According to World Bank Group (WBG), the private sector is expected to play a key role in Ethiopia’s journey to become a middle income country by 2025.
As nation striding to actualize middle income society, sound activities have been undertaken in preparing the private sector development strategy to improve the productivity and modernization of the agricultural sector. And the SMEs should be granted with lease financing and other schemes which could transform nation’s vision.
All the way the strategy has identified the development of micro, small and medium enterprises (MSMEs) as a key industrial policy direction for creating employment.
To secure the aforementioned goal, Addis Ababa City Administr ation Small and Middle Manu facturing Industry Cluster Develop ment Cooperation put in place working approaches that could address the growing demand for manufacturing site for SMEs.
The Cooperation CEO Yabibal Addis told The Ethiopian Herald that during the first Growth and Transformation Plan (GTP-I), providing plot of land for SMEs was taken as one of the incentives to support the sector. “But, as of GTP II, the Corporation has decided to construct industrial parks and handover them to SMEs.
The effort could help addressing the scarcity of land for SMEs and meeting the growing industry demand,” he noted.
According to him, preparations to construct industrial park at Akaki Subcity on 93.9 hectare of land have been finalized.
He call on respective SMEs must be able to respond quickly and efficiently to both domestic and international market opportunities to take advantage of trade and investment opportunities and reap the benefits. “This means they need to be competitive and productive. Effective business support systems are needed to enhance competiti veness and productivity of SMEs. Development of an effective business support system is also a key condition for the success of both trade and investment capacity building,” he said.
It requires business support agencies (including financial instit utions), which are customer-oriented and which have a demonstrated capability of penetrating the SME sector demand across the board.
The effort is believed to avail the sector in a city where land access is serious. Moreover, the corporation will also facilitate how these SMEs could access finance for start up.
Development Bank of Ethiopia and other financial institutions are providing capital goods in order to improve the quality of production as well as move forward the nation’s efforts.
A resident of Addis Ababa who is running Abay Textile and Clothing PLC Habtamu Alebachew owned a shade facility that is found around Diaspora Square Meganagna.
“We appreciate the move of the public efforts to offer the facility. It would solve several problems we are struggling with. Moreover, the lease finance offered to SMEs let them own machineries that assist production with quality and quantity. Finance is a good indicator of the health of the company overall, in my view lease financing is very important. Accessing to business finance plays very important role for any business startup and growth,” he said.
The cooperation is planning to offer selling facilities to the SMEs in the near future. Ethiopia Construction Design and Supervision Corporation CEO Dr. Engineer Negede Abate for his part said each facility in the cluster will be designed as part of easing the burden of manufacturing and other services.
According him, the construction is first of its kind to be designed by domestic firm and it could lead to actualize nation’s goals to transform the agriculture- led economy to industry one. It was learnt that being inhabited in around 125 buildings of the cooperation, about 3,113 SMEs are engaged in manufacturing businesses.
As Ethiopia is not making significant progress in pulling labor out of agriculture into more productive and industrial jobs with three-quarters of all workers still employed in agriculture, efforts in supporting the sector is game changer to meet the set goal.
For a country graduating through the early stages of economic development, growth in the industrial sector is essential for sustained long-term growth and poverty reduction. The structural economic transfor mation that involves the reallocation of workers from the poorly productive agriculture to more productive economic activities in manufacturing is an important step towards the creation of better-paying jobs.
BY MENGISTEAB TESHOME