industry

Ethiopia Has A Commitment To Build Up Its Manufacturing Base

Lawrence , , , , , , , ,

Government providing support for rapid transition from agriculture to manufacturing

(I visited Ethiopia from May 12 to May 25, and examined important aspects of Ethiopia’s economy)

Printed by THE ETHIOPIAN HERALD FRIDAY 6 JUNE 2025, BY ABEBE WOLDEGIORGIS

Ethiopia is an agrarian economy where agriculture plays a dominant role. The sector is subsistence, vulnerable to the extreme climate conditions, utilizes less inputs that results less output and experience little irrigation practices.

Even if agricultural inputs are utilized to enhance production and productivity, due to the fragmented nature of the land modernizing the sector should still go a long way ahead.

The history of the emerging economies and the industrially advanced countries tells us that they attain structural change and transformation through reducing the role of the primary economic activities, which is agriculture in the economy, and promoting the secondary and tertiary economic activities, which are industry and service sector.

This approach helped them to change the economy from lower production in to an advanced one. In our context, economists have reached consensus that manufacturing plays crucial role to change agriculture led economy in to industrial one.

The sector plays vital role in creating job opportunities to thousands, links with the agriculture sector through utilizing products as inputs, attracts both foreign and local investment, boost export, substitute imports and paves the way for the emerging of private sector led self-sustained economy based on innovation and creativity.

Recently, State Minister of Industry, Tarekegn Bululta underscored that significant reforms have been implemented aimed at stimulating the manufacturing sector. These reforms include macroeconomic adjustments and policies focused on import substitution and export growth, the state minister said.

The manufacturing is one of the critical sectors that will determine the future prosperity of Ethiopia. The sector is currently undergoing massive reforms. The government has already introduced new sound policies and procedures and the sector has witnessed a transformation.

He further said that, the reformist leadership of the country has placed a strong emphasis on the industrial sector and is diligently striving to enhance the sector’s competitiveness while fostering a more conducive environment for manufacturers and significant results have been achieved over the last three years.

A renowned American Political-Economic analyst for Africa Lawrence Freeman on his part told local media that Ethiopia has been building up its manufacturing sector while currently registering remarkable progresses in this sphere of the economy.

The American Analyst who visited textile garment factories, steel complexes, sugar factories and other manufacturing sites, said Ethiopia is clearly making progress in the sector.

He also said that the government is committed to industrialize the nation and various measures have been taken. Among others, constructing infrastructures such as industry parks, providing working places to investors with fair price, supplying energy and piped water to industry sites, providing banking services, introducing new laws to ease bureaucratic hurdles in public offices and adjusting exchange rates can be mentioned.

The new homegrown economic reform program for Ethiopia essentially makes the growth of the manufacturing sector one of its top priorities and is now delivering tangible outcomes.

“I think this shows that Ethiopia has a commitment to build up its manufacturing base, which is essential for any economy to truly function and this is very weak throughout Africa. But Ethiopia is clearly trying to make progress in this area,” Freeman said.

The analyst added that he has observed an increase in the number of people employed in Ethiopia’ manufacturing sector over the past few years.

The sector plays crucial role in creating employment to the youth

He emphasized that producing tangible products is essential for economic expansion, stating that this is the direction Ethiopia is currently pursuing and should continue to pursue more vigorously.

This is how the United States was built by emphasis on manufacturing. It is not replaceable by any other sector of the economy. “So I’m very pleased and also to see the optimism that I’ve seen in all the factories that I’ve been at today” he underscored.

There is a real optimism and enthusiasm growing in Ethiopia, and that, along with other accomplishments such as the GERD, Ethiopia is making progress, and that makes me happy to see Ethiopia make progress.

He underlined that the expansion of manufacturing needs reliable energy supply and in this regard the accomplishment of GERD and other electric power dams will bring a dramatic change in the nation’s energy landscape.

As to him, in many developing countries particularly in Africa, the manufacturing sector is not reached to the full-fledged level because of power outage and interruption which again affects the production volume. Currently most industries in Africa produce below their average capacity due to power outage.

Hence, Ethiopia should draw lesson from other countries challenges and should give due attention to mitigate power interruption.

Freeman argues that because of the colonial and neo colonial policy, Africa has a very tiny manufacturing sector in the Sub-Saharan base, and the contribution of manufactured goods in global trade by African nations is very small.

For him, Ethiopia has a lot of light manufacturing by far, such as a textile industry. He acknowledged that textile and garment industry is labor intensive and can create job opportunities to tens of thousands. It utilizes local raw materials as inputs and can create market to the agriculture sector and boost export playing vital role in garnering hard currency which is badly needed by the nation.

