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"Increased
supply of products and export diversification
contributed to high growth rate in the trade and
industry sector" |
| (Part II) - Ato Girma Birru, Minister of Trade and Industry Yesterday we presented the first part of the interview the Minister of Trade and Industry Girma Birru held with the Ethiopian Radio and Television Enterprise on the role of the trade and industry sector in the economic growth the country has registered for the past three successive years. What follows is the second part of the interview. Q: How could you describe the measures the government has taken to back the private sector? A: The government has taken a number of measures to support the private sector. The first one is designing a clear and right policies and strategies. The second one it has been tried to make contacts with the investors and work jointly with them. This includes planning to address problems of investors by holding discussions. The third one is the government has put a regular follow up system in place in order to enhance their operations. In this regard, every month a meeting summoned by the Prime Minister would be held. The meeting has been held for the past two and half years. In the meetings the investors raise issues regarding hindrances they faced in their operations so that corrective measures would be taken. The fourth one is preparing detailed packages of assistance for each of the investors. Q: The government is stating that it is extending the necessary support for the private sector as well as striving to curtail their major impediments. Could you tell us the activities underway to alleviate problems related to finance and to alleviate problems related to finance and tax system? A: the most frequent complaint coming from investors either to launch a new project or while in operation is bank loan. So there are activities carried out to facilitate this. For instance, the government has facilitated conditions particularly for those engaged in the manufacturing and export trade to become beneficiaries of long-term loan from the development bank. They are allowed to pay their loans three years after they began operations. The long-term loan could be extended from 10-15 years depending on the nature of the project. The interest rate is not more than 7.5 per cent and they need no collateral other than their project. This is in order to launch new projects. Apart from this, especially those engaged in export trade need finance for-day-to-day business undertakings. Accordingly, export credit guarantee scheme is established under the Ethiopian national Bank which entitles them to get loan proportional to the volume of export they sent abroad one year prior to making the request. The bank also provides 80 per cent guarantee for them. Private banks are also offering similar service. They are rendering the necessary assistance for all projects. In addition to financial assistance investors need other incentives. For instance, they get incentives on tax and duties. In this regard, a system has been put in place which relieves all the investors from paying profit taxes from two to seven years. The range from two-seven years is needed since it depends on the nature, place where the projects are launched and other factors. They are also allowed to extend the loss for the coming years. They are also allowed to import goods and machineries from abroad free of tax. Even conditions are facilitated for them to extend their losses if they couldn’t get project. they also import various goods free of tax. Even they have entitled a right to import spare parts worth upto 15 per cent. Q: What does the service delivery in the transit and transport sectors which facilities the importation of goods for the investors looks like? A: Various conditions have been put in place to facilitate conditions when they launch as well as expand their projects. For instance, when they import inputs, their money won’t be held in the form of tax. They would either import for free with voucher or clear when they export. Hence if they want their finance not to be held, they should place the imported goods in warehouses. Apart from this, they do also enjoy incentives in the transport and transit areas. The government realizes that specially those investors engaged in exporting items by importing various inputs and processing them face serious challenges. Hence conditions have been facilitated by reaching agreement with the Ethiopian Shipping Lines Corporation so that the investors could import limited volume of inputs at lower price. In addition to this, governmental transport organizations provide services to the investitures at lower price. On top of this, attempts were made to solve their problems on getting container from abroad and exporting goods using it thorough dialogue with pertinent institutions. Q: Investors need assistance as well as training on new technologies. Besides, producing various goods they need locally is helpful for them. In relation to this, what are the measures taken by the government in order to back those investors who purchase government enterprises? A: Conditions are facilitated to offer training for free for those investors engaged in the highly competitive sectors such as textile, leather and leather products. Investors interested to use machineries in these sectors could get the service. Apart from these, they need technological assistance. For example those investors undertaking floriculture development need spare parts for the goods they have imported from overseas. In this case a metal workshop is established under the Ministry of Trade and Industry. Finally, there is an assistance provided for investors with regard to privatization. When governmental enterprises are sold to investors, they are required to maintain their employed and back the country’s development endeavours. Therefore, the earlier initial price has been improved. Besides, they will be only requested to pay 35% of the total amount. They could pay the remaining 65% in a period of five years. Q: What is the government doing to address problems small scale businessmen are facing in the area of market, finance and land? A: Given the highest contribution the sector gives to the country, the government would provide a strong support to this sector. As petty and small-scale business enterprises are functioning in state’s packages are already prepared to support them. So the government would assist these enterprises through providing training and loan. Efforts will also be exerted to maintain their sustainability. Q: In Addis Ababa, Dire Dawa and other four states small scale enterprises are flourishing. Would you please tell us the number of jobs the sector has created? A: Over the past three years there was a difference in the level of implementation of this programme among towns. However, the Ministry of Trade and Industry was working hand in hand with each town. Of the activities undertaken in the sector much was accomplished in 2004/2005. In general, about 325,740 individuals have been engaged in the sector in Addis Ababa, Dire Dawa, Amhara, SNNPS and Oromia. We can say that of the total new jobs created, about 49.5 is in Addis Ababa. Q: What were the challenges encountered in the area of foreign trade? A: The problems we faced in the export trade differ from those in the import trade? I would explain them in order of importance. The problems we face in the export trade are likely to be experienced by other developing countries. Producing sufficient and quality export commodities is the major challenge. Though there are significant improvements, the challenge will remain in the future as well. We need to develop new and improved practices in this area. The challenge is creating a market system which enhances the competitiveness of export commodities, enabling producers generate a better income and assisting them to receive the payment on time so that they could use it raise production. This challenge was tackled through the system put in place at the level of private investors and government to strengthen export trade. We will address these challenges when we devise appropriate market system for agricultural commodities to be used as raw materials in local factories and those exported unprocessed. By the time the project devised by the ministry of Agriculture and Rural Development is finalized, it would curb the shortage of supply, facilitate conditions to maximize competitiveness and reduce the extra cost of production. The other challenge is regarding the capacity to produce export commodities. In running a factory, there are problems particularly in the area of textile and leather products intended for export. The problems include limitations in managerial skill and lack of initiative on the part of the workers to win the global competition. These problems were encountered and solved by other countries which tried to raise the volume of export. As I said earlier since a good result has been achieved through addressing the challenges gradually, I believe that we can pass these challenges through training and creating appropriate market system at various levels. Click here to get the Last part (Ethiopian Herald) |
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