Wednesday, January 18, 2023
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BusinessExport Disruption in Tigray costs Ethiopia USD 20 mln per month

Export Disruption in Tigray costs Ethiopia USD 20 mln per month

Ethiopia loses USD 20 million (800 million birr) per month in exports due to the closure of factories and mining plants in Tigray, following the fighting between the Federal government and the forces of Tigray People’s Liberation Front, according to the Ministry of Trade & Industry.

Factories situated across the region have been closed since the offensive was launched in what the government calls a law enforcement operation against the TPLF.  

Sources indicated that there are also industries that were looted and totally damaged due to the fighting in the region, although an assessment is being conducted to find out the extent of the damage.

While almost all factories, mining plants and small industries are still not operational and have suspended exporting items since November 2020, it is costing the country an aggregate of at least USD 60 million (equivalent to 2.4 billion Birr).

“This is just what we have lost because companies in the region have stopped exporting items. This is excluding the direct damage on factories, which is likely to be higher than what the country has lost due to the export disruption in Tigray,” said Dugsa Dunfa, an Advisor to the State Minister for Trade & Industry. He added: “A team comprised of six members was sent to the region to assess the extent of the damage. Their finding will be disclosed in the weeks ahead.”

The federal government has also decided to give special privileges to industries and other businesses located in Tigray. This includes reducing demurrage cost, offering loan with a low interest rate and allocating foreign currency.

The overhauling of factories in the region will be done into two phases, according to Dugsa.

“In the first phase, an effort will be exerted to help companies that experienced a little damage and can resume operations within a short period of time. During the second phase, measures will be taken to assist companies that are partially or totally damaged because of the war in the region,” Dugsa said.

Textile factories are amongst those that have been forced to cease operations following the war in the region.

SCM Knit Tex Plc, an Indian company based in Tigray with over 1,300 employees, recently expressed its frustration over the fighting in the region, although it has not been damaged because it was protected by federal armed forces based on the last information received by the company.

Last month, the renowned Bangladesh knitwear giant, the DBL Group, also disclosed to Just-Style, an International digital media focusing on fashion, that it has evacuated 103 of its Bangladeshi workers after being trapped in Tigray for 10 days. It has also been closed since November 4, 2020.

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