One of the major challenges the Ethiopian economy faces at present is the lack of diversified economic base, according to a report by the United Nations Conference on Trade and Development (UNCTAD).
Pointing out that there would be a significant challenge to increase the amount of value that is added to GDP by industry, which currently is less than the amount agriculture and services contribute, the report emphasized that integrating technologically advanced equipments is very important for different sectors to produce value-added products.
Recalling the experiences of different countries’ such as Ethiopia, Nigeria and Tanzania and the role technology played in the growth of their economies, the report stated that Small and Medium Enterprises (SMEs) especially find it very difficult to venture into technology-intensive activities that can give value-added products. The challenge of lesser use of technology is attributed to lack of adequate institutional support to develop technology and innovative capacity as a whole, the report said.
Statistics shows that developing countries as a whole accounted for 52 percent of global exports of high technology products in 2014, an 18 percentage point rise since 2000. Nevertheless, African countries are lagging behind, representing just 0.3 percent of the global export, according to UNCTAD’s Technology and Innovation Report 2015 findings.
“Almost all countries in Africa, including the three countries that were studied, and more generally in the developing world, are currently at a developmental stage where industrial development through technological change should be a central, if not the most important, priority. Not only is there a policy transition in that direction, field surveys showed the extensive degree of political commitment to enacting elaborate industrial policy frameworks and revising science, technology and innovation policies towards innovation,” the report recommends.
It is also highlighted that innovation policies are quite new to African countries and thus often not well- implemented, and industrial policies implemented in many African countries in the past gave little emphasis to promote technological learning. Furthermore, lack of skilled human resource, “brain drain” and governance problems in the transfer of technology hindered innovation in these economies.
The report identifies significant gaps in science, technology and innovation in African countries and some positive examples too. The establishment of the Food, Beverages and Pharmaceuticals Industry Development Institute by the Ethiopian Ministry of Industry was said it is a good example of positive institution-building.
The institute was established with the aim to make it a one-stop shop that gives assistance to food processors and pharmaceuticals manufacturers. It was proved that the institute is a critical establishment to boost the capacities of the two sectors, particularly, in upgrading production facilities.