Challenges and Prospects of Industrial Projects in Ethiopia:The Case of Selected Chemical and Construction Input Manufacturing Industries
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Date
2022-06
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Addis Ababa University
Abstract
In Ethiopia, industry in the modern sense of the term emerged as an economic entity only at the turn of the 20th century. Ethiopia’s manufacturing sector, according to the IDSP, is among the most productive sectors of the economy, which can stimulate economic growth and development because of its immense potential for wealth creation, employment generation and poverty alleviation. Over the past 15 years, the Ethiopian economy registered a remarkable double-digit real GDP growth and over a six-fold increase in per capita GDP. Manufacturing is a crucial sector and is probably the most important engine of long-term growth and development. As a country’s economy transforms from a primary agricultural based economy to one of manufacturing, job creation and more sustainable revenue for growth is secured. Though the manufacturing sector is a way out for sustainable economic development its growth is not without challenges. To analyze challenges and prospects of industrial projects, mixed approach, both qualitative and quantitative is used. Among challenges faced by industrial projects, lack of access to foreign exchange, shortage of power supply and absence of peace/ stability ranks the first. Problems related foreign exchange regulation, weak coordination among stakeholders, absence of industrial park for chemical sector, problems related with transport and logistics, absence of comprehensive policy for the sector are challenges that hinder the sector from growing as it is intended to grow. Availability of ample natural resource and cheap labor, Presence of foreign investment policy and incentives for manufacturing industries (fiscal and other incentives), Availability of land and future plan to develop chemical parks, Growth in infrastructure (airway, standard roads train, hydroelectric dams), Increased collaboration between government and the private sector are among important factors that contributes for the prospects of industrial projects.
Key words, challenges, chemical and construction input industries, manufacturing industry, prospects