No equal playing field, say local industries
The sixteenth Addis Chamber International Trade Fair
began with a call for more investment and concluded with a symposium highlighting the slow pace of Ethiopia’s manufacturing industry. While Egyptian participants called for a partnership investment, Indians called for sharing experience. Unlike their counterparts from abroad, Ethiopians complained about the lack of an equal playing field for domestic investors.
“Ethiopia is one of the fastest growing countries in the world. The government of Ethiopia has created a positive business environment not only for domestic investors but also for foreign ones. Through dialogue, we can create an even more dynamic business environment in the year to come,” asserted Mekonen Manyazewal, Minister of Industry, in his opening speech at the Addis Ababa Exhibition Center on February 23, 2011.
“It is not the short game of business that matters most. It is the long term one. I call up on the private sector to play its historical role of creating jobs and wealth in a sustainable manner. I also call up on exhibitors to invest in Ethiopia since this trade fair is not only a platform for showcasing your products and networking with potential business partners here but also a venue through which you can explore the investment opportunity in Ethiopia,” added the minister.
Agriculture represents more than 75 percent of Ethiopia’s export earnings while the balance is covered by service and industry.
“Ethiopia needs to devise a mechanism by which Foreign Direct Investment (FDI) flow in to Ethiopia should be done in partnership with Ethiopian business people. This reduces the impact of capital flight and provides a room for knowledge transfer. Unlike any other time in the past, Ethiopia is headed in the right direction as far as industrial development is concerned because it is building many dams that will ensure an uninterrupted power supply. This is a good step forward for industrial development. I think agro processing should be the priority for the Ethiopian effort towards industrialization,” argued an Egyptian trade participant.
The sixteenth Addis Chamber International Trade Fair that opened its door for exhibitors and visitors a week ago ended Wednesday February 29, 2012.
“We do encourage partnerships when it comes to FDI. However, different countries have different needs in relation to FDI. The government believes that the structural shift from agriculture to industry has to come from domestic investors,” said Ahmed Nuru, Advisor of the Minister of Industry, in his briefing to the participants of the symposium held at Hilton Hotel. Indians attributed the current industrial development deadlock of Ethiopia with their historical experience.
“We were in the same situation of low industrial development 60 years ago. Agriculture used to dominate the economy. However, we managed to change that through skill development that has enabled the technology to flourish. The technology is supplemented by a marketing strategy. You can not develop an industrial economy without your own skilled labor force. India, by doing so, managed to develop the share of industry in the economy at close to 40 percent. I think Ethiopia can do the same if it is ready to learn from others,” said an Indian participant.
Though Ethiopian participants believe in the need for an industrial base owned by Ethiopians, they do complain about the lack of equal playing field.
“In a country where the transport of imported and exported goods is monopolized by state transporters, how can a struggling private sector thrive? In addition to that, there comes the new investment law. The problem we have is lack of a level playing field for all industry actors, whether domestic or foreign. Currently, the field is skewed towards foreign investors. The difficulty for the domestic private sector is increasing,” argued Arega Yirdaw, CEO of MIDROC Technology Group.
The fair dubbed as ‘Industrialization for Development and Transformation’ has attracted the largest number of participants from abroad. The sixteenth Addis Chamber International Trade Fair has attracted 269 companies of which 147 are foreign, while 122 are domestic. The 147 foreign companies that took part in the trade fair come from 24 nations of which participants from Egypt and United Arab Emirates (UAE) took the lead at the exhibition floor. Egypt has brought 60 companies while UAE sent 28.
Industry contributes not more than 13 percent to the Ethiopian economy. While the share of agriculture in the Ethiopian economy has been going down from more than 50 percent to below 40 percent at present, its share has been replaced by a growing service sector. In a bid to reverse the take over of the role of agriculture in the economy by service, the government of Ethiopia has introduced the Growth and Transformation Plan, a governing economic plan of the country which is in its second year of application. It envisaged industry to lead the national economy at the end of 2015.