handbook final mar2016 updated - stipstip.edri.org.et/resources/handbook_final_mar2016.pdf ·...

!Handbook(of(Industrial(Development(in(Ethiopia(!Policies,!Performance!and!Literature!!

!!

!

Ethiopian Development Research Institute

March 2016

!

i!

!

About EDRI

Founded in August 1999 as a semi-autonomous government development research institute, EDRI’s primary mission is to conduct quality research on the development of the Ethiopian economy and disseminate the results to key stakeholders within and outside of Ethiopia. EDRI is sponsored by the Ethiopian government, ACBF, UNDP, IDRC-TTI, IFPRI/ESSP and AFD. For more information, as well as other publications by EDRI staff and its affiliates, go to http://www.edri.org.et

Ethiopian Development Research Institute (EDRI) P.O.Box 2479 Tel: 251115506068 Fax: 251115505588 Email: [email protected] Website: http://www.edri.org.et Project Team This handbook was prepared by a team of researchers consisting of Mulu Gebreeyesus, Biniam Egu Bedasso, Gidisa Lachisa, Ephrem Andargie and Fikru Debele. !!!!!!!!!!!

!

ii!

!

!

Table of(Contents

Acronyms!...................................................................................................................................................!v!

Introduction!.............................................................................................................................................!vii!

Chapter One!.............................................................................................................................................!1!

Industrial Policies and Strategies in Ethiopia: Document Summary, 2002-2014!...................!1!

Introduction!..............................................................................................................................................!10!

Part One: National and Sectoral Development Plans!..................................................................!12!

1.! The Federal Democratic Republic of Ethiopia Industrial Development Strategy (IDS) . 12!

2.! Sustainable Development and Poverty Reduction Program (SDPRP) – (2002/03-2004/05) .................................................................................................................................... 14!

3.! Plan of Action for Sustainable Development and Eradication of Poverty (PASDEP) – (2005/06 – 2009/10) ................................................................................................................ 18!

4.! The Growth and Transformation Plan (GTP) – (2010/11-2014/15) .................................. 21!

5.! Ethiopian Industrial Development Strategic Plan, Roadmap and Institutional Setup .... 24!

Part Two: Industrial Sub-Sectors Strategic Plans!........................................................................!37!

1.! Ethiopian Construction Industry Development Policy ......................................................... 37!

2.! Leather Industry Sector Development Plan 2010/11 – 2014/15 ....................................... 38!

3.! Textile Industry Development Plan ........................................................................................ 39!

4.! Agro-Industry Development Plan ........................................................................................... 40!

Appendix I!...............................................................................................................................................!42!

Appendix II!..............................................................................................................................................!46!

Chapter Two!...........................................................................................................................................!31!

Structure and Performance of the Industrial Sector in Ethiopia, 2000-2014!.........................!31!

1.! Introduction!.............................................................................................................................!48!

2.! Share and Growth of the Industry Sector in the Economy!...............................................!48!

3.! Production Performance of Manufacturing Sub-sectors!..................................................!49!

4.! Export Performance of the Industrial Sector!......................................................................!52!

5.! Ratio of Imported to Total Raw Material in Manufacturing!...............................................!55!

6.! Distribution of Manufacturing Firms!.....................................................................................!56!

!

iii!

!

7.! Employment Opportunity in the Industrial Sector!..............................................................!59!

8.! Performance of the Small Scale Manufacturing Sector!....................................................!60!

9.! Main Constraints in the Industrial Sector!............................................................................!62!

Chapter Three!........................................................................................................................................!64!

Literature Survey: Summary of Academic Research on Industrial Development in Ethiopia!...................................................................................................................................................!64!

!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

!

iv!

!

Table of Figures

Figure 1: Growth rate of real production of the industrial sector!......................................................................!49!Figure 2: Medium and large scale manufacturing gross value of production (in thousands of birr)!...........!50!Figure 3: Export performance of selected manufacturing sub sectors (in thousands of USD)!...................!54!Figure 4:!The ratio of import cost to total cost of raw materials in selected manufacturing sub-sectors!...!56!Figure 5: Distribution of manufacturing industries by sub-sectors!...................................................................!57!Figure 6: Distribution of manufacturing firms by geographical location!..........................................................!58!Figure 7: Trends of engagement and employment in the manufacturing sector!...........................................!59!Figure 8: Percentage distribution of reasons for not working at full capacity.!................................................!62!!

List of Tables

Table 1: Actual and targeted share of the industry in Real GDP (%)!..............................................................!48!Table 2: The share and average annual growth of gross value of production in prioritized manufacturing sub-sectors!...............................................................................................................................................................!51!Table 3: Actual value of production as percentage of yearly capacity (Annual average)!.............................!52!Table 4: Growth of merchandize and manufacturing export and share of manufactures in total merchandize export!.................................................................................................................................................!53!Table 5: Share of export value of leather products as percentage of total leather export!............................!55!Table 6: Distribution of manufacturing firms by ownership!...............................................................................!58!Table 7: The share of employment opportunities across manufacturing sub-sectors!...................................!60!Table 8: Main performance indicators of small scale manufacturing industries (In Birr)!..............................!61!

!

!

v!

!

Acronyms!

Acronyms

• ADLI:!Agricultural!Development!Led!Industrialization!• APIDI:!AgroCprocessing!Industry!Development!Institute!!• BDS:!Business!Development!Service!• CIDI:!Chemical!Industry!Development!Institute!!• CSA:!Central!Statistical!Agency!• ECBP:!Engineering!Capacity!Building!Program!• ECX:!Ethiopian!Commodity!Exchange!• EIRDI:!Ethiopia!Industrial!Research!Development!Institute!!• EIRDTTI:!Ethiopia!Industrial!Research!&!Development!and!Technology!Transfer!Institute!• EPRDF:!Ethiopian!People’s!Revolutionary!Democratic!Front!• EPRI:!Ethiopia!Policy!Research!Institute!• EPZA:!Export!Processing!Zone!Authority!• FDI:!Foreign!Direct!Investment!• FRDC:!Food!Development!and!Research!Centre!!!• GDP:!Gross!Domestic!Product!• GTP:!Growth!and!Transformation!Plan!• HICE:!Household!Income!Consumption!Expenditure!• ICT:!Information!Communication!Technology!• IDSCG:!Industrial!Development!Strategy!Consultative!Group!• IICD:!Institute!for!Industrial!Capacity!Development!!• IIEPC:!Industrial!Investment!and!Export!Promotion!Centre!• IZDMA:!Industrial!Zone!Development!and!Management!Agency!• M&E:!Monitoring!and!Evaluation!!• MDGs:!Millennium!Development!Goals!• MDTI:!Meat!and!Dairy!Technology!Institute!• MEDaC:!Ministry!of!Economic!Development!and!Cooperation!!• MoFED:!Ministry!of!Finance!and!Economic!Development!• NIDC:!National!Industrial!Development!Council!• NIHSP:!National!Integrated!Household!Survey!Program!!• NSDS:!National!Strategy!for!the!Development!of!Statistics!• PASDEP:!Plan!of!Action!for!Sustainable!Development!and!Eradication!of!Poverty!• PRSP:!Poverty!Reduction!Strategy!Program!• PSD:!Private!Sector!Development!!• RIC:!Regional!Industrial!Council!!• SAP:!Structural!Adjustment!Program!• SDPRP:!Sustainable!Development!and!Poverty!Reduction!Program!!

!

!

vi!

!

Acronyms!

