Ethiopia: Leadership in AU Agenda for Industrialization

In its development agenda, the AU has set up an institutional mechanism for industrialization in Africa. It has also underlined that the private sector needs to be involved in the identification of areas and projects for intervention especially in the manufacturing sector. In this process, African countries, including Ethiopia, are focusing on some priority areas such as textiles, pharmaceuticals, chemicals, agro-processing, food and oil processing, etc.

Based on its experience, Ethiopia has been playing a leading role in guiding the organization of the AU agenda for industrialization. It has also been stressing that Africa should focus on the mobilization of domestic resources. Also, both domestic and external investments have to be encouraged within the continent by eliminating artificially created barriers by African countries. In this endeavor, UNIDO has been working to expand its network to encourage industrial cooperation in Africa. This cooperation has been based on the need of Africans to manufacture goods for their needs. It has to be guided by a demand-driven approach to meet the needs of the people that are the center of development.

Ethiopia has played a leading role in supporting the creation of knowledge and skills based industrial cooperation on best practices in Africa. This cooperation took into account the industrial policies, programs, projects and experiences of African countries. The knowledge base has been shared widely to ensure sustainable implementation of AU’s industrial agenda. Focus has been given to resource mobilization for financing the Implementation of the plan of action derived from the industrial policy and program. In this regard, emphasis had to be placed on identifying funding mechanisms without which financing of projects became difficult. Resource limitation forces African countries, including Ethiopia, to prioritize the implementation of their national and regional industrial policies and programs. Countries and regions that do not have industrial policies should endeavor to elaborate the same with the assistance of international institutions. In this situation, Ethiopia is in a position to share its experience with African countries.

Sharing of experience and economic cooperation in Africa opens the door for regional development that results in the growth of output, employment and income. It leads to reduction of poverty in the continent which contributes to self-reliance, rising labor productivity, growth in gross domestic production (GDP) and efficiency. Ethiopia is in a better position to share its experience with African countries on the implementation of its long and short-term plans of economic growth and development. It also closely cooperates with the AU in undertaking mobilization of funds from donors and partners. It is also an active partner of expert group for financing small and medium enterprises (SME) in Africa. It has created an enabling environment for the creation and development of SMEs. It has supported the provision of accessible financing mechanisms of small scale enterprises. In Ethiopia, these enterprises have been provided with shelters and shops as well as loans to meet expenses in running their businesses. They have created employment for semi-skilled workers and have met their responsibility of paying taxes.

Ethiopia has respected the AU’s requirements of ensuring that trade agreements with third partied do not undermine the continent’s industrialization. Is no doing, it has contributed to the regional integration objective of the AU. It has also recognized the importance of providing support to industries, including small, medium and big ones through increasing financing opportunities. Ethiopia has give priority to innovative financing mechanisms which encourages pioneers and new developers. It also addresses information gaps through expanding information tech. Ethiopia has been facilitating the formalization of processes related to new investments in industry. Investors have been encouraged to benefit themselves and their country through technology transfer. Also, it encouraged research and development activities that may be used to resolving industrial tech problems. Research institutes are granted funds to work on issues that are related to production and productivity and employment generation in every sector.

The idea of placing industrialization at the center of development in Africa has been fully supported by Ethiopia. The AU development agenda has emphasized the role of value addition and manufacturing in all countries of the continent. In line with this principle, the international organizations including UNIDO, AfDB, UNECA and other agencies have been required to assist African countries. The focus has been on skills development and technical support for the manufacturing sector. Member States have been required to utilize the Official Development Assistance (ODA) to boost their productive capacities. In this respect, the AU has been required to develop skills of member states on “negotiating contracts” related to concessions and benefits. These international organizations have continued to implement technical cooperation activities aimed at value addition, industrial policy development and skills development in a number of African countries. Ethiopia has been facilitating skills development activities in cooperation with the AU.

Some of the skills development activities included project preparation on the agribusiness and agro-industries. The skills enhancement areas covered value chain development in several African countries, including Ethiopia and other countries of the Horn. The skills of developing industrial policy, strategy, and programs have been given priority. Based on this priority, the UN and other organizations continued to provide technical assistance to a number of African countries. Through this assistance program inputs have been provided for developing sector policies. Also, analytical and policy advisory services, including the regular compilation of data and information specific to industrial development have been conducted. The publication of major action-oriented knowledge such as the periodic industrial development reports have been put in place. These reports revealed the causes of failures and successes to be used as lessons in the next rounds of activities.

The provision of practical training has been extended to the private sector entrepreneurs and SMI developers. This skills development program has been made to promote sustainable employment and economic empowerment in the private sector. African women and youth have been given special attention in skills development that enables them to run their own enterprises. The African governments have been expected to put all enterprises, particularly SMEs/SMIs, at the centre of any policies aimed at private sector development. The private sector operates in all sectors of the economy that produce and deliver goods and services to markets at home and abroad. They generate domestic employment opportunities and earn foreign exchange through trading. They engage in the import of means of production and in the export of final goods for external markets. Ethiopia has been sharing the experiences of its private sector with African countries. It also takes lessons from the experiences of these counties.

African countries, including Ethiopia, have put in place policy instruments and measures to facilitate the registration and operation of SME as well as their access to finance and export readiness. They have also scaled up interventions that are designed to develop “value chains” and production clusters in the continent. Africans, including Ethiopians have explored the ways and means of assisting SME both in the informal and formal sectors of the economy. Ethiopia has been able to share its experiences to African countries in small and medium enterprise development. These enterprises use local resources, including land, labor, capital and management for the production of goods and services required by the markets at home and abroad. Such experience has contributed to the competitive industrial performance in both the public and private sectors of the Ethiopian economy. This is done in line with AU agenda for industrialization in Africa.

The national industrial performance of African countries is based on indicators of economic ability to produce and export manufactured goods competitively. These indicators reveal the strength of African states in SME development, entrepreneurship and skills development. The AU in association with the concerned UN bodies has successfully promoted the creation of employment opportunities through supporting the expansion of SMEs in African countries. Ethiopia has been a strong partner with the AU in the creation of employment opportunities for the job-seekers. It has developed an integrated approach to productive work for its youth and women. This approach is useful in tackling the issues that young women and men have faced in starting and upgrading their existing businesses in the urban areas. In the rural areas, Ethiopian has tried to create access to renewable energy for productive use in rural development. It has also promoted green industries, energy efficiency and cleaner and sustainable production in the same sector.