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BusinessEthiopia misses export target yet again

Ethiopia misses export target yet again

Withthe country struggling to contend with the extended security crisis, more reports are emerging revealing an alarming trendin the performance of Ethiopia’sexport sectorasthe Ministry of Trade and Industry (MoTI) continues tograpple with illicittrade activities.

In a six month report presented to the House of Peoples’ Representatives (HPR) and the concerned Standing Committees, the Ministry of Trade and Industry (MoTI), Industrial Parks Corporation and the Ethiopia Road Authority (ERA) have reported a shockingperformance downturnsover the past six month in their respective sectors and subsectors.

Unfortunately, in all the reports presented to House this week, the government’s key institutions were observed to have struggled to achieve their targets, whose combined results are expected to drive the nation’s economic growth rate to at least 8.2 percent (AfDB)or IMF’s projection of 8.5 percentat the end of the year.

Among them was the MoTIthat presented a more gloomy report on Thursday’s regular session of the House.

Presenting the report, the Minister of Trade and Industry, FetleworkGebregziabher, disclosed that Ethiopia’s export performance wasUSD 135 million less than what it had been in the previous year,the same report period. The minister raisedspecific itemssuch as Khat and Tantalum that fetchedbetter export revenue, at leasthigher thanwhat was initiallyexpected.

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According to Fetlework, export targets for the past six months which was USD 1.96 billion was missed by miles, realizing only 62 percent (USD 1.21 billion) of the targets.

She told the House that the continued failure to deter illegal trade activities and/or black market operations,inability to supply agricultural inputs to global markets with the required volume and quality, and the sluggish global market are the major contributing factors for the poor export performance.

In addition to that, according to the minister, the security crisis at home had also its own impact against the overall export performance affecting the buyer’s interest and preventing the free movements of goods and service in various parts of the country.

She added that during the past six months, manufacturers have encountered shortages of raw material mainly skin and hide, cotton, chemicals and other important inputs that eventuallylead them to be less productive. “This has also directly contributed to the export performance which has already been diminishing since the previous years,” she told MPs.

The minister also highlighted several cases that made the ministry less effective in enforcing the law and facilitatethe way for legitimate and free trade.

According to the minister, various legal actions have been taken by the ministry against hundreds of importers and exporters engaged in illegal trade practices that have impacted the local and export markets.

For instance, Fetlework told the House that around 150 importers and manufacturers have been issued a last warning as well as face license revocation. “Of the 150, the licenses of 21 exporters have been striped,” she said.

According to Fetlework, among 128businesses identified for violationof trade practices, 98 have received written warnings while oral warnings have also been issued to 28 of them. However, the minister did not give details to the specific violation of trade practices that the importers and exporters allegedly committed.

In the same report, she also indicated an administrative action (suspension) onsome manufacturers engaged in steel production [corrugated Iron sheet] due to the low quality of their products while one manufacturer has received a warning.Similarly, three importers have had their licenses revoked.Furthermore, one unnamed soup importer has been barred from importing the product with its product recalled from the market.

Besides the MoTI, such account of low performanceswas also seen in other sectors, mainly from Industrial Parks Corporation and Ethiopia Road Authority (ERA).Both entities,in their six month performance report, reflected a gloomy half year report period.

The two government’s institutions separately presented their reports to their respective standing committees of the HPR.

The Industrial Parks Corporation’s CEO, LeliseLeme and her colleagues presented the progress of the implementation of a finding of a performance audit conducted on the three years plan of Industry Parks Development and Administration (2015–2018)to the Government ExpenseAdministration and Supervisions standing Committee in the presence of the Auditor General.

During the hearing, the standing committee members, however,raised the poor performance of the export sector in the past three years particularly from the exports of products produced inthemajor industrial parks.

According to the evaluations of the standing committee, in 2015/16, exports of products originating at the Bole Lemi Industrial facility,was about USD 16.9 million. The original plan was to export productsworth USD 130 million. Similarly, in the fiscal year of 2016/17, it was expected to earn USD 40 million and USD 50 million from exports of products manufactured at Bole Lemi and Hawassa Industrial parks, respectively.However, the actual performance was restricted at USD 23.8 million and USD 1.4 million only.

While responding to the questions on the performance, Lelisa blamed the existing instability and security crisis for thelow performances during the stated period. However, she defended her Corporation saying that its mandate is to facilitate investment opportunities for investorsrather than exporting products.

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