The sector was expected to produce products worth 39.7 billion birr but it managed to produce goods valued at 31.43 billion birr. Samuel applauded National Cement which exported cement valued at 17 million dollars.

The Chemicals and Construction Inputs Development Institute yesterday held a consultative meeting with industry players at the Ministry of Industry. Manufacturers listed shortage of foreign currency and raw materials, erratic power supply and unavailability of land as major hurdles facing the sector. Investors cited in efficient and expensive transport and logistics system as one of the factors affecting the export sector. "You encourage us to export our products but the transport cost to the port of Djibouti or Kenya is ridiculous. How can we export our products and be competitive in the international market?" the investors asked.

Investors engaged in the chemical and construction inputs manufacturing sector lamented that they were unable to secure foreign currency to import some industrial inputs. "We are about to close our factories and lay off our employees," they told officials of the Ministry of Industry. "While we are waiting for long to open letter of credit others get foreign currency with a short cut," they lamented.

Samuel admitted that steel importers recently received 140 million dollars while manufacturers managed to secure only 70 million dollars. However, Samuel sounds to be optimistic that the bottle necks will be resolved with the on-going political reform. "We are holding talks with officials of the National Bank of Ethiopia. We will also present your complaints to the Prime minister," he said.

The chemical and construction inputs manufacturing sector created 8,769 jobs in the 2017-2018 fiscal year. The target was to create 7,756 new jobs.

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