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MANUFACTURING SECTOR: RIDDLE WRAPPED IN AN ENIGMA (LESSON VI)

Jan 5 , 2020

Thus, the answer should be to pour money into the manufacturing sector, improve infrastructure significantly and market the nation’s low labour costs as a means of attracting foreign direct investments.

MANUFACTURING SECTOR: RIDDLE WRAPPED IN AN ENIGMA (LESSON VI)

It should have been easy. The manufacturing sector's contribution to GDP is insignificant, although it is a high productivity area that can boost Ethiopia’s foreign currency earnings. But the sector with the highest share to GDP is agriculture, which is a low productivity area and is easily susceptible to nature’s vagaries and the global fluctuations in commodity prices. Thus, the answer should be to pour money into the manufacturing sector, improve infrastructure significantly and market the nation’s low labour costs as a means of attracting foreign direct investments.

Tax incentives, around a dozen industrial parks and a plethora of Turkish, Indian and Chinese investors later, the outcome has been far from impressive. It stood at 6.8pc in the 2018/19 fiscal year, a snail pace Of 4.9pc at the start of the decade. But long-planned projects have gradually come online, and it is yet to be seen if these will end with improved manufacturing output.