Ethiopia: Upholding Manufacturing Industries Economic, Employment Fabric

As national experience would have it, manufacturing industries stimulate economic growth by boosting productivity and competitiveness, and creating many more jobs, particularly in the industrial ecosystem beyond the factory ground. Since manufacturing industries offer such a dual advantage, their essence makes the manufacturing sector a key driver of economic development and job creation.

Asaminew Debalkie, an industrial Engineer says, “A revitalization of the manufacturing sector, which is an industry that can be the beating heart of the economic progress, could be fundamental to resolving a range of inequities while driving sustainable, inclusive growth. These days in many countries, including Ethiopia, the manufacturing sector represents a great deal of GDP and job creation dimension as it has been driving nations’ capital investment, productivity growth, exports, and business research and development expenditure.”

As to him, Ethiopia’s manufacturing sector is experiencing revitalization and growth in 2025, particularly driven by ongoing macroeconomic reforms and the ‘Let Ethiopia Produces,’ “Ethiopia Tamrit” initiative. These efforts have led to increased production capacity, job creation, and a rise in the share of domestically produced goods. The sector is also benefiting out of increased access to foreign exchange and financial resources, enabling the revival of previously inactive industries.

According to Asaminew, Ethiopia’s manufacturing sector is experiencing a period of growth and revitalization, driven by government initiatives and favorable macro economic conditions. While challenges remain, particularly regarding access to finance and skills development, the sector’s potential for future growth is substantial.

Renewing capital stock in the nation’s manufacturing sector could help the industry realize its full potential and get billions of dollars of investment flowing. Not only does this move serve to modernize and digitize manufacturing infrastructure, but it also triggers a virtuous cycle of increased economic activity in communities across the nation, he added.

In Ethiopia Manufacturing has become the main economic engine and primary employer of citizens via bolstering investments in various sub-sectors. The industry is more inclusive and employs a broader swath of the overall population.

“Reviving manufacturing could also add up to a number of jobs, peculiarly the young generation and middle-skill workers, helping to recalibrate the country’s labor market and bolster the middle class. Revitalizing manufacturing means revitalizing communities, indeed!” he opined.

Asaminew further elaborated that realizing the benefits of a dynamic manufacturing industry will require a dual focus on modernization and workforce development. The industry is undergoing seismic shifts toward a digital, automated, advanced, and sustainable future, but many smaller players lack the tools they need to keep up. It will take innovation and participation across the economy to deliver these businesses the people and capital they need to thrive. Private and public sector leaders can play a role in modernizing smaller manufacturing operations by offering financial programs and targeted business accelerators.

The public and private sectors are increasingly resolved to shore up an industry that will be a pillar of Ethiopia’s economic and employment fabric. The manufacturing sector has to be primed to resume its position as a powerhouse of the economy, but the government should focus its collective energy on three actions namely urging investors and capital markets to turn their attention to manufacturing, enticing new talent and training the workforce for tomorrow’s jobs and updating and digitizing Ethiopia’s manufacturing infrastructure.

If the manufacturing industry capitalizes on this opportunity by investing in innovation and workforce development, the gains will propel sustainable and inclusive growth while simultaneously fueling the country’s competitiveness on the global stages.

Responding to the request about the economic contribution of manufacturing industry to economic growth, Asaminew stated that manufacturing industries are essential for building national technological capacity and industrial capability, which in turn improves overall economic productivity and competitiveness. As to him, the development of the manufacturing sector has also a positive trickle-down effect on the entire economy, including related industries and supply chains.

“Manufacturing fosters innovation and technological advancements, leading to increased efficiency and the development of new products and services. It helps the nation create direct jobs in factories and plants, but also indirect jobs in supporting industries, transportation, and logistics. Industrialization helps build a skilled workforce, providing well-paid jobs and fostering a robust middle class,” he opined.

The jobs created in the manufacturing sector have a multiplier effect, generating further employment in related industries and services. Manufacturing can provide quality jobs with good wages and benefits, contributing to a more stable and prosperous society.

He said, “Manufacturing can help absorb the large number of youth entering the labor market each year, providing them with opportunities for employment and skill development. In Ethiopia, the manufacturing sector is considered a key driver of economic growth and job creation, with a focus on attracting investment and fostering local industrial development. The United Nations Industrial Development Organization (UNIDO) highlights the importance of manufacturing in building a skilled workforce and fostering industrialization in developing countries, including Africa.”

According to Asaminew, manufacturing has traditionally played a key role in the economic growth of developing countries. Low levels of industrialization in developing countries are attributable to long-term changes in the development characteristics of manufacturing or to the manufacturing sector’s general continental and global prospects.

The Ethiopian government has also implemented tax incentives and other measures to encourage investment in the sector. Briefly, industry park development in Ethiopia is a key part of the country’s economic growth strategy. The government has been actively promoting the development of industry parks and has made significant progress in this area over the last few years, he opined.

Yes, he said, the decline in both manufacturing value added and manufacturing employment shares in many developing countries has not been caused by changes in the manufacturing sector’s development potential, but is primarily caused by the failures of manufacturing development in a large number of developing countries against the backdrop of rapid manufacturing development in a small number of countries, thus resulting in a concentration of manufacturing activities in developing countries.