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