Where is Ethiopia’s export going?
There has never been a success story for Ethiopian economy when it comes to export performance except for the two consecutive years since 2010, the start of the first Growth and Transformation Plan (GTP I).
Since then, the export performance has been an epicenter of concern for the policy makers who always face serious criticisms both from the party members and the outsiders.
Once, reporting on the country’s plan for the 2008 (2015/16) fiscal year, the then Minister for the Ministry of Finance and Economic Development (MoFED), the Current Ministry of Finance and Economic Cooperation (MoFEC), Sufian Ahmed said that he is much concerned in the export performance of the country and it needed to be curbed to bring a dynamic shift in the export performance. Unless, he said, the economy is not to grow in the expected rate.
One of the major failures of the economy in the GTP I was the rate at which the export performance was falling from time to time in the five years.
Although the economy was expanding at an average rate of 10 percent, the contribution that the export had for the economy was very much limited. As an indicator, the export earning of the country was only able to cover only 20 percent of the export expenses in the last year of the GTP II.
This still seems to continue as a challenge in the current five years second Growth and Transformation Plan (GTP II).
As stated at the Ministry of Trade’s (MoT) six months report for the first year of the GTP II, export failure is to press the economy down exerting pressure on the country’s economic growth.
The figures from export performance of the country show that, the achievement was only 72.7 percent. The performance for the half year showed a decrease of 91 million USD compared to the last year’s similar time. This even makes the GTP II targets have a bleak future.
“In this manner, the plans in the GTP II might not be achieved,” said Sisay Baykedagn, the planning director at the MoT during the three days discussion of the sector’s performance with federal and regional stakeholders.
Looking at some of the country’s export items, although there had been an increase in the amount of the exported items, the revenue generated from the exported items did not meet the plans set by the government.
Taking coffee for example, as the Ministry’s five months report for the year indicates that the amount of export surpassed the plan thus the performance being 116 percent (77, 338 tons exported). But, the contrast comes along with the export earnings from the commodity which is achieved 96 percent compared to the plan (274.51 million dollars gained).
The report also shows that the increase in the amount of export and revenue from the same period in the previous fiscal year are 20.4 percent and 0.08 percent respectively — a little bit questionable performance making one challenge the export promotion strategies of the country.
The cliché strategic direction that the country uses for the enhancement of the export is to provide the export market with increased quantity, improved quality and diversified items of export- a dream no one had ever seen getting hold in the minds of the executives.
With the demand for the export items that the country supplies to the international market continuously decreasing, the increase in the amount of export seems to be a foolish decision — pouring water over a dumb stone, as the saying of Ethiopians goes.
Quality, a more interesting issue, as it is also raised in relation to many issues in the country ranging from govern menace to commodities, is also becoming a loose end in the export items. The country that hugely depends on agricultural items, most of which comes from small holder farmers that have less than half a hectare farmland, fails to educate the farmers on how to keep their products collected from the farmland.
It is clear that one of the factors for the lower grades of Ethiopian coffee emanates from the manner in which the coffee is stored. Much of the coffee is stored along with animal dung and is spread on bare soil to dry with cows and hens stepping on it. How is the quality to be maintained without first changing the mindset in the executive?
The third issue, diversity of the items exported, is also a failure for the sixth year since the thought of industrialization and economic transformation officially came to the Ethiopian plans. Since the start of the first GTP, the plan was to raise the contribution of the industrial sector for the export earnings from the country, but, by the end of the plan period, the manufacturing sector, the most hopped sector, contributed only 21.9 percent according to report from the Ministry of Industry.
Projects that are also meant for the diversification of the export items of the country like sugar projects were planned to generate up to 660 million dollars as export earnings. Sugar projects, let alone contribute for the export earnings of the country, could not even be realized and feed the local demand. Among the 10 sugar projects that were planned to be constructed in the GTP I, only four started trial production in the period.
But, the most important point both the exporting burgeons and the political elites want to seem non cognizant is the need for value addition. The exporters fear the high competition in the markets of processed items like roasted market and the government lacks proper regulation in trading these processed items like the absence of roasted ground coffee trading in the coffee trading proclamation that the Ministry of Trade implements.
There were incidents when some of the courageous roasters in the country were forbidden from letting their products into the market.
These all indicate that the draining export performance of the country will remain the challenge in the future development of the country and needs a quick remedy planned both for the long run and the short run.