Ethiopian traders find importing faster and more profitable than manufacturing at home, leaving the country dependent on imported goods from fuel to packaging labels, Ezega contributor Seble Teweldebirhan reported in August 2019.
The container terminal at the Port of Djibouti, through which most of Ethiopia's imports pass, photographed on December 1, 2015. (Skilla1st / Wikimedia Commons, CC BY-SA 4.0) [file photo]
Even local manufacturers import many of their inputs, which has pushed demand for foreign currency far above supply, the report said. Shortages had made medicines and spare parts scarce or expensive and forced some factories to cut operations.
Ezega cited National Bank of Ethiopia figures putting foreign-currency reserves at about $3.4 billion, enough for roughly three months of imports, and said many importers were waiting in line after opening letters of credit.
Economists see two ways to narrow the trade deficit, the report said: exporting more value-added manufactured goods and replacing imports with competitive local products. Some analysts estimate that landlocked Ethiopia spends around 10 percent of its gross export revenue on sea access, Ezega reported.
Hanna, a 35-year-old importer whose name Ezega changed, said she travels to Dubai, Bangkok and Beijing to buy women's clothing, cosmetics and mobile phone accessories. “Shops in Ethiopia take things off my hand the same day I cleared the goods from customs,” she said, adding that she had no idea how the goods could be made locally.
A shareholder in an Addis Ababa import-export company said the foreign-currency shortage had pushed importers into exporting agricultural products just to earn dollars. The report said some such exporters sold coffee and pulses cheaply because they recovered their losses on imports.
“Why would anyone want to deal with the bureaucracy? If your investment is limited, the incentives for local production are too low. Land and capital are unavailable,” one importer said. He added that customers were willing to pay for imports and assumed Ethiopian-made goods were of low quality.
“The solution is to transform our collective mindset,” Dagem Alemayehu, an Addis Ababa economist and business consultant, told Ezega. “We must redefine success, and value entrepreneurship, creativity, and discovery.”
Ethiopia earned $2.67 billion from merchandise exports in the 2018/19 fiscal year, with agricultural products making up most of the total, New Business Ethiopia reported.