Ethiopia has been undertaking macroeconomic reform measures to tackle pressing economic challenges like foreign exchange crunch, inflation and debt sustainability. These reforms began paying off in terms of narrowing the gap between the official and parallel market, and alleviating inflation.
Documents indicated thatEthiopia is among the fastest-growing economies over the past decades. The recent key macroeconomic reforms include the use of floating exchange system and interest rates as a policy tool. However, questions are still being raised about the benefits the macroeconomic reform measures would bring to manufacturing industry.
The National Bank Ethiopia (NBE) Governor Mamo Miheretu said that the undertaken economic reform measures would highly contribute to the effectiveness of manufacturing industry if investors properly utilize macroeconomic opportunities.
The measures would offer unique benefit to manufacturing sector. Mainly the foreign exchange floating would highly benefit in improving and strengthening the involvement of private sector, creating a stable macroeconomic approach.
The macroeconomic reform measures have been encouraging and appreciating export, expanding investment, import substitution, supporting manufacturing sector and others. The reforms would support to develop competitive manufacturing sector to deliver positive economic outcome. They would enable to create more jobs, register promising performance and others, he added.
Furthermore, the action would enable to correct foreign exchange distortions, balance trade, and reduce inflation and others. Mentioning the measures are golden opportunities for private sector, especially for manufacturing industry to create sustainable jobs, resolve foreign exchange shortage, and expand investment, Mamo urged the private sector to galvanize their energy and utilize these opportunities.
Currently, investors can repatriate their 100 percent of income, dividend and other export earnings. This would enable investors to focus on their tasks, he added.
According to the Governor, the banking sector has been shifting offering almost its generated resources or deposits to privet sector creditors which is basically intended to address manufacturing sector challenges in order to increase production and productivity and import substitution.
For his part, the Industrial Parks Development Corporation (IPDC) Director General Fiseha Yitagesu (PhD) said that the IPDC has been working to upgrade industrial parks into dynamic special economic zones (SEZ) establishing additional business units. So far, the local and global uncertainty has been highly affecting the effectiveness of parks, especially textile and garment sector.
The SEZ would contribute to boosting operational efficiency excellence and infrastructure quality, balancing local and foreign investors, emphasize on import substitution and export promotion, create quality jobs, diversify investments and others, he said.
In the near future, the parks would be a center for trade and logistics, financial and other one-stop-services in addition to manufacturing. Through process, parks would be center of urbanization and modernization.
The IPDC has been undertaking reform measures to be a key player in the sector. For instance, in addition to transforming service land to investors, it has been establishing new business units such as logistics and transports service, industrial project service, agriculture, construction and hotel service. The business units are aligned with macroeconomic reform, Fiseha indicated.
The ongoing macroeconomic reforms such as opening up of wholesale, retail, export-import trade, foreign exchange flotation, banking sector liberalization and others would contribute to the effectiveness of manufacturing sector.
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So far, the parks are facing poor export performance, low operational excellence, global and local uncertainty, low resource optimization, bureaucratic hurdles, foreign exchange shortage, infrastructure gaps, regulatory complexities and other challenges, he noted.
According to Industry Minister Melaku Alebel, the market share of manufacturing industry has been growing from time to time. As part of making the sector competitive, the annual growth of manufacturing sector has hit 10.1%.
Changing exporting of raw agricultural products trend requires fully capacity operation of industrial parks as well as joining of more investors into IPs. To support investors or private sector, the government has been supplying land, fulfilling infrastructure, designing suitable policies and others for this purpose, he stated.
The great share to improve production and productivity of manufacturing sector belongs to private sector, he added.
