Expand Export Offerings to Boost Market Reach

The agricultural sector predominantly features an outdated method of production and relies largely on subsistence farming as the backbone of the country's economic system. This sector provides employment for 80% of the workforce among more than 130 million people.

Achieving structural transformation without expanding the economy and moving rural labor into the modern sector is unrealistic. Given this, the government has committed to diversifying exports, prioritizing key areas such as light manufacturing, where textile and clothing production will be included. Moreover, sectors like livestock and mining could also play crucial roles in supporting this diversification effort.

Although Ethiopia ranks among the least economically developed nations globally when measured by average individual earnings, its economy is expanding with efforts aimed at tackling joblessness and boosting manufacturing and efficiency.

To diversify the economy requires transforming it from having lower levels of productivity to achieving greater efficiency. This can be accomplished by utilizing a skilled workforce, advanced technologies, and robust infrastructure, along with establishing a solid value chain that aligns with market demands.

Dr. Demis Chanyalew, an economist, noted that Ethiopia is classified as having a single-sector economy due to the predominant influence of agriculture. This sector not only provides goods for markets primarily at survival levels but also delivers produce to agro-industrial entities as input materials and stands as the principal source of exports. Additionally, many commodities are traded in unprocessed states which reduces competitiveness globally. Consequently, diversification of the economy has emerged as a strategy to enhance market success.

Increasing production in industries like textiles and garments that make full use of locally sourced materials and require substantial labor is crucial for achieving our objectives. Additionally, growing facilities focused on leather products, along with those involved in mining and pharmaceuticals, is important. Expanding manufacturing not only broadens the economic base but also enhances exports, speeds up import replacement, draws foreign investments, and stimulates innovation within privately-run sectors.

The nation boasts plentiful natural resources and agricultural outputs that can serve as inputs for manufacturing processes. Notably, the presence of cotton, inexpensive labor force, and affordable energy supplies contribute significantly to this potential.

Labor-intensive sectors generate numerous employment prospects, particularly benefiting thousands through the expansion of the textile and clothing industries in developing nations such as Ethiopia. These fields hold significant potential yet remain underutilized. Textiles play a crucial role economically and socially: they offer immediate income sources, jobs—especially for women—and contributions from foreign exchange earnings; over time, this sector also provides pathways for enduring national economic progress.

Apart from people producing fabrics and clothes at home for their own use before the European industrial revolutions, the textile sector became part of the worldwide value network. Certain nations bring in refined textiles, transform these into final products, and then distribute them internationally. Similarly, within our nation, facilities that produce edible oils source pre-processed materials used as inputs for manufacturing edible oil; they subsequently convert these materials into end-products and sell them locally.

The ability of the textile and apparel sectors to foster sustained economic expansion and progress hinges both on investor involvement and on the caliber and efficiency of governmental strategies, supportive conditions, tax and customs services, as well as robust organizations capable of upholding regulations and agreements.

In the contemporary history of industrial nations, economic structural transformation has typically progressed from lower agricultural productivity to increased efficiency in manufacturing and service sectors. Expanding these advanced industries requires integrating surplus unskilled labor into more productive roles within the modern economy.

The textile sector has evolved into a highly intricate field, beginning in agriculture with fiber cultivation and the raising of animals like sheep and silkworms. This demonstrates the significant impact it has had on agricultural markets. Additionally, mining for metals and minerals contributes to the process where fibers are transformed into yarns, textiles, and clothing items.

The textile sector establishes a connection with agriculture; however, for the growth of this field, an adequate supply of contemporary cotton farms is crucial. Within our situation, such development has not progressed according to industrial needs. Furthermore, the native cotton varieties cultivated locally are susceptible to pests, making insect protection via chemical sprays both laborious and ecologically damaging. Therefore, importing superior cotton strains that resist pests and illnesses would be preferable. However, because of a scarcity of foreign exchange, there’s minimal opportunity to procure these required cotton types, consequently impeding the expansion of textile manufacturing.

Constantine Berhe (PhD), an economist who serves as a consultant for multiple companies, believes that the apparel industry significantly boosts the job market. He states that this sector is the primary provider of manufacturing jobs and export activities.

He stated that manufacturing plays a significant part in economic diversity. Despite requiring modest initial investments, expanding this industry lays the groundwork for accumulating capital needed for more technology-driven pursuits across various sectors. The garment sector has evolved into one that demands higher levels of knowledge due to increased focus on intangible assets like understanding soil properties and agricultural methods, R&D efforts encompassing software creation and biotechnological applications, along with enhanced design abilities, advanced engineering expertise, comprehensive training programs, efficient monitoring systems, strategic marketing tactics, and robust managerial practices—all crucial components in both goods and service delivery processes.

The sector has the ability to draw foreign investment, with Turkish and Chinese investors presently involved in textile production.

Over the past twenty years, Ethiopia has been working towards achieving significant structural changes. To this aim, the former EPRDF government implemented Growth Transformation Plans I and II. These plans facilitated substantial economic expansion within the nation; however, progress toward genuine transformation remained minimal, barely surpassing a two-percent mark. This limited success was largely confined to the construction industry, which primarily drew rural laborers into urban job markets.

The lack of a supportive ecosystem for investors, coupled with limited opportunities for the private sector and numerous bureaucratic obstacles in the past, led to unmet goals. It must be recognized that success can only be achieved through commitment, fostering a conducive environment, and offering improved tax and customs assistance.

The textile sector has been employed for manufacturing various items such as bags and carriers, balloons, kites, sails, parachutes, garments, flags, interior decorations, and other household accessories. Additionally, textiles have found applications in industries and sciences including filtration systems, nets, rugs, and carpets, catering to different needs based on consumer preferences.

Globally, clothing exports face a mix of positive and negative influences. While the pressure on these exports might persist in the near future, there are several encouraging signs such as rising inventory demands in advanced economies, accelerated expansion in developing nations, and swift advancements in innovative channels including cross-border online retailing. Consequently, this should lead to a consistent trajectory for the country’s garment exports due to better pricing conditions and ongoing enhancements in market configuration.

Several factors impede the progress of the textile sector, including high transportation and logistical expenses, delays in industrial inputs at the Port of Djibouti for different reasons, scarcity of raw materials, and to a certain degree, security concerns.

The agricultural subsector focusing on livestock remains an underused resource with significant potential to diversify the economy. Despite having the largest cattle population in Africa, Ethiopia’s livestock industry contributes minimally to economic growth because of outdated farming practices, insufficient technological adoption, and limited financial support. Cattle populate regions across both the lowlands and highlands of the nation. Unfortunately, current per capita consumption of dairy products and meats within our country is quite small when compared even to other Sub-Saharan nations. Properly harnessing this sector could enhance local food availability as well as increase exports. Additionally, leveraging leather and related byproducts for industrial purposes would generate substantial foreign exchange earnings.

For many years, the government has aimed to increase exports by focusing on leather and leather goods. Although they implemented new regulations to lure foreign investors, they fell short of their desired targets. This underscores the necessity of expanding production capabilities.

Despite being capital-intensive, the mining industry significantly boosts export revenues. The recent inflow of hard currency from gold exports underscores its potential for economic diversification. Therefore, continuing efforts to support this sector makes sense.

Provided by SyndiGate Media Inc. Syndigate.info ).

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