Ethiopia: What WTO Membership Holds for Ethiopian Private Sector?

With a growing globalization, Ethiopia's trade integration and accession to the World Trade Organization (WTO) expected to provide an opportunity for the private sector to expand its trade, acquire better technology and quality labor force and provide value-added jobs thereby bringing a better economic growth, experts in the area say.

Approached by The Ethiopian Herald, Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA) President Melaku Ezezew says that the major advantage Ethiopia's private sector obtains from the country's membership to the WTO is the market-access security that guarantees domestic companies to penetrate global market.

The president states that as members of the WTO are expected to significantly reduced their import tariffs, Ethiopia's domestic companies could easily access capital goods and raw material with relatively fair price from global market which is hard to consider in the current status of a non-WTO member. "Obtaining capital and raw materials at a comparatively low price from international market, the cost of production for Ethiopia's local companies is substantially reduced and their profitability and growth thus remarkably enhanced."

As to him, when foreign companies engage in Ethiopia, there would be considerable transfer of knowledge and technology which is an input of growth and prosperity to domestic companies as well. Due to Ethiopia's established and enabling business environment, foreign companies from WTO member states would be encouraged to come and invest here and this would create more jobs for both skilled and non-skilled market.

Melaku indicates that the success witnessed in enhancing the role and contribution of the private sector in economy and the subsequent growing of middle-income citizens also avail the opportunity for local companies to exploit the untapped domestic market potential thereby bolstering profitability and sustaining operations.

Sharing the above, Business Lecturer at Addis Ababa University Mukemil Bedru says that the ongoing macroeconomic reforms that have been complemented with structural adjustments have been playing pivotal role in creating a conducive business climate and streamlining bureaucratic and regulatory procedures to both domestic and multinational companies. The macroeconomic reforms have also been instruments in materializing the vision of making the private sector the engine of Ethiopia's economic growth.

According to the expert, creating a secure and predictable market access to exports, including by expediting WTO accession and strengthening regional trade integration are among priorities of the existing macroeconomic adjustments. The reforms have also given due consideration to undertake logistic transformation to enhance logistics efficiency and encourage foreign companies' involvement in the modernization of logistics sector.

"Guiding by these economic reforms, the Government of Ethiopia is in a good shape in implementing its plan to partially privatize and liberalize strategic companies in telecom, aviation, and electricity as well as maritime and logistics sectors in a view to ensuring a broader private sector role in the economy thereby speeding country's accession to the WTO."

Mukemil points out that the incumbent also initiates Public- Private- Partnership (PPP) model in the power generation and telecom sectors in a bid to attract multinational companies from WTO member states to support efforts to ensure power reliability and avail dependable voice, text and internet services to the ever-expanding household and enterprise customers.

As to Melaku, the government needs to consult stakeholders, private sector, academia and conduct relevant research and get acquainted the necessary skills and knowledge on the positions to hold during membership and how to manage post-WTO membership process.

He states that the study includes exhaustively identify sectors which to fall under excluded list, sensitive list and others subject to be liberalized soon, and the time period needed for its implementation. All these activities demand adequate technical competency and strong institutions in all aspects which to be the mandate of the government in advance.

The situation implies there is a need to assess the current situation and identify performances of sectors and group them according to their level of development and competency and prime attention should be given to sub-sectors in which one would expect Ethiopia to have a clear competitive edge on the global market-namely the food, beverages, textiles and leather.

Both experts highlight that improving the efficiency of domestic markets for goods and services, including removing barriers to entry, enforcing the competition law and enhancing the efficiency of commodity market supply chain are among necessary steps to ease Ethiopia's accession to WTO. Holding broader discussion on the implication of WTO membership with all relevant stakeholders including private sector, researchers, civil societies and parliamentarians is also need equal consideration.

The accession also requires a profound consideration and work in the areas of trade-related legislation and law enforcement, economic and trade policies, development of institutional framework and human resources to properly optimize private sector's benefit from Ethiopia's membership in the WTO, they remark.

More From: Ethiopian Herald

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