The Ministry of Industry (MoT), the office responsible for following the manufacturing sector, has set an ambitious target for exports this fiscal year.
They plan for manufacturing to earn 275 percent more from exports than it did during the 2013/14 budget year.
If everything goes right the manufacturing sector would earn USD 1.5 billion though exports this year.
The Growth and Transformation Plan (GTP), a five year development plan, which was endorsed in the 2010/11 budget year has focused on increasing industrial output in the country.
To follow this strategy the government has put in place several policies and strategies to help the manufacturing sector grow. Manufacturing exports have been doing well lately but they didn’t meet the expectations for the GTP.
Every year the ministry evaluates the progress of manufacturing and makes adjustments. This year it addressed the issue of improving export volume and earnings. MoI said that it did not revise the original GTP target a year ago it planned to generate USD 1.2 billion. In the GTP target during the 2013/14 budget year the manufacturing sector was supposed to generate USD 1.6 billion from exports. The actual export earnings from the manufacturing sector in the past budget year was almost USD 400 million, which is very high compared with the 2012/13 budget year, where the country earned USD 282 million.
Similar to last year, the ministry’s goal is to earn USD 1.5 billion from manufacturing export products. The original GTP target stated that in the 2014/15 fiscal year the country would earn USD 2.449 billion from manufacturing product exports, (this figure does not include the exports from public enterprises).
In the 2014/15 budget year MoI plans to generate almost USD 434.9million from textile and garment exports. Currently, clothing and textiles are the manufactured products which earn the most money from exports. The GTP called for textiles and garments to earn USD one billion this year. During the past fiscal year the manufacturing sector earned USD 111 million, which is three times lower than last year’s target.
Leather was seen as another big earner and plans were for it to be dramatically improved during the GTP. By the end of this fiscal year leather was projected to earn USD 500 million, according to the GTP matrix. In its latest project MoI plans to generate almost USD 357.7 million by exporting leather and leather products whereas last year they earned around USD 133 million.
Sugar was expected to bring in the third highest amount of export revenue at USD 286 million. Hopes are that when the new factories are finished sugar will take off. Tendaho Sugar Factory is expected to begin production by the middle of this year. This should alleviate the fact that sugar has been behind GTP projections. During the current and past budget year sugar was expected to generate USD 661 million and 244 million from exports respectively. Meat and dairy products which earned USD 76 million last fiscal year are expected to earn USD 255.5 million during this fiscal year. According to the government’s target, the sector was expected to generate USD one billion from exports, including livestock. Other sub-sectors the government plans to earn a large amount of money from through exports include: agro-processing and pharmaceuticals (USD 134.6 million), chemicals and manufacturing (USD 20 million) and metal engineering (USD 19.3 million).
Originally agro processing was intended to bring in USD 300 million and Pharmaceuticals USD 20 million.
To meet the targets this year the manufacturing sector is expected to increase its output to 21.4 percent.
The Ministry of Finance and Economic Development forecasted manufacturing’s contribution to the Gross Domestic Product (GDP) to increase from 21 to 23 percent, last fiscal year. Expanding industrial output seems plausible given that industry along with service and agriculture is one of the three economic sectors that have been rapidly growing and eventually it is expected to grow even more rapidly.
To achieve these goals the ministry has identified challenges and recommended adjustments.
Some of the steps the ministry recommends include implementing new technology, improving management skills and the process of conducting business, strengthening production capability, improving the quantity and quality of raw materials and coming up with ways to make labour production more efficient.
Reducing bureaucracy and improving links between industries are seen as other improvements that will help manufacturing in Ethiopia.
The ministry pointed out that it wants more industrial leaders to focus on the export market as opposed to local consumers. They added that they will continue to work on these goals.
Another thing it is doing is working directly with factories to improve their outputs in tangible ways. For example if a factory produced 70 percent of its capacity last year it will work with these factories to boost capacity 80 percent this year.