• SMEs:!Small!and!Medium!Enterprises!• SNNP:!Southern!Nations!Nationalities!and!Peoples!• TVET:!Technical!and!Vocational!Education!and!Training!• UNIDO:!United!Nation!Industrial!Development!Organization!• WB:!World!Bank!• WITS:!World!Integrated!Trade!Solutions!• WMS:!Welfare!Monitoring!Survey!• WMSC:!Welfare!Monitoring!Steering!Committee!• WMSP:!Welfare!Monitoring!System!Program!• WMTC:!Welfare!Monitoring!Technical!Committee!• WMU:!Welfare!Monitoring!Unit!

!

!

!vii!

!

Introduction!

Introduction

Modern economic history has proven time and again that the socioeconomic transformation of a certain society can rarely be achieved without industrialization. The astounding success of several Asian economies over the past half-century stands as a glaring evidence of the role of industrialization as the surest way to reduce poverty. However, industrialization is not a structural inevitability. Industrialization requires careful management of policy options and consistent monitoring of sectoral dynamics.

Ethiopia has long been struggling to attain structural transformation in a way that will reduce its dependence on the agricultural sector. There has been a growing consensus among policymakers in the country over the past decade that sustainable poverty reduction cannot be attained without rapid industrialization. Accordingly, the country had formulated a comprehensive industrial development strategy in 2002/03, which was implemented through successive national and sector development plans. The country continues to aim for greater industrial development as it has particularly placed the strategy of promoting light manufacturing at the centre of its Growth and Transformation Plan II to be implemented over the period of five years, 2015-2020. To that end, the government has recognized the need for implementing an effective and coherent industrial policy.

This handbook provides an overview of industrial policy and development in Ethiopia over the past decade and half since the launch of full-fledged industrial policy by the incumbent EPRDF government. We have noticed that there is a lack of a quick reference document on industrial policy of the country. Such a reference will ideally consist of, inter alia, a compilation of policy and strategy documents on the industrial sector issued by the government at different points in time. The availability of such a document is important for at least two major reasons. First, it keeps all stakeholders on the same page regarding the evolution of industrial policy in Ethiopia. Second, it facilitates the effort of policymakers to ensure policy coherence around the central objective of industrialization. Hence, the first chapter of the handbook offers a short summary of industrial policies and strategies in Ethiopia since the introduction of the first comprehensive industrial policy document in 2002. This chapter covers all national and sectoral development plans adopted over the past 13 years. Parts of those official documents which are deemed relevant for industrial policy are presented as they are. In that sense, the aim is not to provide our own interpretation of the polices and strategies but to make them accessible in a single place.

The second chapter of the handbook aims to review the structure and performance of the industrial sector during the period in which various forms of industrial policy have been implemented in Ethiopia. The analysis is based on data from the Central Statistical Agency (CSA) and other organizations tasked with monitoring indicators of industrial performance and trade. Other reports and academic papers might have already covered many of the descriptive statistics we have presented in chapter two. However, those studies are less likely to generate a whole set of indicators, as we have done in chapter two, for the entire period when industrial

!

!

viii!

!

Introduction!

policy has been in action. Moreover, this is arguably the first attempt to juxtapose in a single document the parameters of the industrial policy framework with a broad set of performance indicators.

A handbook of industrial development in Ethiopia would not be complete without an overview of the academic literature produced on the subject matter. Therefore, the third chapter presents a series of brief abstracts of a number of studies that have been published over the past few decades on the industrial sector in Ethiopia. The summaries provide a window into a critical and rigorous analysis of the industrial sector in general and the manufacturing sector in particular.

This handbook is expected to serve as an accompanying document to academic and policy works on industrial development in Ethiopia. There is a range of potential users of this handbook including policymakers, civil servants, academics and private sector actors. The Ethiopian Development Research Institute (EDRI) will endeavour to continue updating this document in an online platform by maintaining an active database of policy parameters, performance indicators and academic articles on industrial development in Ethiopia.

!

!

! !

Chapter One

Industrial Policies and Strategies in Ethiopia: Document Summary, 2002-2015†

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!† Selected segments of the policy and strategy documents are presented here as they are, with the aim of rendering them accessible and facilitating comparison of policies and performance indicators in a single document. Therefore, we do not claim originality as far as chapter one is concerned.

Industrial!Policies!and!Strategies!in!Ethiopia:!Document!Summary,!2002N2015!Chapter!One!

!!

!

Page!10!

!

Introduction

The Government of Ethiopia has been attempting to promote economic growth and development through designing and implementing integrated national policies and strategies. Accordingly, the country has been implementing different policies and strategies not only at an aggregate level but also at sectoral and sub-sectoral levels. Historically, the modern manufacturing industry began to emerge in Ethiopia in the 1920s. However, it started to get momentum only in the 1950s during which a number of new industries were established with the aim of achieving import substitution. By the early 1970s, Ethiopia's industrialization strategies included a range of fiscal incentives, direct government investment and equity participation in private enterprises. This policy attracted considerable foreign investment to the industrial sector.2

The economic dislocation that followed the 1974 revolution had a significant impact on the manufacturing sector. Private capital investment ceased and labour's marginal productivity began to decline. However, in 1990, acknowledging that socialism had failed; Dergue proposed implementing a mixed economy which came too late and was short-lived. Following the overthrow of the Dergue regime, the transitional government announced that the country would follow a market-led economic policy. The first decade of the EPRDF regime (1991-99) was marked by a series of reforms under the Structural Adjustment Program (SAP) with the aim of reversing the command economic system by way of fostering competition, opening the economy and promoting the private sector.

The industry sector in general and the manufacturing sector in particular were attached with strategic importance following the formulation of the national industry policy in 2002/03 by the FDRE. The industrial policy of the country was further elaborated through various sub-sector strategies and successive development plans such as the Sustainable Development and Poverty Reduction Program (SDPRP) 2002/03-2004/05, the Plan of Action for Sustainable Development and Eradication of Poverty (PASDEP) 2005/06-2009/10, the Growth and Transformation Plan (GTP I) 2010/11-2014/15 and Growth and Transformation Plan II (GTP II). Particularly, PASDEP and the two successive five year GTP plans have been framed broadly enough to give sufficient attention to urban and industrial development.

This chapter summarizes the industrial policies and strategies in Ethiopia since the introduction of the first comprehensive industrial policy in 2002/03. The document review is presented in a chronological order. Part one starts with the description of the Industrial Development Strategy (IDS) which was formulated in 2002 and then presents a summary of the successive national

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!2 See Gebreeyesus (2013) for further review on the evolution of industrial policy and development in Ethiopia.


!!

!

Page!11!

!

and sectoral development plans with a focus on the industrial development. The second part is devoted to summarizing policies and strategies developed to address priority sub-sectors.


!!

!

Page!12!

!

Part One: National and Sectoral Development Plans

1. The Federal Democratic Republic of Ethiopia Industrial Development Strategy (IDS)

1.1. Source – Ministry of Information, Press and Audio-visual Division, August 2002 (translated from the Amharic version)

1.2. Scope

The Industrial Development Strategy (hereafter, IDS) developed in 2002 focuses mainly on the manufacturing sector. The document also addresses other sub-sectors in the broader spectrum of the industry sector. The document, however, has no clearly defined timeline, goals, as well as implementing institutions and monitoring and evaluation mechanisms.

1.3. Description

The Ethiopian government, in order to bring about all rounded development, has been putting in place different policies and strategies. Since the overthrow of the Dergue regime, major emphasis has been given to agricultural development, the establishment of democratic government, and implementation of capacity building. The encouraging outcomes in these focus areas and the limited scope of the related strategies laid ground for further sector specific policies and strategies. For instance, in previous programs, the industrial sector was not well addressed. In light of this, the government formulated a comprehensive industrial development strategy in 2002.