He also said that Ethiopia is the most populous country in Africa with more than 120 million and out of it 70 percent is below the age of 30 and this implies how the nation has prudent labor potential which have the capacity to mitigate poverty and the expansion of manufacturing can absorb this excess labor force.

Having confidence that manufacturing is the most important sector to achieve prosperity, Freeman urged Ethiopia to further accelerate its transition in this regard.

The State Minister of Industry also said that, following the new policy reform introduced in the manufacturing sector, the production capacity of industries in Ethiopia has now jumped from 46 percent to 61.2 percent.

Acknowledging the current contribution of the sector to the Gross Domestic Product (GDP) stands at less than 6.8 percent, the state minister pointed out that concerted efforts are being exerted to boost this to 17.2 percent.

He noted that the manufacturing sector has achieved a significant milestone in its import substitution strategy, generating goods valued at 3.1 billion USD during the first nine months of this fiscal year.

According to the World Bank manufacturing can help provide quality jobs for 2 million plus youth who enter the labor market every year.

The manufacturing sector is nascent and represents only 6 percent of GDP and contributes 5 percent of total employment in 2023 compared to 6.8 percent of GDP in 2022. While it is true that the Ethiopian manufacturing sector has enjoyed steady growth over the last decade it accounted for less than seven percent of GDP in 2023, according to the World Bank, and continues to face a host of challenges.

The main characteristics of the manufacturing sector inherited from the past included: a predominance of foreign ownership and foreign managerial, professional, and technical staffing; great emphasis on light industries; inward orientation and relatively high tariffs; capital-intensiveness; underutilized capacity.

In terms of regional distribution, 39.9 percent of the MSEs were located in Oromia followed by Amhara (34.5 percent), SNNPR (7.2 percent), Addis Ababa (6.7 percent), Sidama (6.5 percent) and Somali (3 percent) regional states.

In the history of global development, industrialization is considered as the most important role player. For this reason scholars and ordinary persons use development and industrialization interchangeably. This idea emanated from the world experience in that all advanced nations had achieved their development goals through industrialization. Consequently, most developing countries view it as their chief development strategy.

Read below my earlier posts:

Ethiopia Prioritizes Growth in Manufacturing

With Manufacturing, Modern Farming & Energy From GERD, Ethiopia Can Be A Leading Economy in Africa: Interview

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved ineconomic development policies for Africa for 35 years. He is a teacher, writer, public speaker, consultant on Africa, and an analyst of global strategic relations. Mr. Freeman strongly believes that economic development is an essential human right. He is the creator of the blog: lawrencefreemanafricaandtheworld.com, also publishes on: lawrencefreeman.substack.com, “Freeman’s Africa and the World, and on X @lkfreemansafrica

Solar and Wind Force Poverty on Africa: Africa Needs Reliable Energy-Nuclear-to Power Industrialized Economies

Lawrence , , , , , , , , , , , , , , , , , ,

Wind turbines operate at a wind farm near Vredenburg, South Africa, Oct. 6. Photo: Dwayne Senior/Bloomberg News

The comments below by Ugandan President Yoweri Museveni, are very timely as G-20 nations convene in Glasgow for the COP26 Summit. President Museveni is absolutely correct. The Green energy movement proposed by the West will lead to more deaths, increase poverty, and impose more misery, and suffering across the continent of sub-Saharan African (SSA). Under the guise of reducing C02, the “Green Reset” supported by all the global financial instructions, will suppress the growth of agriculture, manufacturing and industry in SSA.  The deficit of energy in SSA is killing Africans today and has retarded economic growth in SSA for decades. Over the last several decades Western nations and intuitions have done nothing to address the huge infrastructure needs in Africa. However, now these same institutions are using the Green ideology to prevent Africa from developing. My estimates are that SSA needs at least 1,000 gigawatts of energy. I support burning as much oil, gas, and coal as necessary in preparation to transitioning into economies powered by nuclear energy. Only in the last ten years as we seen minimally, but important construction of vital infrastructure by China and Belt and Road Initiative. 

OPINION | COMMENTARY-Wall Street Journal

Solar and Wind Force Poverty on Africa
Letting us use reliable energy doesn’t mean a climate disaster.

By Yoweri K. Museveni
Oct. 24, 2021

Africa can’t sacrifice its future prosperity for Western climate goals. The continent should balance its energy mix, not rush straight toward renewables—even though that will likely frustrate some of those gathering at next week’s global climate conference in Glasgow.
My continent’s energy choices will dictate much of the climate’s future. Conservative estimates project that Africa’s population of 1.3 billion will double by 2050. Africans’ energy consumption will likely surpass that of the European Union around the same time.

