Manufacturing moves centre stage.

Author:Jeffrey, James
Position:Around Africa: Ethiopia

Ethiopia has been steadily developing its manufacturing sector in a bid to supplement vital income from its more traditional exports. If it can maintain political stability, it could join Nigeria and South Africa as a continental powerhouses. Report by James Jeffrey.

This Mother's Day gone, there is a fair chance that if you bought your flowers in the likes of the UK or US, the floral arrangement for your dear mother contained cut flowers from Ethiopia. Ethiopia's income from flower exports has increased steadily over the years, generating $228.6m in the last fiscal year, according to Ethiopia's Ministry of Trade, part of the overall $2.84bn worth of goods exported. This marked an increase of 10.5% since 2013.

In its bid to become a light-manufacturing hub to rival those in the Far East, Ethiopia is pursuing an ambitious programme of building multiple investor-friendly industrial parks offering special opportunities in textiles, leather products, horticulture and pharmaceuticals, to attract both foreign capital and know-how as it seeks to keep boosting those export numbers.

"The Dest sectors relate to export revenue generation," says Reg Hankey, CEO of Pittards, a British leather goods company trading in Ethiopia since the 1920s. "Broadly these are agriculture, textiles, leather, shoes, leather goods and other manufacturing options. These all generate foreign exchange, but also employ lots of people whilst developing their skills, enabling the society to move away from poverty."

Along with cut flowers representing 11% of total exports in 2016/2017--Ethiopia's other top exports were coffee (30%), oil seeds (12%), pulses (10%), gold (9%) and khat (9%), according to the US Department of Commerce. Major destinations for Ethiopia's exports in this period were Asia (37%, with China at 20%), Europe (32%) Africa (21.5%), and the US (896).

"In the next 10 years, the exports from these industrial parks and other manufacturing facilities outside of them, plus value-added agricultural production, including coffee, and electricity and other items are expected to account for up to 25% of GDP from less than 5% today," says Zemedeneh Negatu, chairman of Fairfax Africa Fund, a US-based investment firm. Fairfax has several investments in Ethiopia including in technology and manufacturing. "Ethiopia's export model is similar to the strategies used by the Asian Tigers and China to generate significant forex and build wealth in just a few decades."

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