This industrial development strategy rests on the following major pillars:

• Private sector as an engine of industrial development • Agricultural led industrial development and strong agriculture-industry linkages • Export oriented industries to lead industrial development • Labour intensive industries to be given special attention • Government to play a leading role in coordination and also to make direct public investment

in sectors where gaps exist in private investment • Good governance • Nationwide participatory industrial development that requires coordination between:

o The government and private investors o Private industrial investors and farmers o Employers and employees

1.4. Industrial Development Strategies and Interventions

The industrial development strategy document focuses on two broad areas of intervention to bring fast and sustainable industrial development in the country. The first is creating conducive


!!

!

Page!13!

!

environment for industrial development and developmental enterprises/investors. The second is providing direct support and guidance to developmental enterprises/investors in priority industrial sectors. In line with these two broad forms of interventions, specific strategic objectives and implementation strategies are summarized below.

1.4.1. Creating Conducive Environment for Industrial Development and Developmental Enterprises

The strategy of creating conducive environment is not limited to priority industrial sectors, but meant to cover all sectors and facilitate industrial development in general. The industrial sector of the country is subjected to deep-rooted obstacles. Therefore, this strategy aims to address these obstacles by creating conducive environment, which include:

a) Creating favourable situation for developmental enterprises b) Creating stable and favourable macroeconomic environment through:

• Strong control over policy implementation • Control of money supply • Balanced budget schedule and tight implementation scheme • Government intervention when markets fail to clear

c) Creating modern and development-oriented financial systems through • Capacitating and strengthening the National Bank • Facilitating an environment in which banks get full, timely and reliable information • Building the human capital and technology of banks • Improving the financial capacity of development banks • Protecting domestic banks from foreign competition • Giving emphasis to insurance and pension institutions • Facilitating an environment for the establishment and expansion of financial assets,

market and institutions • Integrating rural financial institutions with other financial institutions

d) Providing sustainable infrastructural facilities which include: • Road construction and road transport service • Railway Construction and railway transport service • Air transport service • Telecommunications service • Electric power service • Supply of land and water

Note: Land can be used as an important instrument to encourage investment. In the previous periods there was no separate land administration meant to encourage investment. In this industrial development strategy, however, due emphasis is given to land administration. In all urban areas, the administrations are required to prepare an industrial zone and supply with the required infrastructure in coordination with other corporations.


!!

!

Page!14!

!

e) Human capital development – It is clear that capable, responsible and ethical manpower is prerequisite for industrial development. Therefore, in order to improve the human capital of the country, the following activities are planned to be undertaken. • Keeping on the expansion and capacity of TVETs in alignment with the industrial

development requirements. • Improving the quality of education and providing civic and ethical education. • Provision of continuous on-the-job training • Facilitating apprenticeship to strengthen practical knowledge of students • Strengthening the university–industry linkage through research and development • Improving the entrepreneurial skills of citizens

f) Creating efficient administration to support the development process through • Realizing transparent, accountable and efficient system (administration) • Realizing strong and free market economy • Creating agricultural and information systems

g) Creating efficient dispute resolution systems

1.4.2. Providing Direct Support and Guidance to Developmental Enterprises

The various strategies mentioned above are aimed at alleviating the main obstacles in the industrial sector. However, focusing on specific priority sectors helps to design sector specific strategies, to provide direct support and to follow up on the implementations. The strategy, thus, identifies priority sectors for direct support by the government including additional economic incentives and capacity building measures. These specific prioritized sub-sectors include:

1. Textile and Garment Industry 2. Meat, Leather and Leather Products Industry 3. Agro-processing Industry 4. Small and Micro Enterprises 5. Construction Industry

2. Sustainable Development and Poverty Reduction Program (SDPRP) – (2002/03-2004/05)

2.1. Source

The Federal Democratic Republic of Ethiopia (FDRE), Ministry of Finance and Economic Development, Main Text, July 2002.

2.2. Timeline – The program was intended to cover the period 2002/03 to 2004/05. 2.3. Scope

The program covers a wide range of issues and sectors although the main focus was on rural and agricultural development.


!!

!

Page!15!

!

2.4. Description

The objective of the program is to build a free-market economic system in the country which will enable:

a) The economy to develop rapidly, b) The country to extricate itself from dependence on food aid, and c) Poor people to be the main beneficiaries of economic growth.

Given that poverty reduction will continue to be the core of the county's development agenda, the strategy is built on four pillars (building blocks). These are:

• Agricultural Development Led Industrialization (ADLI), • Justice system and civil service reform, • Decentralization and empowerment, and • Capacity building in public and private sectors.

Such a four-pronged approach is believed to be effective in the fight against poverty and in ensuring sustainable development.

2.5. Industry Related Objectives

The broad thrust of Ethiopia’s strategy during the SDPRP period related to industry includes:

• Strengthening private sector growth and development especially in industry as means of achieving off-farm employment and output growth (including investment in necessary infrastructure).

• Rapid export growth through production of high value agricultural products and increased support to export oriented manufacturing sectors particularly intensified processing of high quality skins/leather and textile garment.

In addition to these, to encourage the private sector and export, the following objectives are indicated in the program:

• To make existing policies work better by removing regulatory impediments and improving implementation capacities on the side of government.

• To encourage public-private sector partnership through establishment of platforms of dialogue.

• To make the business environment and the incentive structure attractive for manufacturing in particular.

• The strategy gives recognition to the critical role of exports both in terms of growth of income and foreign exchange.


!!

!

Page!16!

!

2.6. Implementing Strategies

In an endeavour to create an enabling environment for the participation of the private sector and then to encourage industrial development, the government planned to help:

• Foster the establishment of industrial associations through amending the existing laws of the chamber of commerce;

• Encourage private entrepreneurs establishing industrial estates; business incubation • Promote public-private partnership through creating forums for structured (institutionalized)

dialogue; • Establish permanent exhibition centres as means for the dissemination of information on the

standards and qualities of domestically produced products; • Improve the functioning of urban land lease markets to increase the availability of land; • Remove and amend regulatory impediments to private sector development

2.7. Key Sector Development Policies and Strategies under SDPRP 2.7.1. Private Sector and Export Development

Private Sector Development (PSD) is about enabling the enhanced utilization of labour and other resources of the country through the growth of private businesses by providing predictable and enabling environment both in domestic and overseas markets.

In the manufacturing sectors, a new set of export trade incentive schemes covering credit guarantee, duty-drawback, voucher system and bonded manufacturing warehouse, are aimed at enhancing competitiveness through relieving exporters from the burden of duties and taxes.

2.7.2. Developing the Manufacturing Sector

Considering the importance of the manufacturing sector to the success of ADLI and the strategy for poverty reduction, the government has short-to-medium term programs to implement a comprehensive capacity building program to improve competitiveness by enhancing private sector institutions, human resource inputs, research and development and the introduction of different schemes for capacity building. The components of this program include:

• Establishing Industrial Zones • Completing the implementation of the Leather and Leather products Technology Institute

project • Completing the implementation of Garment Training Centres project • Devising and implementing training programs • Establishing a National Network of Information System and ensure the flow of industrial

information. • Establish a Research and Development Institute


!!

!

Page!17!

!

2.7.3. Construction Sector

With regard to the domestic construction industry, the government planned to assign 40% of road maintenance works to private sector contractors in the short term and to increase the level to 100% in 10 years. Also 100% of major road works and 100% of periodic maintenance in 4 years were planned to be handled by the private construction industry. Civil construction projects, outdoor network projects and lines in the telecommunications sector as well as distribution lines in the power sector were mentioned as opportunities for private construction industries.

2.7.4. Mining Sector

Building the geological database on mineral occurrence, building regulatory capacity as well as attracting private sector investment will have considerable contribution towards realizing the potential of the mining sector.