Knowing this, many developed nations are pushing an accelerated transition to renewables on Africa. The Western aid-industrial complex, composed of nongovernmental organizations and state development agencies, has poured money into wind and solar projects across the continent. This earns them praise in the U.S. and Europe but leaves many Africans with unreliable and expensive electricity that depends on diesel generators or batteries on overcast or still days. Generators and the mining of lithium for batteries are both highly polluting.

This stands to forestall Africa’s attempts to rise out of poverty, which require reliable energy. African manufacturing will struggle to attract investment and therefore to create jobs without consistent energy sources. Agriculture will suffer if the continent can’t use natural gas to create synthetic fertilizer or to power efficient freight transportation.

A better solution is for Africa to move slowly toward a variety of reliable green energy sources. Wildlife-friendly minihydro technologies should be a part of the continent’s energy mix. They allow for 24-hour-a-day energy production and can be installed along minor rivers without the need for backup energy. Coal-fired power stations can be converted to burning biomass, and carbon capture can help in the meantime. Nuclear power is also already being put to good use in South Africa, while Algeria, Ghana and Nigeria operate research reactors with the intent of building full-scale nuclear facilities.

All this will take time, meaning Africa will have to use fossil fuels as it makes the transition. Natural gas is a greener option that will help the continent reduce emissions even as it grows, as developed nations have done themselves.

Saying any of this meets with backlash from developed nations. Instead of reliable renewables or greener fossil fuels, aid money and development investments go to pushing solar and wind, with all their accompanying drawbacks. And many Western nations have put a blanket ban on public funding for a range of fossil-fuel projects abroad, making it difficult for Africa to make the transition to cleaner nonrenewables.

In the coming decades my continent will have a strong influence on global warming. But it doesn’t now. Were sub-Saharan Africa (minus South Africa) to triple its electricity consumption overnight, powering the new usage entirely by gas, it would add only 0.6% to global carbon emissions.

Africans have a right to use reliable, cheap energy, and doing so doesn’t prevent the development of the continent’s renewables. Forcing Africa down one route will hinder our fight against poverty.

Mr. Museveni is president of Uganda.

Realize the Vision of Diop and Nkrumah: Industrialize and Energize the African Continent

Lawrence , , , , , , , , , , , , , , , ,

October 8, 2021

Watch my hour long presentation from October 3. I discussed that the future of our planet in this century will be dependent on the African continent with its projected population of 2.4 billion and 1 billion youth by the year 2050. Either we set in motion NOW policies to develop African nations and realize the potential of 1 billion young creative minds, or we fail to do so, which will lead to more misery, and instability. The whole world will suffer from insecurity on the the African continent.

Past African giants like Cheikh Anta Diop and President Kwame Nkrumah understood what was required to develop the nations of Africa: infrastructure, energy, industry, and science. Africa suffers from an deliberate policy of imposed economic under-development, which must be overcome, not only for the sake of Africa, but for the very future of our planet.

The United States has adopted an anti-development, geo-political ideology that opposes development in Africa. For example, why hasn’t the Biden administration praised Ethiopia for the construction of the Grand Ethiopian Renaissance Dam (GERD) that will generate 6,200 megawatts of electricity for the Horn of Africa? I am sure that Presidents Franklin Roosevelt and John Kennedy would have supported Ethiopia’s drive for development, if they were alive today.

All this and more, including quotes from Diop and Nkrumah, is presented by myself in this video, which I believe will stimulate further discussion on the future of Africa.

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in economic development policies for Africa for over 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com. Mr. Freeman’s stated personal mission is; to eliminate poverty and hunger in Africa by applying the scientific economic principles of Alexander Hamilton

Presidents Kagame and Museveni Discuss; Democracy, China, Infrastructure, and Jobs

Lawrence , , , , , , , , , , , , , , , , , , , ,

President Paul Kagame: Time for Europe To Invest in Industry and Infrastrucure

December  26, 2018)

In an exclusive interview with Austria’s {Die Presse} news daily, Rwandan President Paul Kagame stated that “Europe has invested billions upon billions of dollars in Africa. (But) something must have gone wrong…. Part of it is that these billions had a return ticket. They flowed to Africa and then back to Europe again. This money left nothing on the ground in Africa.” The European money was invested in the wrong place, he said.  Instead it should go to investments “in industry, infrastructure, and educational institutions for Africa’s youth, whose number is growing fast. That is the only way to create a  demographic dividend.” It would be a better way of preventing migration of young Africans to Europe, which the Europeans were so much worried about. Europe could cooperate with China, Kagame hints: “China is active in Rwanda, but not in an inappropriate way. The new roads in Rwanda are largely built with European money. Sometimes there are Chinese subcontractors.”

