Ministry of Industry (MoI) withdrew incentive packages and privileges it gives to foreign companies that operate in Ethiopia. The move came for the companies are selling their products to the local market while they were supposed to export them.
While presenting the Minister’s six months performance before MPs, Ahmed Abitew, Minister of Industry, described the situation as a “bad trend” and that the withdrawal of the incentive package and privilege are aimed at curbing the trend.
The Ethiopia government has been working to attract foreign companies that will export their products and in order to achieve this it gives attractive investment incentive packages. Nonetheless, the Minister explained, some foreign companies operating in Ethiopia are focusing on local market.
“These companies who are focused on the local market have been receiving government’s incentives and privileges to help them compete at the global level,” he explained. “The government is taking measures against these companies including withdrawing the incentive package. However, the suspension could be lifted if the companies take corrective measures.”
The misdeed of the foreigners is one of the reasons cited as a factor for the sluggish export performance of the manufacturing sector.
Ethiopia aims to emulate the success of East Asian countries by attracting light manufacturing industries. There is a rising wage factor that is driving investors from these countries and the investors are looking for alternatives elsewhere.
Ethiopia on the other hand is offering cheap labour, land and raw materials making it an attractive opportunity for some of these investors. The nation has been preparing itself by setting upindustrial parks and investment incentives.
Ahmed also reported to the Parliament challenges of the manufacturing sector. He said among other things the challenges the sector faced were raw materials, inefficiency and lack of technological applications.
“Industrial input has been the basic challenges both in terms of quantity and quality. It has impeded companies engaged in textile and leathers from exporting and sometimes forced them to halt production,” he said.
Major shortage according to Ahmed is the supply of cotton for the textile sector and to control this, the government has stepped in and imported cottons.
In addition to this the government is undertaking feasibility study in order to assess the import of leather from neighboring countries, the Minister explained. “There is also a move to establish a new institution tasked to implement the supply system and simultaneously address the existing challenges,” he added.
During the first six months of the current fiscal year, the manufacturing sector secured a total of USD 191.5. Nonetheless, the target the Ministry set was USD 505 Million for the first half of the year and an entire USD 1.2 Billion by the end of the fiscal year.
Source: The Reporter
