A vital shift is on the horizon for Ethiopia’s manufacturers, who once thrived on exports braced by the African Growth & Opportunity Act (AGOA). If a bold proposal by Melaku Alebel, minister of Industry, and his senior officials gains traction, industrial park operators could soon tap into the domestic markets, signalling a significant shift in the federal government’s trade strategy.

In the aftermath of Ethiopia’s January 2022 suspension from AGOA - a consequence of a bitter two-year conflict with armed forces in Tigray - the federal government initiated a stopgap measure: temporarily letting companies in industrial parks access local markets to stave off potential business collapses. With AGOA’s preferential status set to sunset in 2025 and Ethiopia’s position still precarious, the urgency for a more sustainable solution has become pressing.

The proposed strategy, which is now before the Ethiopian Investment Board - a federal agency that operates under the purview of the Prime Minister - is audacious. The Board comprises members such as Central Bank Governor Mamo Mihretu, Finance Minister Ahmed Shide, Fitsum Asfaw (PhD), minister of Planning & Development, Lelise Neme, head of the Ethiopian Investment Commission, and Grima Biru, senior macroeconomic advisor to the Prime Minister.

Manufacturers might soon be required to channel 50pc of their finished goods, along with their inputs, into the domestic market.

State Minister for Industry, Tarekegn Bululta, remains hopeful but pragmatic about a potential AGOA reinstatement.

“It’s beyond our control,” Tarekegn told Fortune.

He highlighted the country’s proactive measures to elevate the manufacturing sector, which currently contributes 3.1pc to Ethiopia’s GDP.

“We’re exploring options, including renting out spaces to local manufacturers and seeking markets outside the US,” said Tarekegn.

In a recent performance snapshot, Ethiopia’s five main manufacturing sectors — encompassing textile, food & beverages, leather products, chemical, and tech — raked in 266 million dollars, achieving 69pc of their annual target in the third quarter of last year. The Ministry of Industry is bullish about the future, targeting 400 million dollars from manufacturing exports this year. Encouragingly, textile exports to countries like Italy, Germany, India, Korea, Belgium, and the United Kingdom (UK) have already brought in five million dollars in the past two months.

Zerihun Abebe, who oversees competitive export production at the Ministry, emphasised the need to deal with sweeping employee layoffs plaguing the industrial parks. The mostly textile-centric Hawassa Industrial Park (HIP) witnessed a 16pc workforce dip of 25,000 post-AGOA. Hong Kong’s Tal Apparel, a six-year veteran of the Park, reflects this trend. Once a busy operation exporting shirts to the US, the company now grapples with downsizing and dwindling demand.

Fitsum Tafesse, Tal’s logistics manager, offered a sobering perspective. The company has stopped recruiting new employees and is struggling to maintain the 1,100 workforce as it operates at half capacity.

“Domestic sales might just about cover rent,” he told Fortune, highlighting the daunting challenges of adapting to a post-AGOA landscape, where domestic wholesalers find a seven-dollar price tag for a shirt steep. “We are simply surviving.”