 What Africans do not need, is Europeans trying to give them lessons on democracy, Kagame said. The European model of democracy is a failure, Europe is in a profound political crisis, as shown by the recent mass protests and other aspects, this model cannot be one for Africans to follow. Europe finally has to give up its attitudes of fake generosity, and begin accepting Africa as a real partner, he said.

Presidents Museveni of Uganda and Kagame of Rwanda

China Creating Tens of Thousands of Jobs for Ugandans in Infrastructure Projects

Ugandan President Yoweri Museveni revealed in an interview with {Xinhua} with its focus on infrastructure development, the country wanted to attract more invest-ment from China: “We are likely to advance the project of the Standard Gauge Railway (SGR)… in the government-to-government (talks).” Extending the Chinese-built SGR line from the Kenyan seaport of Mombasa, which is expected to reach the border areas with Rwanda, South Sudan, and the Democratic Republic of Congo, to Uganda would make sense as a catalyst of economic growth. To finance its infra-structure development agenda, Uganda looked at China because of the country’s favorable lending terms compared to some of the Western global financiers.

Other major infrastructure projects in Uganda will benefit from Chinese support as well: A few months ago, the Kampala-Entebbe Expressway, linking the capital Kampala to Entebbe Airport, the country’s gateway to the world, was completed. China financed the construction of the mega road  project, the first of its kind in the country. China is also financing the expansion of Uganda’s Entebbe International Airport. Official figures show that after completion of the first phase of expansion, the cargo center can handle up to 150,000 metric tons of goods, compared to the previous 69,000 metric tons.

In the northern part of Uganda along the River Nile, the world’s longest river, China is constructing the 600MW Karuma Hydropower Plant. While touring the facility in July, President Museveni said he was amazed by the progress noting that the plant will not only address Uganda’s inadequate power supply, but also that youths have become skilled through the construction process.

Farther upstream on the River Nile, in the central Ugandan district of Kayunga, construction of a Chinese-funded 183MW Isimba Hydro-power plant that is nearing completion according to the Chinese engineers on site, power generated by the plant is expected to come onto the national grid early next year.

The power development plan is crucial for the Uganda’s industrialization policy, which has designated over 22 industrial parks across the country where investors can set up base, taking advantage of the incentives that come with establishing their factories in the parks. In October, President Museveni launched the first phase of a $620 million Chinese industrial project in the eastern district of Tororo. The project has dubbed the Uganda-China Free Zone of International Industrial Cooperation, undertaken by the Dongsong Energy Group, will manufacture glass, steel, and organic-fertilizers, creating about 3,000 jobs at peak when completed in 2020.

President Museveni, in March of this year launched another Chinese-owned Mbale Industrial Park. The park owners, Tian Tang Group, said it will attract more than 30 investors with a total investment of about $600 million and an annual output value of $1.5 billion. The park will directly employ about 12,000 locals.

 The $220 million Kehong China-Uganda Agricultural Industrial Park, is another park that will play a critical role in transforming the economy. According to government figures, almost 80% of the country’s population derives its livelihood from agriculture.

 When fully operational, Kehong China-Uganda Agricultural Industrial Park is expected to produce about 600,000 tons of agro-products annually to meet the domestic and regional market demands.

 It will also create 25,000 jobs as well as making opportunities for training local people available, according to the managers of the park.

Africa Advancing With Kenya’s New Mega Infrastructure RR

Lawrence , , , , , , , , , , , , ,

Kenya`s New Mega Infrastructure, the Mombasa-Nairobi Railway

 

Below is my current course at Frederick Community College and the Community College of Baltimore County. I also teach a course, “Africa the Sleeping Giant” and will be teaching another course in the Fall, “The Legacy of 500 years of Slavery and Colonialism in Africa.”

“Eight Nations Vital to sub-Sahara Africa: Past & Present“

“Learn about the important histories of eight African nations that helped shape the sub-Sahara continent including; Ghana, Nigeria, Sudan, Ethiopia, Kenya, Democratic Republic of the Congo, Zimbabwe and South Africa, from slavery to the present. Students will learn how their unique history is reflected in today’s political-economic life of these nations.”

