Ethiopia: How Digital Ethiopia 2025 National Strategy Reinforces Economic Growth

Digital Ethiopia 2025 national strategy set to transform the country’s national economy through four major pathway sectors including agriculture, manufacturing, IT-enabled services and the tourism.

The digitization of these sectors is expected to boost the economic transformation of the country in the coming five years to drive its status to the middle-income countries of the world.

Recently, African Innovation Week and Technology and Innovation Institute held a video conference about Digital Ethiopia 2025. How the ambitious strategy would be realized to effectively address the existing challenges in the country is, however, the major issue the panelists tried to address in their discussions.

Myriam Said, Digital Transformation advisor at the Office of the Prime Minister said that Ethiopia’s industrialization endeavor started about 15 years ago following its pursuance of industrialization policies. At the time, the focused areas were sectors such as labour, textile, food processing, meat processing, leverage, cement, steel, horticulture and others.

On the occasion, Myriam briefed about technology advancement in the manufacturing sector including digital communication production and logistics.

Historically, as to her, the core benefit of the manufacturing sector was generation of foreign exchange and job creation. Being a labor intensive sector, it created golden opportunity for skilled labour forces particularly women and the youth.

Manufacturing has been a fast growing sector. This is particularly true for the light manufacturing export sector. Global industries’ leaders are increasingly looking for opportunities in Ethiopia. “That’s why Ethiopia has become an important hub, because we have competitive labour and electricity cost that is affordable,” she said.

“We have also trade privileges such as the African Growth and Opportunity Act (AGOA) and state-of-the-art Industrial parks that made Ethiopia attractive to such investment. We need to know how we can make the sector successful in the future,” she stated.

The automation of the global manufacturing sector has resulted in the loss of job opportunities. What is being seen is that the fourth industrial revolution, the automation of the apparel manufacturing, is technically too difficult and economically infeasible. On the other hand, some argue that fully automated apparel factory are possible and potentially viable but it may take time.

“International and local industry leaders told us that in the next 10 years robots will engage in apparel manufacturing but it was countered by many that the possibility for such investment to happen is low.”

Myriam said lower income countries’ workers may become less competitive. Having such technology involves some level of factory automation even if it is hard to reach full automation. Yet, competitive labor is going to be essential.

Fast connectivity between production facility and global center of innovations is going to be fundamental. “This tells us there is strong link between internet connectivity and the future oriented apparel manufacturing. So we look at where Ethiopia can succeed based on that,” she noted.

The investors have been investing in Ethiopia’s industrial parks adopt advanced technologies are which provides an opportunity to young electrical engineers to quickly catch-up learning this technology to repair machines. Ethiopia can succeed by adapting digitally enable solutions recognizing that to remain competitive, it needs fast and reliable connectivity in industrial parks.

The internet connectivity is important in industrial parks. Logistic management approach is also needed to boost export. The ability to deliver product on the given time and with an affordable cost from the point of origin to the final destination is essential for competitiveness. Unfortunately, Ethiopia has difficulties in catching up on trade logistics system efficiencies compared to countries in other part of the world.

As to her, Ethiopia has been introducing a large number of initiatives in the transport sector to improve infrastructure. It has been heavily investing in improving transport infrastructure such as the railroad linking Addis Ababa to Djibouti. Efforts are under way to expand the dry port of Mojo with state-of-the-art technology and other custom related improvements.

It is a must to continue to pay greater attention to trade logistics particularly learning the interface between import, digitalization and trade logistics. And successful manufactured goods export delivery involves diverse products as a priority in two main areas.

One is the manufacturing goods that are more and more digitalized. Thus, ecommerce is a critical export channel as the ecommerce policies are in progress. Second is improving efficiency through easing customs procedure that paves way to improve Ethiopia’s export performance.

Munir Duri, Founder and CEO of Kifya Financial Technology, on his part said that Ethiopia’s agriculture is comprised of two sub sectors; smallholder farmers and pastoralists. Currently, the Ethiopian agriculture is conducted by combining farming and animals’ breeding in a traditional way.

Smallholder farmers and pastoralists have multiple challenges and demands such as lack of market access with fair value to their produce and livestock; challenges in the agricultural inputs supply like seeds, fertilizers and others.

They have also challenges in terms of mechanization as they are still using traditional methods of farming. Besides, they are stuck in the traditional logistics delivery. “However, most of the challenges can be addressed through modernized and digitalized technology and this contributes greatly to overcome the existing problems and demands.

In many countries, digital technology is a major part that can give input credit for smallholder farmers to access better seeds and chemicals, he further added. “As a result, they can increase productivity and profitability. Many markets leverage digital technology to provide mechanization whether it is the tractors or harvest combiners at fraction of cost, because it allows the fraction use of high capital goods such as tractor the smallholder farmers can rent for an hour or combine harvester for a couple of hours to harvest his or her produce.”

Munir stated that digital enables smallholder farmers to have access to market. So, farmers are able to supply their products directly to retail through the use of ecommerce platforms leveraging logistic. In Ethiopia, in the past years, substantial amount of directives and proclamations were issued to show the way to use digital tools such as the digital strategy and ecommerce proclamation. National Bank issued two major supplementary directives and immovable asset directive. Now livestock and farmland can be collateralized for pastoralist to get access to financial services.

Bahiru Zeyenu, CEO, AFRICOM Technologies Plc. explained that they give IT services at different levels for overseas and local customers.

Through strategic partnership, AFRICOM is able to concentrate on bringing effective solutions to the market. Over the world, there is market for digital labor. Therefore, Ethiopia can get this opportunity.

He added that there are some challenges but the government, as a strategy, is now doing a lot to address the existing problems such as infrastructure. The government is also trying to establish substations to have reliable electricity service and facilitate centers like offices as an incentive to encourage companies in the digital world.

 

source: extensia



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