Weak Asymmetric Power and Looser Coordination among Actors: Hurdles for the Ethiopia's Leather Industry Competitiveness
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Date
2012-06
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A.A.U
Abstract
Though it is not equivalent to its potential, the leather industry in Ethiopia has been one
of the key industries which support the special economic need of the nation called foreign
currency generation, besides other economic benefits. Evidently, irrespective of the
potential availability of relatively competitive resource base, cheap labor, policies and
strategies, incentives as well as support institutions, the value captured by the core actors
or individual firms and the export performance of the industry shows wider gap from the
expectation mainly due to weak asymmetric power relation and looser coordination
among different level of actors.
But competitors, especially many emerging economies, have shifted their development
strategies or business environment from simple export-oriented firm level thinking to an
emphasis on gaining access to higher value adding strategies in global value chains.
True, this necessitates systemic efficiency and competency of all actors along the value
chain. Actually global value chain approach (VCA), as a method and development
strategy, gives possibilities to appropriately analyze the efficiencies, competencies,
opportunities and perhaps also the risks of the whole value chain and help forward the
development or upgrading strategies so as to be globally competitive.
In this respect, Ethiopia's leather value chain is characterized by very low supply of raw
materials with poor quality, complex routes of input recovery, sluggish material flow with
wider gap between end users expectations and producers' performance, very low value
added, dysfunctional information flow, weakly exercising of governance functions and
less coordination among macro-, meso- and micro-level actors along with some rivaby
directions or policies.
Thus, the immediate measures to be taken so as to make the sector competitive are to fill
the gaps of those suboptimal value chain attributes and to reconcile and align those
antagonistic directions and policies accordingly.
Key Words: value chain, value added, governance, coordination, transaction cost,
product flow, information flow, critical success factors, leverage points, benchmark,
upgrading
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Keywords
Critical Success Factors, Leverage Points