 

BRICS, China, and Ethiopia Promote Industrialization

Lawrence , , , , , , , , , , ,

BRICS ministers adopt new industrial action plan

The industry ministers from Brazil, Russia, India, China and South Africa (BRICS) adopted a new action plan to deepen industrial cooperation among the five nations, Trade and Industry Minister Rob Davies said in a statement on Sunday. Davies and his counterparts from the BRICS grouping attended a meeting in Hangzhou, China where industrial and manufacturing matters were discussed and which culminated in the adoption of a seven-point action plan. “The action plan states that the world economy is still in a period of profound adjustment after the international financial crisis,” Davies said.

 “Industrial sectors, the manufacturing sector and the service sectors related to it in particular, have become key factors in sustaining mid- and long-term economic development.” At the meeting, the ministers acknowledged that the new industrial revolution of digitisation among other things will change traditional production flows and business models that will give rise to new industrial forms.

The following seven points have been identified as key in the action plan:

       strengthen industrial capacity cooperation 

       strengthen the coordination and match-making in the field of industrial policies

       promote the cooperation in the development of new industrial infrastructure

       expand cooperation in technological development and innovation

       deepen cooperation in the field of small and medium enterprises (SMMEs)

       strengthen cooperation in standard area

       facilitate all-round cooperation with the United Nations Industrial Development Organization (UNIDO)

He emphasized that industrial development strategies and investment cooperation have to grapple with the potential threats in particular in the context of high unemployment.  Davies said the industrial development cooperation between the Brics countries can be used as a springboard to foster growth and development and create work opportunities. BRICS countries will focus on using their respective rich natural and human resources and broad domestic markets to broaden industrial capacity and policies, while working together in developing new industrial infrastructure and technology.

Chinese investment leads way as Ethiopia opens to outside

As Ethiopia, the most populous nation in East Africa, is spreading its economic relations across the globe, investment from the world’s most populous nation China is playing a prominent role. Ethiopia, with a population of some 100 million, is a country on the move with rail, air and road infrastructure projects and an ambitious industrialization plan.

Ethiopia keenly needs investment from industrial giants like China to give its burgeoning population, which is estimated to grow by 2 million annually, ample employment opportunities. According to the Ethiopian Investment Commission (EIC), there have been 279 Chinese companies with more than 571-million-U.S.-dollars worth of investment, creating more than 28,300 jobs in Ethiopia between January 2012 and January 2017.

Huajian Industrial Holding Company Limited, a Chinese company that has a long-term investment plan in Ethiopia, is operating two plants in the country. Yin Xinjun, Vice General Manager at Ethiopia Division of Huajian Industrial Holding Company Limited, says Huajian’s decision to have its first plant in Ethiopia stems from the country’s firm desire for industrialization. In fact, a personal call for more investment by late Ethiopian Prime Minister Meles Zenawi during an August 2011 visit to China is what motivated initially Huajian to invest in Ethiopia, says Yin. According to Yin, Huajian’s investment in its first African plant had overcome several challenges, including logistical ones. Huajian initially had to transport its goods through an overcrowded highway from the plant in landlocked Ethiopia to Djibouti port. The problem has been partially solved with the construction of the 85-km Addis Ababa-Adama Expressway funded partly by the Export-Import Bank of China (China EXIM bank) and built by China Communications Construction Company (CCCC). The 500-million-dollar expressway was inaugurated in May, 2014.

Huajian also had to face intermittent power and water outages. The Ethiopian government later solved this problem through a special water and power line for the Eastern Industry Zone where Huajian’s first plant is located. Overcoming these challenges, Huajian currently employs more than 4,000 Ethiopians with a plan to increase employment to 50,000 people by 2022. Having established a plant in the Dukem industrial zone, 37 km south of Addis Ababa, Huajian is currently building a massive 138-hectare international light industry city in Addis Ababa. With the completion of the light industry city, Huajian foresees increasing its export revenue from 30 million dollars in 2016 to 4 billion dollars by 2022

However Western critics warn Ethiopia of being trapped in a neo-colonial relationship and some Ethiopians wonder if the Ethiopia-China relationship comes at the expense of other countries. Gedion Jalata, Program Manager of Africa China Dialogue Platform at Oxfam International, says both views miss the mutual beneficial and sovereignty respecting aspect of the bilateral relations. Jalata points out that Ethiopia is one of the beneficiaries of the China-proposed Belt and Road Initiative.

While Ethiopia is attracting massive Chinese investment in infrastructure projects, the Ethiopian government has set its sight in particular on Chinese involvement in industry parks. Ahmed Shide, Ethiopia’s Minister of Transport, says the country plans to utilize Chinese built infrastructure to boost its industrial exports. Shide is especially keen on the 4.2-billion-dollar Chinese built and financed 756 km Ethiopia-Djibouti electrified rail line to boost its industrial exports.