2.8. Monitoring and Evaluation Mechanisms

Broadening the data/information base through conducting surveys and censuses as well as compiling databases from administrative/secondary sources including scientific research publications and mainstreaming them is key to putting in place effective monitoring systems and developing robust indicators and targets. Apart from maintaining the momentum of the National Integrated Household Survey Program (NIHSP) of the 1980s, new surveys and censuses have been initiated and implemented by the Central Statistical Agency (CSA) during the 1990s. Some of the statistical developments which are believed to be the bases for an effective monitoring and evaluation system are:

• The setting up of the welfare monitoring system under the Welfare Monitoring Survey (WMS) including the establishment of the Welfare Monitoring Unit (WMU) and the series of WMSs and the two Household Income Consumption Expenditure (HICE) surveys. In particular, the completion of the 1999/2000 HICE provided baseline information on poverty and the welfare of the population as well as information on trends in the second half of the nineties;

• The National Medium-term Statistical Development Program developed jointly by the then MEDaC now MoFED and CSA, in particular, the establishment of a proposed program of surveys and censuses;

• The development of analytical capacity, both within the Government and other agencies such as the Economics Department of Addis Ababa University, especially through their involvement in the analysis of the 1999/2000 HICE & WMS’s results.


!!

!

Page!18!

!

3. Plan of Action for Sustainable Development and Eradication of Poverty (PASDEP) – (2005/06 – 2009/10)

3.1. Source

The Federal Democratic Republic of Ethiopia (FDRE), Ministry of Finance and Economic Development, Volume I: Main Text, September 2006.

3.2. Timeline!– The plan was intended to cover the period 2005/06 to 2009/10. 3.3. Scope

The plan encompasses a wide array of issues aimed at bringing sustainable development and eradicating poverty. The document addresses progress and achievement under SDPRP, economic performance, plan, objectives, strategies, monitoring and evaluation for the five years. Unlike the preceding program, the PASDEP attaches significant weight to industry sector development in general and the manufacturing sector in particular.

3.4. Description

The PASDEP represents the second phase of the Poverty Reduction Strategy Program (PRSP) process, which has begun under the Sustainable Development and Poverty Reduction Program (SDPRP) covering the previous three years, 2002/03-2004/05.

The PASDEP carries forward important strategic directions pursued under the Sustainable Development and Poverty Reduction Program (SDPRP) - related to infrastructure and human development, rural development, food security, and capacity-building- but also embodies some bold new directions. These include, a major focus on growth in the coming five-year period with a particular emphasis on greater commercialization of agriculture and enhancing private sector development, industry, urban development and a scaling-up of efforts to achieve the Millennium Development Goals (MDGs).

The PASDEP consists of the following eight pillars:

• Building all-inclusive implementation capacity; • A massive push to accelerate growth; • Creating the balance between economic development and population growth; • Unleashing the potentials of Ethiopia's women; • Strengthening the infrastructure backbone of the country; • Strengthening human resource development; • Managing risk and volatility; and, • Creating employment opportunities.


!!

!

Page!19!

!

3.5. Industry Sector Goals

The integration and interdependence between the agricultural and industrial sectors was perceived to play a key role in accelerating the country's economic development and bringing about socio-economic transformation. As a result, the industrial sector’s share to GDP was envisaged to increase from 14% to take 16% (base case scenario) by the end of the plan period.

3.6. Industrial Development Strategic Objectives

To achieve the strategic goal set in the plan, the following industrial development strategic objectives were identified:

• Enabling all industries to utilize their full capacity in order to increase production and productivity;

• Establishment and expansion of industries that are labour intensive and that use domestic raw materials;

• Strengthening the participation of the private sector in the development process; and, • Increasing the industrial sector's share of GDP and its employment generation capacity as

well as its contribution to foreign exchange earnings.

3.7. Implementing Strategies and Interventions

The underlying objective of the industrial development plan is to increase the benefits earned from economic integration with an ultimate goal of becoming an industrialized country. This involves strengthening of inter-sectoral linkages (between agriculture and industry) on the domestic front and exploiting the potentials and opportunities of regional and global economic integration. The rural-centred ADLI, within the framework of a free market economy, is the principal driving force of the strategy.

The action plan also reiterated the two mechanisms of engagement of the government with the private sector identified under the Industrial Development strategy: (i) creating a conducive environment for industrial development and investment (ii) providing direct support for selected sectors.

3.7.1. Creating conducive environment for industrial development and investment: This involves: • Eliminating rent-seeking activities; • Maintaining macroeconomic stability; • Maintaining security, a stable environment for sustainable investment; • Building a functioning and well-regulated financial sector; • Investing in infrastructure; transport and telecommunications that lower the cost of

business, and provision of reliable water supply, and power that are essential inputs to any industrial activity;


!!

!

Page!20!

!

• Ensuring the availability of land; • Providing an educated and skilled workforce through the education system; • Establishing agricultural information systems to support development efforts; • Establishing an efficient legal framework and contract enforcement, and other

administration systems; • Strengthening activities under the capacity-building initiative, especially the

Engineering Capacity Building Program (ECBP); • Enforcing working system that sustain strong market competition; and,

3.6.2 Provide direct support and guidance to strategic sectors. This involves support to: • Textile and garment industries; • Meat, leather and leather product industries; • Other agro-processing industries; • Construction industry; and, • Strengthening small and micro enterprises.

Other specific sub-sectors were also added into the list of priority under the PASDEP, which include:

• Sugar Industry Development Program • Production of Flowers, High-Value Fruits and Vegetables


As the PASDEP is a continuation of the SDPRP, the M&E system follows the same line. It is built on the existing Welfare Monitoring System Program (WMSP) which was in place even before the advent of the PRSP process. The poverty reduction strategy M&E system represents a strengthening and broadening of the existing WMSP.

Accordingly, surveys that will be conducted by the CSA and the analytical studies which will be undertaken by MoFED based on the data and information generated through such surveys are indicated in the WMSP. The Program is designed with the main objective of providing the necessary socio-economic data and information for the PASDEP M&E system.

Other elements of the PASDEP M&E system include the use of:

• Specialized surveys; • The development of a matrix of indicators to track progress on inputs, outputs, and

outcomes; • The implementation of new instruments such as the Participatory Poverty Assessment; and • The use of routine data generated by sectoral ministries and local governments. These

sources are supplemented through information generated by civil society institutions.

The role of major institutions in the monitoring and evaluation process includes:


!!

!

Page!21!

!

• MoFED - coordinate/chair the Welfare Monitoring Steering Committee (WMSC) as well as Welfare Monitoring Technical Committee (WMTC) members.

• Federal Executive Bodies – The federal implementing bodies prepare and submit annual progress/implementation assessment reports to MoFED.

• CSA - The CSA is established with the main objective of gathering and distributing socioeconomic data and information as an input for the preparation of development strategies, to help evaluate public programs, and to feed into policy designs.

4. The Growth and Transformation Plan (GTP) – (2010/11-2014/15)

4.1. Source The Federal Democratic Republic of Ethiopia, Ministry of Finance and Economic Development, Volume One: Main Text, November 2010.

4.2. Timeline The GTP is formulated to carry forward the important strategic direction pursued in the PASDEP. It is a five-year plan covering the time span 2010/11 – 2014/15.

4.3. Scope The plan encompasses a wide array of issues aimed at bringing broad-based, accelerated and sustained economic growth so as to eradicate poverty. In the plan period, strong focus has been given to improvement in the quality of public service provided through investment in infrastructure and in the social and human development sectors.

4.4. Description The Growth and Transformation Plan (GTP) aims to sustain the registered performance in the PASDEP period and achieve the MDG targets by 2015. It gives special emphasis to agricultural and rural development, industry, infrastructure, social and human development, good governance and democratization.

The country’s vision in the plan period specifically on economic sector is:

“to build an economy which has a modern and productive agricultural sector with enhanced technology and an industrial sector that plays a leading role in the economy; to sustain economic development and secure social justice; and, increase per capita income of citizens so that it reaches at the level of those in middle-income countries.”

