Boosting the manufacturing sector

                                                                                                                         Desta Hailu

It has now been close to two years since the second Growth and Transformation Plan GTP II started to get implemented. It can be said that the works that have been planned and carried out within these time are going well. The fact that our economy is projected to grow by more than 11% in the current year speaks volume of this. In this article, I will try to look into the plans that are set in regards to the industry and export sector – by citing the GTP II document.

As it’s known, our country’s industry sector, especially the manufacturing sector, has huge role to play in our country’s renaissance. In order for our country’s economy rapid and continuous development to be sustainable, and help consolidate the country’s path to its renaissance, the plan should bring growth in the manufacturing industry sector within the plan years. This will have huge role for the structural transformation of the economy as well, which plays an irreplaceable role in the vision the country has planned. In fact it can be said that the issue is an existential one.

It also helps in boosting the productivity, competitiveness and quality of existing industries, while also enabling create huge mobilization in the effort to bring structural change in the economy. Thus, in order to initiate structural change in the economy, the manufacturing sector should record 24% annual growth on average within the plan years. This also means that such effort will increase the share the sector has on the economy by 8% by 2020.

This change will lay the foundation for the realization of the plan to bring the manufacturing industry sector’s share to 18% (by increasing it from its current rate by for 4 fold) in the overall nationwide pan of reaching middle income status. It also helps lay the groundwork for the realization of the country’s vision to enter middle income status.

In terms of implementing the structural change, the role of manufacturing industry is huge. Comparing the present wit the past, the revenue the manufacturing sector used to bring in from export was no more than 10%. However, it is planned to take up this number to 25% by 2020 – by planning to collect 5 billion dollar in revenue from the sector. The plan/aim is to take the number to 40% by the time we reach the year we planned to enter middle income status, i.e. 2025. Of course this plan is ambitious and challenging. However, as former Prime Minister Ato Meles Zenawi at one time said, there is no reason why we can’t be successful with our plans even if they are enormously hard to achieve if we are willing to work hard.

Therefore, it is possible to bring economic structural transformation with hard work. For this, I can use the manufacturing industry sector. The manpower reshuffle that is taking place within the sector is one. As current numbers show, the manpower that is involved in medium scale and large scale manufacturing industries is no more than 350 thousand.

Thus, there is a plan to increase that number within the GTP II period and the next five years that comes after that (10 years in total) by four fold taking the number of manpower involved in the sector to 1.5 million people. Out of this, the plan set in the GTP II is to realize half of the plan, which means creating a suitable environment to involve 750 thousand citizens in the sector. If this is made possible, I think it is also possible to increase the manpower reshuffling by double of its current rate.

Thus, it is obvious that huge effort is needed tor achieve this plan – as it takes the involvement of the youth and women, and making sure that they benefit hugely from it along with ensuring the implementation of the plan. As the various benefit packages the government is working and planning on in order to ensure that the youth and women benefit shows the strong commitment the government has to that end, it is possible to get success if these efforts are made to continue strongly within the remaining years of the GTP II plan.

Objectives are set in the aforementioned sectors in order to help achieve the goals set in the plan by giving attention to small, medium and large scale industries. This situation will play its own role in the effort to transform both sectors towards being export led sectors and in reducing import goods.

As it’s known, the basis of the manufacturing sector is narrow and therefore cannot be a source of guarantee. Nevertheless, our country should mainly attract investment to bring program in the sector. Our investors that are growing in capability especially should be made part of the change and by encouraging them to enter into selected sectors. Thus, in addition to the local investors, foreign investors will have also a visible role in investing in the manufacturing sector. This will have huge role in hastening the growth of the sector.

Thus, there will be huge efforts to carefully attract direct investment on every sector within the plan years. There is a plan to recruit and select foreign companies that have huge reputation and convince them to help with the growth of the sector. There is a plan to involve the investors on export oriented manufacturing sectors and help our country gain the benefit it should get from the sector.

It doesn’t mean that our country will not give focus to local investors when doing this as they will be able to invest in the sector. The plan explains that local investors that are performing well will be carefully selected and will be given enough support for them to enter into import substituting manufacturing goods.

Side by side to this, in the bid to build up the country’s science, technology and innovation capacity, the GTP II plan aims to bring technological transfer that is in harmony with the country’s growth demand. Thus, industry development support institutions that are setup within the sector and universities will be strengthened through quality education facilities. It is also planned to strengthen the link they have with similar foreign institutions and modernize their operation.

Therefore, efforts will be underway to increase the productivity of the sector by selecting, modifying and utilizing works on better fit and improved technologies. Thus, the ‘Kaizen’ management philosophy our country chose will be implemented on every type of industry and export sectors during the second growth and transformation plan years in order to increase their quality, productivity and competitiveness.

In general, there needs to be investment in order to guarantee the sustainability of the manufacturing industry. The investment also should help the export sector as well. The industry should be export oriented. Otherwise it should substitute for imported goods.

I think when we do this, it will be a case of hitting two birds with one stone - we can substitute imported goods by using local products and two, we can further increase our foreign currency we get from the export sector. And I say everybody should play their own role on the second growth and transformation plan so that this comes to fruition.