In an industrial manufacturing landscape plagued by shortages of raw materials, foreign currency and skilled labour, an industrial policy entailing increased focus on import substitution has made its way to the Council of Ministers.

Two years in the making, the bill by the Ministry of Industry seeks to enhance the manufacturing sector's role through competitiveness and foreign direct investments by identifying key sectors and creating a sustainable value chain.

The import substitution has reached 38pc while Tarekegn Bululta, state minister for Industry disclosed the plan to substitute imports worth two billion dollars in the year.

Officials expressed their desire to attract investors into the fold by reorganising the policy and directing significant capital allocation.

Tilahun Abay, strategy affairs head at the Ministry, hopes to attain 60pc within a decade with the 'Ethiopia Tamrit' initiative holding significant promise to realise the objectives. He underscored the importance of identifying and addressing critical challenges of the manufacturing sector through an updated policy framework to reach the desired goal.

"It all falls under enhancing capacity," Tilahun told Fortune.

Despite expanding industrial parks over the past decade, Ethiopia's manufacturing sector contributes less than six per cent to the country's GDP. However, the rise in import bills, which had increased by 26.6pc last year paints a contrasting picture.

The annual report by the Central Bank indicates that manufacturing accounted for 13pc of the country's total export revenues out of nearly four billion dollars.

Tilahun insisted that by doubling down on products that require substantial foreign currency, Ethiopia saved up to 2.6 billion dollars in the last fiscal year. He suggested that the country had managed to save 48.8 million dollars in the past three months from the textile industry alone by locally producing military uniforms.

The bill targets facilitating long-term financial loans and insurance policies by forging relationships between financial institutions and factories while emphasising greater automation and research to exhaust the potential of underutilised but available resources.

One such sector is the leather industry, which has lagged despite Ethiopia's large livestock population with 65 million cattle and 45 million sheep. Last year, leather and leather products accounted for only one percent of the 4.1 billion dollars earned in merchandise exports.

Former secretary of the Ethiopian Leather Industry Association, Solomon Getu, points out that the short, positive upswing observed in the industry has been stamped out with foreign currency shortages, limited access to chemicals and the pandemic.

"Lack of policy prioritisation has pushed several factories to close," he told Fortune.

Solomon indicated that 25 tanneries from the 30 that used to be operational in the country have shut down. He insists that the country's overall economy could grow threefold if only an enabling policy environment existed with tax incentives and vibrant export markets.