Overview of Ethiopian Manufacturing Industries

Abstract

The industrial sector in Ethiopia is only 11.1% which is much less than the world average (26.29%) and the sub-Saharan average (30.34%). The manufacturing sector contributes only 3.7% of output to GDP which is declined from its 6.4% proportion of the 2003/04. (WDI, 2013). Considering the average of three years value before and after GTP at constant factor price, the manufacturing value added has been 8.9 billion birr and 13.12 billion birr. Besides, the lead of the manufacturing sector has been taken by the group of light industries such as food, beverage, leather and textile. Hence, those whose multiplier effect would be more are less in their physical commencement. This would be seen as the other line disparity in industrial development. The import intensity and export value are different in each sub-sector. Heavy industries such as chemicals and basic iron and steel are found to be import intensive while the light categories such as food and beverage, textile and others are domestic resource intensive ones. Of course, the import intensive groups have shown reduction in their import intensity in the post GTP period. For example, in case of iron and steel it has been 0.93 and 0.91 in the pre-post GTP respectively. Export value in real terms has shown small increment in the post GTP period than in its pre counterpart. Food and beverage industries followed by leather have been the better performers in the export sector. Textile wakens up in the post GTP season to strengthen its export. This entails us that the transformation plan has opened new opportunities to the manufacturing firms to create and enhance their capability to export. The export duty elimination, the industrial finance priority, new export destinations as additional demand and others have made the export sector waken up. Regional disparity in the distribution of manufacturing firms especially in those important heavy manufacturing industries serious prejudice has been made against Amhara region. Basic iron and steel, fabricated metals and chemical manufacturing firms are dismally few or none at all relative to other regions which are economically influential. Thus, it would be shrewdness to objectively distribute the manufacturing sectors among the regions so that the balanced regional development would commonly be enjoyed. Otherwise, the intentionally crafted inequity problem would bear social turmoil and instability for all. The physical resource endowment, human resource accumulation, population size a base for effective demand and the infrastructure set ups have to be the objective criteria in determining the location decision of the manufacturing firms. Turning to the phase of the heavy industry fabrication for they have wider multiplier effects (backward and forward linkages) of the economy is the other core element the researcher desires to recommend. This would of course, be scrutinized in a way that the labour intensive categories would be selected thereby to augment their employment impact.

Keywords: Ethiopia, Employment, Manufacturing, Regional Disparity