Ethiopia’s strategy for sustaining the rapid and broad-based growth path rests on the following pillars:

• Sustaining faster and equitable economic growth


!!

!

Page!22!

!

• Maintaining agriculture as a major source of economic growth • Creating favourable conditions for the industry sector to play a key role in the economy • Enhancing expansion and quality of infrastructure development • Enhancing expansion and quality of social development • Building capacity and promoting good governance • Promoting women and youth empowerment and equitable benefit

4.5. Industry Sector Goals In the GTP period, the aim for the industry sector is to register a higher growth rate than that of the agriculture and service sectors. The target is to achieve average annual growth rate of 20% as a base case scenario and 21.3% as a high case scenario. The targeted GDP share of the sector at the end of the plan period is 18.8% under the base case scenario.

4.6. Industrial Sector Strategic Objectives The development objectives for the industrial sector are to:

• Creating a broad-based springboard for competitive domestic industrial and private sector development.

• Creating employment opportunities and thereby reduce poverty. • Supporting sustainable development of agriculture • Increasing industrial production and productivity by fully utilizing the existing capacity of

industries • Promoting medium and large industries that use domestic raw materials and labour • Creating strong foundation for the sector to start playing a leading position in the national

economy, employment creation, and foreign exchange earnings and saving. • Strengthening the sector’s capacity to produce equipment, machinery and spare parts.

4.7. Strategic Directions and Implementing Strategies The government’s industrial development strategy states that ensuring accelerated and sustained industrial development is a fundamental policy direction. To implement this policy, the sector’s development strategy focuses mainly on industries that are labour intensive, have broad linkages with the rest of the economy, use agricultural products as inputs, are export oriented and import substituting, and contribute to rapid technological transfer. Particular emphasis will be given to two main sub-sectors. First the main strategic direction will be to support expansion and development of micro and small enterprises. In addition, efforts will be made to further develop medium and large scale industries.

In line with the aforementioned directions, the following industries and sub-sectors will receive special support in the years to come. These include:-


!!

!

Page!23!

!

a) Small and Micro Enterprise development. Focus areas • Creating conducive environment for the emergence of new MSEs • Supporting the endeavour to increase the productivity of the existing MSEs.

b) Medium and Large Industry Development. Particular emphasis will be given to: • Textile and garment Industry; • Leather and Leather Products Industry; • Sugar and Sugar Related Industries; • Cement Industry; • Metal and Engineering Industry; • Chemical Industry; • Pharmaceutical Industry; and • Agro-Processing Industry;

c) Industrial zone development: based on their feasibility, industrial zones that are suited for establishing medium and large scale manufacturing industries will be developed.

d) Public enterprise management and privatization: the capacity and management of public enterprises as well as privatization will be enhanced.

Most of the priority sectors in the medium and large manufacturing listed above are export oriented ones consistent with the priority list in the previous five-year plan. But new import substituting industries such as the chemical, pharmaceuticals, and metal and engineering sectors are added in the GTP period aiming to reduce import dependence of the country.

4.8. Construction Sector Strategic Objectives, Directions and Strategies

In the past five-year plan, the construction industry played an important role in improving the delivery of social and economic infrastructure, generating jobs and contributing to economic growth. To sustain this in the GTP period and to enable the local construction industry to play its role, focus will be on the capacity and competitiveness of the industry, and the legal framework of enforcement.

In order to enable the local construction industry to play its role, the following strategies have been identified:

• Ensure construction works are completed to the standard required, time limits set and costs planned.

• Build the capacity of the domestic construction industry to fully meet the local demand. • Enable the industry to make a significant contribution to the sustainable growth of other

sectors and the national economy, as well as improve its productivity. • Enable the construction industry to play significant role in job creation; developing the

capacities and increasing the number of local companies (contractors, consultants, construction machinery supplying and leasing companies, and construction material suppliers) engaged in the industry, and ensuring the effective use of public investment on different construction works.


!!

!

Page!24!

!

The construction industry’s strategic direction promotes an industry that is labour intensive, market oriented, led by the domestic private sector, competitive, ethical, and free from corruption. Development of the construction sector will take into account micro and small enterprise development, capacity building requirements, and ensure the full participation of women.


The GTP’s M&E system is built on the existing Welfare Monitoring System Program (WMSP). With regard to the data source, the Central Statistical Agency (CSA) recently launched the new National Strategy for the Development of Statistics (NSDS) in consultation with relevant stakeholders. The NSDS will help to generate data through surveys and censuses to monitor the implementation progress of the GTP. The administrative data generated by sectoral line ministries will also provide an input to the M&E system. Data from censuses, surveys and administrative sources will be used to generate full-fledged economic analysis and reports by the Ministry of Finance and Economic Development (MoFED).

5. Ethiopian Industrial Development Strategic Plan, Roadmap and Institutional Setup

5.1. Source!- FDRE Ministry of Industry, September 2013 5.2. Timeline!

This particular document covers a time span of thirteen years (2013 – 2025). The implementation is divided into three phases. Phase one is from 2013 until the end of 2015. Phase two extends from 2016 – 2020, while phase three covers the period from 2021 – 2025. 5.3. Scope

Although the overall goal of this industrial development strategic roadmap is to increase the share of the industry sector as percentage of GDP from the current (2013) 13% to 27% by 2025, the details of strategic objectives, implementation strategies, main activities, and the monitoring and evaluation mechanisms are limited to the manufacturing sector. Thus, the discussion to follow only covers the manufacturing sector.

5.4. Description

This strategic plan is developed based on the experience from the PASDEP and the first two years of the GTP. The encouraging results obtained during the PASDEP period are mainly attributable to the improvement in agricultural and industrial development and the enhanced linkage between the two sectors. However, the major obstacles to the growth and development of the industrial sector were inadequate human resource capability (both technical and managerial); shortage of foreign exchange to import the required raw materials, spare parts and


!!

!

Page!25!

!

other inputs; disruption of electric power supply; and lack of access to efficient and effective credit and other services.

Promising achievements were also registered in the first two years of the GTP where the major focus strategies are on industries which are labour intensive and with wide market; have broad linkages with the rest of the economy; use agricultural products as input; are export-oriented and import substituting; and can contribute to faster technology transfer. The priority sectors in the manufacturing sector are agro-processing, textile and garment, leather and leather products, metal and engineering, and chemical and pharmaceutical sectors. Like the PASDEP, the major strengths, limitations, opportunities and threats of the first two years of GTP were also clearly identified.

The limitations in the past industrial development strategies under PASDEP and GTP paved the way to design an industrial development strategic roadmap which covers longer time period (2013-2025) and addresses the limitations observed so far. The strategic issues identified to be addressed in the plan include:

• Inadequate enabling business environment; • Poor human resource development system and shortage of highly qualified human

resource; • Insufficient industrial inputs and infrastructure; • Lack of well-established investment and technology development; • Poor market diversification and development; • Inadequate institutional support and enterprise development; and • Weak strategic sector development and diversification.

5.5. Industry Sector Vision and Goals

The vision of the Industry Sector Development Plan is:

“Building an industrial sector with the highest manufacturing capability in Africa which is diversified, globally competitive, environmentally-friendly, and capable of significantly improving the living standards of the Ethiopian people by the year 2025”

The realization of this vision is guided by the principles stipulated in the Ethiopian industry development strategy (2002) which includes accepting the private sector as the engine of the industrial development strategy; following export-led Industrialization; focusing on Labour Intensive Industries; using coordinated foreign and domestic investment; strong leadership role of the government; and mobilizing the whole society for industrial development.

Accordingly, the overall goal of the industrial development strategy is to bring about structural change in the country’s economy through industrial development by:


!!

!

Page!26!

!

