Ethiopia Should Harness Its Untapped Potential in Manufacturing Industry

Manufacturing utilizes raw materials obtained from both agriculture and industry as inputs and after processing, it produces finished goods using tools, human labor and machinery. It supplies its products at a higher cost than the value of the raw materials used. Efficient manufacturing techniques enable manufacturers to be competent not only in the local market but also in the international market. It also will be part of the international value chain, which integrates the country economy with the outside world, and promote its trademark.

Most of the middle and small size industries enable to reduce production cost through utilizing cutting age technology create market to local farmers by purchasing raw materials used as inputs, create job opportunities to thousands, substitute imports and boost export.

Costentinos Berhe (PhD) is an economist working as consultant for various firms. He told local media recently that Manufacturing could change the nation’s economy from low productivity in to the higher one. To that end it absorbs a well-trained and semi skill labor that serve to scale up productivity. The sector in addition to attaining economic growth helps to bring structural change and dramatically change the economic landscape.

Currently 85 % of the labor force engaged in agriculture with less productivity and in such a way, reaching to the middle-income level is unrealistic. Therefore, relocating the labor force to the non-farming sector such as service and industry is crucial and to that end, manufacturing can play crucial role in absorbing the stranded rural labor force.

The multiplier effect of manufacturing extends beyond direct economic contributions, creating a trickledown effect that benefits local communities, generates tax revenues, and fuels overall economic prosperity.

As to him, in the country where 70 % of the population is below the age of 30 manufacturing can be an engine to create job opportunities and to fill the market gaps witnessed in the urban centers where residents can afford to purchase the products. Manufacturing has traditionally played a key role in the economic growth of developing countries.

The sector offers special opportunities for economies of scale, which are less available in agriculture or services. Technological advance is concentrated in the manufacturing sector and diffuses from there to other economic sectors such as the service sector. The transfer of resources from agriculture to manufacturing provides a change for achieving structural change.

According to the report released from the Ministry of Revenue and Customs Authority, the sector role in generating income to employee and paying tax is growing from time to time. In addition, its capacity in garnering foreign currency through export is rapidly growing.

According to Costentinos, the manufacturing sector plays a crucial role in driving societal progress. Through the production of goods, manufacturers contribute to improving the quality of life by providing access to essential products and services. From medical equipment that saves lives and producing in environmentally friendly manner and proper waste management.

As technology continues to advance, the boundaries between physical and digital manufacturing will be changed. This integration of digital technologies and physical manufacturing will lead to increased efficiency, reduced downtime, and improved product quality.

The manufacturing industry is a dynamic and ever-evolving sector that plays a crucial role to the economy. From its historical roots to the adoption of advanced technologies, manufacturing continues to shape the way of living all over the world. By embracing innovation, technological adaptation and collaboration, the future of manufacturing holds immense potential for growth and positive change.

Demis Chanyallew is also an economist and researcher. As to him, manufacturing industry is a complex and dynamic sector that constantly faces a range of challenges and opportunities. From navigating global supply chain complexities to addressing environmental concerns, manufacturers must adapt and innovate to thrive in today’s competitive landscape.

He further said that competing in the world market is not an easy task because countries equipped with better technology and production system have a capacity to reduce production cost. Even in some countries the sector is subsidized by governments to overcome challenges in the international market therefore, by considering such situation providing incentive and tax holidays is vital. Manufacturers need to invest in training programs that focus on developing skills in areas such as ICT and programming. By empowering their workforce with these new skills, manufacturers can enhance productivity, improve product Quality and derive innovation.

As to Demis, to enhance the manufacturing production and productivity availing reliable energy supply is essential.

However, in our context power outage and repeated interruption left the firms to produce bellow their average capacity and according to the recent report, they produce only by their 40 percent capacity which has its own draw back on the production.

Not only these, the obsolete logistic system and the bureaucratic hurdles in the revenue authority made production activities to be slower. Hence providing remedy to the challenges is a timely solution

Growth in the manufacturing sector can be hindered by various factors, including limited access to capital, regulatory hurdles, and market fluctuations. Governments and industry stakeholders must collaborate to identify and overcome these barriers, fostering an environment that supports manufacturing growth through investment incentives, streamlined regulations, and market stability.

The other challenge which hampered the sector activities is securing foreign currency from banks for the importation of raw materials. Before the introduction of new exchange regime through flouting the scarcity was very high and customers were complaining with regard to inconvenience.

After the introduction the shortage of hard currency resurfaced again and waiting long time to secure loan came back, finding solution and protecting the sector from such vagaries is essential and government pledged to address the problems.

He also said that strategic government policies are essential in shaping the manufacturing landscape. By prioritizing infrastructure development, policymakers can ensure that manufacturers have access to efficient transportation networks, reliable utilities, and modern facilities. This infrastructure is vital for manufacturers to operate smoothly and deliver products to consumers in a timely manner.

Manufacturers must comply with international standards to ensure product safety, quality, and compatibility in global markets. Adhering to these standards promotes trust among consumers, enhances market access, and fosters fair competition.

The development of industrial parks with well- equipped apparatus including banking services, internet and residential houses to workers by government played pivotal role in boosting the morale of investors and workers. The location of the parks being nearer to main roads helped to supply products to the market. By embracing sustainable manufacturing, governments can support the transition to a more resource-efficient sector.

As to him, the history of the emerging economies particularly the Asian tigers proved that in their formative years 50 years ago, Manufacturing laid ground for building modern economy derived by export. The preparation of educational curriculum was targeted to produce well trained labor force which can serve the manufacturing. The opening up of the economy to local and foreign private companies shaped to develop a self -sustained manufacturing governed by innovation and competition.