Sunday, June 16, 2024

Trade policy deemed crucial in up scaling local, international commerce


Crafting a trade policy has been underlined as a crucial move to augment Ethiopia’s trade and export.
During the discussion that Addis Ababa Chamber of Commerce and Sectoral Association (AACCSA) held with regards to the export sector, Shibeshi Bettemariam, Acting Secretary General of AACCSA, on his inception presentation expressed his hope that the new incoming policy will bring change for trade in general and for export in particular.
Shibeshi said that lack of similar policy was one of the major reasons for the stagnation of Ethiopia’s export in terms of earning and diversification. Challenges like low production, productivity and low value addition, limited quality and standards of export goods, and lack of comprehensive trade policy were stated as the Achilles’ heel of the export sector.
For the 8 year period of 2010/11-2018/19, the import and export of Ethiopia’s goods and services had grown by 4.3 percent and 10.46 percent respectively.
He said that the trade balance has consistently been negative, with average deficit per year standing at USD 10.6 billion. Of these, the peak was USD 13.8 billion in 2015/16, while imports have been more than double the exports in almost all years.
Figures that were included on the study conducted by the chamber indicated that in the last ten years the export trade contributed on average only 5.5 percent of the GDP, which is razor thin when compared to other countries.
“At the same time the import trade contribution for the GDP is 23.3 percent on average which shows the largest gap between export and import,” the Acting Sec. Gen remarked.
He added that compared to regional economies such as Tanzania, Uganda, Rwanda and Kenya, Ethiopia’s export performance as a percentage of GDP was the lowest, implying our economy has been classified as relatively closed.
“The country is joining continental and international free trade areas but because of productivity and efficiency at the current status we can’t compete with other countries around the region,” he said, adding, “the gap on the private sector must be identified and solved.”
He emphasized that the private sector is the pride of the country and the flag carrier in the global market competition rather than the government, thus it is wise to keenly focus on export development through the private sector.
“To attain the required growth, a trade policy is crucial,” Shibeshi said.
According to the expert, who is an economist by profession and an investor, trade policies are a necessity, and even seat atop of the international relations agenda for countries that even have trade policy negotiators that specialize on market intelligence and statistics, in addition to lawyers in diplomatic missions. He emphasizes that as a country, we ought to emulate the same.
Ethiopia export’s puzzling challenge is one that is seen to be solved through structural arrangement and policy.
The agricultural productivity is crucial to expand the expected growth since the ecosystem of the country is a good advantage followed by agricultural processing.
Trade logistics improvements in the areas of technology like the telecom infrastructure are crucial to conduct frequent and speedy communication. Allocating efficiently the earned foreign currency through administrative measure has also been stated as a supportive measure that will expand export.
The trade policy that is currently under drafting stage is the main pillar for the export sector.
The new policy will center different government directions and policy contents that are related with trade and export.
“Currently trade and trade related issues are included under industrialization policy, different five year development plans, and other policies that shall be governed independently and proactively through structural manner in the new trade policy,” he added.
Shibeshi reminded that there were efforts to expand the export commodity diversification, though they could not materialize as per the expectation because of different reasons. He gave an example of the failure in the pharmaceutical sector which faced the market challenge and access to finance. However in the past over a decade up to three sectors like horticulture products, and textile and garment have diversified the composition of Ethiopian export.
Export facilitation services are stated as crucial and are to be largely included on the trade policy similar to other countries. Export trade results have been in flux since 2011 to which the trajectory showed some improvements in 2020 and in the last budget year.
The government through Ministry of Trade and Regional Integration is responding to disappointing results in both local and international commerce by drafting its first trade policy.
The policy will evaluate everything from scratch and indicate the end goal of the commercial sector and will show the actors and contributors in commerce.
Crafting the policy started in 2019 and has taken much time to which experts said that it has faced delays since the policy work ought to include international experts’ view thus having wider validations.
Besides the export trade, in the local market hording, smuggling, overstating price increases, and uncontrollable and lack of adequate supply in terms of goods and services have been major problems over the past several years. The Ministry has attempted to come up with solutions by imposing laws and controlling mechanisms to smash illegality and or supply products on its own but things have not improved.

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