The manufacturing sector has fallen short of expectations. The Ministry of Industry (MoI) reported to parliament that exports of manufactured products only performed half as well as expected over the last six months of the 2016/17 budget year. The nation earned USD 198.5 million in export revenues which is 56.5 percent of Ethiopia’s goal of USD 349 million. Non major export products rose 3.9 percent.
Manufacturing has been expected to be a staple of Ethiopia’s resurgence. Textile and leather products along with agro processed products like meat and dairy are major areas, along with import substitution, that the government plans to focus on.
However income from textiles, leather, meat, and dairy exports declined when compared with the same period last year. Leather exports declined 7.5 percent, reaching half of their goal. Textiles and garments earned 55.5 percent of their goals which is a decrease of 0.5 percent.
Meat and dairy exports performed better than textiles and leather however they still fell short of their targets. Meat and dairy exports earned 62 percent of their goals which is a 5.1 percent lower performance compared with the same period last year, according to the report.
One of the possible reasons for the weak performance is lack of demand on the international market for leather, textiles and garments. To offset this, the industry plans to focus on the local market which is seen as growing.
Cement and steel are two products that are seen as having potential in Ethiopia’s quest for import substitution. Cement is being exported to Kenya, Djibouti, Somalia, Somaliland and South Sudan. Local cement companies have been expanding operations lately. Steel, aluminum profile and roof steel production have increased, according to Ahmed Abitew, Minister of MoI, who presented the first half report to the parliament.
Recently the government has banned the duty free incentive for reinforcement bars.