Assessment of the Current Status, Challenges and Opportunities for Small & Medium Scale Edible Oil Processors in Addis Ababa, Ethiopia
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Date
2021-11
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Addis Ababa University
Abstract
This study was carried out with the objective to review the current policies, regulations and practices, current status in the small and medium enterprises (SME) edible oil sub sector, and identify the challenges as well as opportunities for the SME edible oil processing sub sector in Addis Ababa (A. A.), based on a descriptive research design, & using quantitative and qualitative data, from the SME edible oil processors, key informants, pertinent governmental regulatory and support institutions, & Advocacy groups/Associations, by applying the (input-market) value chain approach. The findings of the study indicated that the demand for edible oils was met predominantly through imported palm and non-palm edible oils and insignificant domestic edible oil supply, and distributed through shemachoch retail outlets and private retail shops, and characterized by serious availability and accessibility challenges for consumers in A. A. The major current policies, regulations & practices, challenges and opportunities across the input-market chain of the SME edible oil sub sector in A. A. were assessed & analyzed. The identified major challenges facing the SME edible oil processors in Addis Ababa included: the significantly weakened current status of the SME edible oil processors; edible oil related policies, regulations and practices biases & resulting market distortions, such as import duty and VAT exempted huge import and distribution of palm edible oil, focus of support towards large scale processing; application of VAT tax system on domestic edible oil supply; limitations of palm edible oil in proper household targeting and existence of distribution malpractices, high export orientation of oilseed crops; regulatory requirement for refining of edible oils; the raw material supply (shortages, quality related problems and rising oilseed crops prices), significantly low capacity utilization, much lower than 50%; significant lack of SME edible oil-dedicated technical training, capacity building and related supports and incentives, as well as processing technology & access to financing & infrastructural challenges, …, resulting in the SME edible oil processors’ marginalization and becoming the ‘missing middle’. The identified opportunities included: increasing population, huge domestic consumer demand, economic growth, well-developed experience in A. A. in SME edible oil processing, marketing and consumption in A. A.; Ethiopia as a major grower, and origin, of some of the oilseed crops & its conducive agro ecological condition for oilseed crops production, and overall government policy and commitment for agriculture and agro processing investments. Finally, the study identified recommendations and strategies for action, including implementing institutions, in order to address the pressing lack of SME edible oil dedicated policy support & incentives, edible oil processing, and food safety and quality management capacity building supports, and a conducive overall business enabling environment to enable SMEs in A. A. to survive and grow, and contribute to sustainably increase edible oil availability in A. A., to ensure accessibility at the household level, and to attain adequate food utilization in edible oils at the individual level in A. A., thereby also contributing to the import substitution effort in the country.
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Keywords
Ethiopia, SME edible oil processing, Policies, Regulations, Challenges & opportunities, Value chain