• Increasing the share of the industry sector as percentage of GDP from the current 13% to 27% by 2025.

• Increasing the share of the manufacturing sector as percentage of GDP from the current 4% to 17% by 2025.

5.6. Manufacturing Sector Strategic Objectives

Based on the strategic issues identified (as outlined above under description), five strategic objectives are formulated. These five strategic objectives that guide the implementing strategies and programs are:

• Further expanding and developing the existing manufacturing industry priority sectors; • Diversifying the manufacturing sector to new sectors; • Enhancing enterprise cultivation and entrepreneurship; • Increasing public, domestic and foreign investment; and • Developing and operating industrial zones and cities.

5.7. Implementing Strategies, Programs, Projects and Activities

The achievement of the strategic objectives clearly calls for the choice of appropriate implementation strategies and programs. Based on the overall strategic directions outlined in this study, the following key implementation strategies are identified

• Ensuring a conducive business environment for industrial development • Availing competent human resource for industrial development • Availing quality industrial inputs for value-addition • Developing and diversifying local, regional, global markets for the industry • Enhancing technology transfer for industrial development • Developing and providing institutional support for industrial development

In order to realize the above mentioned strategic objectives based on the implementing strategies, six major programs are designed. Each of the six major programs are directly associated with the five strategic objectives mentioned above.

5.7.1. Priority Sectors Expansion Program

The priority sector expansion program focuses on the major activities and projects that are related to the deepening, expansion, and upgrading of the current priority sectors. The projects aimed to implement the program include:

• Enhancing investment capability and business climate project; • Human resource development project; • Enhancing quality and quantity of industrial raw material and inputs; • Developing and diversifying markets project; • Enhancing technology development and transfer project; and


!!

!

Page!27!

!

• Strengthening institutional support project.

Though these are the overall programs and envisaged projects to realize priority sector expansion, the five manufacturing sector priority areas have produced their own specific projects based on the six development programs of the strategic plan. These prioritized sectors program include (For the detail of the intervention in the prioritized sectors refer to Appendix I):

• Metal and engineering services sector expansion and diversification program • Footwear, leather and leather products sector expansion and diversification program • Agro processing sector expansion and diversification program • Textile and garment sector expansion and diversification program • Chemical sector expansion and diversification program

5.7.2. New Manufacturing Sectors Development Program

The diversification of the manufacturing sector focuses on additional new sectors by considering the global value chains and the country’s resource potentials and other criteria such as critical resource and capacity, market and demands, and multiple linkages. The diversification of the manufacturing sector into biotechnology, ICT (both software and hardware), and petrochemical industries is a key component of this program.

The following industries will emerge during the different phases of the planning period:-

• Food processing industry (including fish industry and spices extraction and processing industries);

• Large scale Wood based products manufacturing industries; • Natural fibres like wool, silk and sisal, in addition to Cotton; • Man-made fibres and technical textile manufacturing industries; • Rubber, plastic and textile shoe fabrications industries; • Packaging industries; • Machinery and equipment manufacturing industries; • Iron and steel Industry; • Automotive industries including agro machinery parts); • Chemical industries including:

o Petro chemical /Bio-based/ industries, o Special chemicals (construction chemicals ,dyes and dyestuffs) industries o Alcohol based chemical products (acetic acid ,acetone etc) industries;

• Pharmaceutical industries: o Specialty medicines and manufactured indigenous medicines, o Food supplements, o Pharmaceutical components and ingredients, o Cosmetics;


!!

!

Page!28!

!

• Bio-technology industries; • Electrical and electronics equipment manufacturing industries; and • ICT software and hardware manufacturing industries.

The implementation of the program relies heavily on the appropriate selection of the strategies for implementation. Accordingly, the following strategies are relevant to be followed to achieve the desired results.

• Producing capable human resource needed for industrial development of new sector and supply of highly skilled workforce,

• Ensuring sustainable supply of high quality industrial raw materials, (diversification areas)

• Developing and diversifying markets for the manufacturing industry outputs (local, regional, global markets)

• Enhancing Technology and technology transfer for industrial development

• Developing and strengthening institutional support and infrastructural facilities for further investment of diversified industries

5.7.3. Industrial Enterprise and Entrepreneurship Development Program

Business enterprises lie at the core of industrial development. Accordingly, this program focuses on further strengthening and development by considering the SMEs as engines for development and job creation.

The major activities to be carried out in this program are grouped under four projects. These are:

• Government enterprise development support services • Marketing system development • Capacity building projects for entrepreneurship development • Enterprise cultivation focusing on value chain and cluster development strategy

5.7.4. Local (Private) and Foreign Investment Promotion Program

This program aims at attracting more private investment flow for industrial development. Achieving accelerated manufacturing sector development plan requires huge investment that the government alone cannot shoulder. In this program, various investment promotion activities are designed to encourage both local and foreign private investments.

The key implementing strategy for the investment promotion program is developing and providing appropriate legal and institutional support to facilitate and support all promotion endeavours for sustaining industrial development. The major activities outlined in this program include:


!!

!

Page!29!

!

• Formulating comprehensive and sector specific FDI strategy through the Industrial Bill • Strengthening /Establishing appropriate institutional setup for promoting FDI • Further mobilization of the diplomatic community and the Diaspora • Institutionalizing one-stop services for investors

The implementation plan to promote investment which is divided in to sub programs includes:

• FDI Promotion • Local /Private Investment Promotion • Public Investment Promotion

5.7.5. Government (Public) Sector Investment Program

This program calls for continued public investment in social overhead capital, infrastructure as well as capital-intensive flagship projects. Some of the major projects and activities within this program include:

• Development of appropriate macroeconomic policies that further enhance FDI flow • Formulation of sector and industry specific incentive policies and strategies • Mobilization of the Ethiopian diplomatic missions and the Diaspora for attracting FDI • Sustaining government investment in social overhead capital • Maintaining government investment in capital intensive and flagship projects

5.7.6. Industrial Zone Development Program

The industrial zones development program focuses on how to develop an integrated economic development zone or city that builds and develops industrial parks, business centres, as well as residential area for employees. The major intervention areas for this program include:

• Formulation and implementation of industrial act that attracts investors and partner countries to establish industrial zones that evolve to industrial cities

• Development of infrastructure for the new industrial zones in Dire Dawa, Hawaasa, Kombolcha and Addis Ababa

• Capacity building in the development and management of industrial zones and cities

The projects that are to be undertaken in this program are outlined as follows:

• Creating Conducive Environment for Establishing Industrial Cities • Infrastructure Development Projects • Capacity Building Projects

5.8. Implementing Agencies/Institutions

As the current situational assessment revealed, there are a number of government and private institutes which are providing support for the development of the manufacturing sector of


!!

!

Page!30!

!

Ethiopia. However, these institutions need to be strengthening their capabilities to exert more thrust towards supporting the sector’s development.

To bring industrial transformation in the national economy structure, an Industrial Development Act shall be promulgated to serve the following purposes.

• Granting the legal framework for the overall industrial endeavours • Indicating the formation of a National Industry Development Council with operational

frameworks • Providing additional mandate to the Ministry of Industry • Indicating the role of regional governments • Providing guidance in the formation of councils, forums and support institutes

The key industrial development actors among the public at large are the government, private sector, the civil society and development partners.

To implement the industrial development plan and achieve industrial growth, it is essential to ensure coordination activities with the private sector and at all levels of government, and to this effect a National Industrial Development Council (NIDC) will be established at the highest level of government, and private sector representatives. The NIDC will be accountable to and chaired by the Prime Minister where the Ministry of Industry may function as its secretary and it may consist of:

• The Ministry of Industry; • The Ministry of Finance and Economic Development ; • The Custom & Revenue Authority; • The Ministry of Agriculture; • The Ministry of Trade; • The Ministry of Education; • The Ministry of Water and Energy; • The Ministry of Transport; • The Ministry of Science & Technology; • National Bank of Ethiopia; • The Chamber of Commerce and Industry and • The industry forums representative.

Similarly, Regional Industrial Council (RIC) with corresponding representation will be established in each regional state.

In order to provide the required support for the accomplishment of the objectives of NIDC, the Industrial Development Strategy Consultative Group (IDSCG) will be established and accountable to NIDC. The IDSCG will act as a "think tank" as well as the repository of industrial and technological intelligence in Ethiopia. The IDSCG will establish close contact with appropriate industrial policy and research organizations, including the Ministry of Science and


!!

!

Page!31!

!

Technology, Ministry of Industry, the Ethiopia Policy Research Institute (EPRI) and the Ethiopia Industrial Research Development Institute (EIRDI), etc. in order to promote industrialization of the economy.

In addition, Consultative Forums for Industry Development which is accountable to the NIDC will have four forums. The forums provide the necessary support for the council to execute its mandate. These forums are the local investors and industrialist forum, foreign investors and business forum, the professional association’s forum, and the industry employee association’s forum.

To implement the industrial development strategic plan and to enhance the industrial development process of the country there will be establishment of new institution and upgrading of the existing institutions. The new institutions established and upgraded are summarized below.

Establishment of New Institutions

• Industrial Investment and Export Promotion Centre (IIEPC) • Ethiopia Industrial Research & Development and Technology Transfer Institute (EIRDTTI) • Industrial Zone Development and Management Agency (IZDMA) • Agro-processing Industry Development Institute (APIDI) • Chemical Industry Development Institute (CIDI) • Institute for Industrial Capacity Development (IICD) • Export Processing Zone Authority (EPZA)

Improvements in Existing Institutions The institutional setup demanded some improvement in the existing industrially related support institutes. Institutions on which the improvement is to take place are:

• Industrial Financing by the Development Bank of Ethiopia • Manufacturing Industry Policy Issue and Implementation Unit • Domestic and Export Manufacturing Sector Support Divisions • Foreign Trade Support Unit • Engineering Services in Industrial Development Institutes • Fashion and Designing Studio • Meat and Dairy Technology Institute (MDTI) • Extension of the Role of Horticulture Development Agency • Expanding the Quality Assurance Related Institutes • Improvement in Customer Service Delivery


Monitoring is expected to be conducted at every stage of the program by collecting, analysing, and using data regularly. Evaluations are also envisaged to be conducted at mid-term or at the


!!

!

Page!32!

!

end of each of the three phases of this strategic plan and focus mainly on how well the programs have achieved their goals and targets, and the extent to which changes in outcomes can be attributed to the programs.

The monitoring and evaluation of the different projects under each of the six main programs, explained above, take place based on the respective targets. Clear indicators for each of the project targets are outlined in the strategic plan and will be used as means to evaluate the extent of their achievements.

According to the road map, the monitoring and evaluation of the development plan will take place at different levels: national, sectoral and enterprise levels. At the national level, the National Industrial Development Council (NIDC) will monitor and evaluate focusing on the broad policy issues, strategic objectives, intervention-areas and programs, expected outcomes and performance indicators in the three phases of industrial development strategy. Special desks could be established by NIDC as necessary to expedite the M&E process, and make decisions about the frequency of the evaluations to be undertaken. As it becomes important to make an internal and external evaluation, the different consultative forums under the NIDC would have a significant role in this respect. At sector level, the Ministry of Industry leads and coordinates the M&E activities of all the manufacturing sectors based on the industrial development goals and targets.

Government and private institutions will undertake the M&E activities and provide feedback on their performances to the Ministry of Industry regularly. The various sectors in the manufacturing industry need to develop their own M&E plans and report accordingly on a regular basis.

6. The Second Growth and Transformation Plan (GTP II) – (2015/16-2019/20)

6.1. Source

The Federal Democratic Republic of Ethiopia, National Planning Commission, Draft, September 2015.

6.2. Timeline

As usual, the second GTP is a five- year plan, covering the time span 2015/16 – 2019/20. The plan is built on Sectoral Policies, Strategies, and Programs, lessons drawn while implementing GTP I and the post-2015 Sustainable Development Goals (SDGs).

6.3. Scope

The plan encompasses a wide array of issues aimed at bringing rapid, sustainable and equitable economic growth so as to significantly reduce poverty and induce economic structural transformation. Emphasis is given to the need to enhance productivity, quality, and competitiveness so that the bases of economic structural transformation can be realized.


!!

!

Page!33!

!

This can be achieved through coordinated and strengthened forward and backward production linkage, promoting private sector development, provision of quality infrastructure, and enhancing human capital development.

6.4. Description

Given the vision of becoming a lower middle income country by 2025, GTP II aims to achieve an annual average real GDP growth rate of 11% within stable macroeconomic environment while at the same time pursuing aggressive measures towards rapid industrialization and structural transformation. This aim rests on the following nine strategic pillars.

• Sustaining the rapid, broad based and equitable economic growth and development; • Increasing productive capacity and efficiency so as to reach the economy’s productive

possibility frontier through rapidly improving quality, productivity and competitiveness of productive sectors (agriculture and manufacturing industries);

• Enhancing the transformation of the domestic private sector to enable them become capable development force;

• Building the capacity of the domestic construction industry, bridging critical infrastructure gaps with particular focus on ensuring quality provision of infrastructure services;

• Proactively managing the on-going rapid urbanization to unlock its potential for sustained rapid growth and structural transformation of the economy;

• Accelerating human development and technological capacity building and ensuring its sustainability;

• Continuing the building of democratic and developmental good governance through enhancing implementation capacity of public institution and active engagement of citizens;

• Promoting women and youth empowerment, ensuring their effective participation in the development and democratization process and enabling them to equitably benefit from the outcomes of development;

• Building climate resilient green economy

6.5. Industry Sector Goals

During the GTP II, the industry sector, and particularly the manufacturing industry, is expected to grow faster than the other sectors. The estimated and projected growth rate figures for the baseline year 2014/15 and plan-end year 2019/20 indicate that the industry sector is expected to grow at a higher rate (22.2% and 19.8% respectively) than that of the agriculture and service sectors. Similarly, the manufacturing industry is expected to grow much faster (24%) than it was growing in the base year (19.2%). Besides, the industry sector’s share in GDP is expected to increase from 15.6% to 22.8%; the manufacturing industry’s share of GDP is also expected to increase from 4.6 percent to 8 percent.

6.6. The Industrial Development and Transformation Objective


!!

!

Page!34!

!

The main objective of the Industrial Development and Structural Transformation is to bring significant growth of the manufacturing industry so that it plays leading role in job creation, technology learning, structural shift in Ethiopia’s export and addressing trade imbalance.

6.7. Strategic Directions and Implementing Strategies

GTP II clearly indicates that the industrial sector’s strategic directions are to establish light manufacturing industries which are labour intensive and benefiting citizens, globally competitive and leading in Africa, and environment friendly. The document further states the need to establish the foundation which enables to create an industrialized country by moving into the development of strategic heavy industries. In addition, there is opportunity which enables high-tech industries to contribute to the development of the industrial sector. Besides, substantial emphasis will be given to conduct various studies to identify future potential growth industries with the view to make the necessary preparations for future development.

In order to achieve the stated objective of the industrial sector, a number of implementation strategies are devised within GTP II. These strategies mainly focus on the implementation of projects and programs which are geared towards attracting quality investment, enhancing production and productivity, boosting export shares, accelerating technological learning and strengthening the linkage among industries. The various subsector institutions will be brought to the level where they can access appropriate technologies and organize information, adopt and transfer technologies to the private sector through improving their research and extension capacity and equipping them with the necessary infrastructure. In addition, existing industrial forums will continue; and policies and legal frameworks which enable to lead the sector to the required direction will be put in place.

Besides, the implementation of Kaizen philosophy and establishment of industrial parks and clusters are given due attention in the document. The former is meant to attain continuous improvement in productivity, production and quality within the sector through attitudinal change among workers and investors. The latter is partly meant to attain the goal of expanding investment in the sector by avoiding rent seeking in relation to land allocation and curbing problems associated with customs and logistic services. Finally, in line with GTP I, Micro and Small Scale Enterprises development is given an emphasis. These enterprises are critical in generating employment, serve as school for entrepreneurship, and will broaden the base for value adding domestic private sector. Actions will be taken to enhance their productivity, technology learning and growth. Micro, small, and medium enterprises will be supported to transform to the next level of industry in accordance with their level of development.

6.8. Construction Industry Development 6.8.1. Construction Sector Strategic Objectives

The aim of the construction industry sector is to manufacture high quality and time saving products which will be competitive at the international market. GTP II states that this sector, with


!!

!

Page!35!

!

the help of research and development, is set to bring in new technologies and new ways of construction. To attain this goal, certain specific objectives are set as follows.

• Building the capacity of the industry in sustainable way; • Ensuring the efficiency and effectiveness of the construction procurement and contract

management; • Developing internationally competent contractors and design & construction consultants;

and • Improving the availability of construction raw materials and machineries for those

engaged in construction and housing development programs.

6.8.2. Construction Sector Strategic Directions and Implementing Strategies

The key strategic directions for the construction industry during the planned period are to:

• Combat rent-seeking behaviour; • Reduce the cost of projects by increasing the capacity, efficiency and effectiveness of

contractors; • Implement kaizen and construction project management system as a tool for change;

and • Make all construction programs a centre of capacity building and improve license

provision system for the key players in the industry.

As an implementation strategy, GTP II indicates that a number of programs will be implemented to enhance the development of the sector. Among those programs, two of them are already stated in the document, and with their salient features:

• Construction Industry Management Reform program: under this program the plan is to capacitate the engineering and construction design management system to the international standard; establish project profile, licensing and regulatory systems in order to build competition in the sector; develop skilled, educated and disciplined manpower to meet the demand for professionals in the industry and ensure safe and healthy construction environment.

• National Construction Project Management Capacity Building Program: this program is designed in comprehensive manner so that it captures all the key players of the sector. Infrastructure design guideline will be prepared and disseminated. Research centers will be established and supported to assist in the transfusion and adaptation of new & better technologies and skills. The research conducted by these centers will be disseminated to the key players with new, cost-effective technologies in concrete molds, construction techniques and project management delivery system. The capacity development program is also meant to develop local capacity to manufacture construction materials and machineries to meet the growing demand of the sector and


!!

!

Page!36!

!

ease the burden on foreign exchange. For this, building the capacity of the most important companies- such as cement, iron and steel as well as plastics and construction based chemical manufacturing companies- is considered to be critical.


In line with GTP I, strong monitoring and evaluation will also be carried out in GTP II period. This would basically depend on survey data from the Central Statistical Agency and progress reports of the sectoral implementing entities. On top of that, monitoring data will be generated from field visits to strengthen the information gathered from administrative and survey data. A full-fledged action plan will be prepared to conduct field visits which will mainly focus on mega projects. The National Planning Commission has a clear mandate to lead and coordinate the national monitoring and evaluation system. After conducting assessments in the national monitoring and evaluation system, capacity building measures will be taken on strengthening the system, organizational structure and manpower. Proper data management, organization, and analysis on timely basis will be undertaken by implementing the Second National Statistical Development Strategy (NSDS II).


!!

!

Page!37!

!

Part Two: Industrial Sub-Sectors Strategic Plans

1. Ethiopian Construction Industry Development Policy

1.1. Source – The Federal Democratic Republic of Ethiopia, Ministry of Urban Development, Housing and Construction, December 2013 (translated from the Amharic version)

1.2. Description

The construction industry plays a vital role in the socio-economic development of the country through its contribution to the provision of infrastructure, industrial and housing expansion, job creation and expansion of other sectors. In comparison to other African countries, the contribution of the sector to the GDP of the country had been insignificant. However, in recent years, the sector is registering an average annual growth of around 12% and the share of the sector in GDP has grown to 5.3%.

The main reason behind this low share of GDP is the multifaceted problems in the sector and insufficiency of government incentives. This necessitated a continuous support of the sector through designing favourable policy, increasing the quality and quantity of human resources in the sector, and creating a corruption free and accountable system. Consequently, the construction industry development policy is formulated.

1.3. Construction Industry Vision and Goals

The vision of the construction industry development strategy is:

To create regionally and internationally competitive construction industry in 2025.

In order to realize the mission of the industry, the following goals are set out:

• Providing an environmentally friendly, quality and fair service. • Creating profitable and efficient national construction enterprises. • Recruiting, supporting and capacitating willing, self-initiated and committed developmental

construction industry investors/enterprises. • Facilitating the role, participation and human capital of stakeholders.

1.4. Strategic Objectives

The following main strategies are identified in order to realize the industry’s vision in 2025.

• Building institutional capacity to lead and coordinate the construction industry • Creating corruption free environment and good administration service to private investors • Building the human capital in the sector


!!

!

Page!38!

!

• Building the capacity of enterprises to imitate and adopt advanced technology at least cost and time.

• Supporting and monitoring domestic producers to produce spare parts for construction machinery and to increase the supply of construction equipment

• Creating a conducive environment for an efficient supply chain, cost-effective supply of inputs and technologies, and entrepreneurship

• Creating efficient, transparent and responsible governmental and private sectors that provide the service as per the agreement

• Expanding infrastructural facilities to speed up socio economic growth • Creating partnership between local, regional and international stakeholders • Increasing the contribution of the industry in job creation and national production

2. Leather Industry Sector Development Plan 2010/11 – 2014/15

2.1. Source – Leather and Leather Products Technology Institute, January 2011 (translated from the Amharic version)

2.2. Description

This plan, designed based on the evaluation of the past five-year development plan of the sector, is meant to contribute to further development of the sector so as to attain the overall economic goals of the country. This plan is also based on the sector’s objectives and targets identified under the GTP.

2.3. Development Goals of the Sector

The main goals are summarized as follows (the detailed objectives to achieve each goal can be obtained from the main text):

• Building the capacity of the leather and leather products technology institute to achieve its mission with the intended standard, efficiency and quality

• Provision of quality education and training to solve the manpower problem in the leather industry sector

• Creating strong linkage between the leather industry sector and the rest of the economy • Provision of support to the leather industry sector • Increasing foreign exchange earnings through improving the productivity of the sector • Cooperating with other stakeholders to smoothen supply of inputs to the sector

2.4. Implementation Strategies

To realize the above mentioned goals, the following strategies are planned for implementation

• Creating a conducive environment to attract domestic and foreign private investors • Improving the education curricula to meet the manpower requirements of the sector


!!

!

Page!39!

!

• Introducing modern production management and benchmarking • Building the capacity of the leather and leather products technology institute to provide up-

to-date information • Realizing technological transformation in the institute • Provision of incentive packages to investors operating in the sector • Facilitating supply of quality inputs • Facilitating the cooperation between leather industry associations and other stakeholders

3. Textile Industry Development Plan

3.1. Topic – The second five year (2010/11 – 2014/15) Large and Medium Textile and Apparel Industry Development plan

3.2. Source – Textile Industry Development Institute, February 2010. 3.3. Description

The Textile and Apparel Development Inst

handbook final mar2016 updated - stipstip.edri.org.et/resources/handbook_final_mar2016.pdf ·...

Documents