IMF praises efforts to spur industrialization in Ethiopia

IMF praises efforts to spur industrialization in Ethiopia

VIENNA, 31 January 2018 – The International Monetary Fund (IMF) recently concluded its Article IV consultation with the Federal Democratic Republic of Ethiopia, and its summary notes that “efforts to spur industrialization are showing positive results.”

The Article IV summary further states, “The strategic orientation of industrialization policy – a focus on labour-intensive light manufacturing such as in leather, apparel, textiles, agro-processing and electricity – capitalizes on Ethiopia’s competitive advantages. This is buttressed by the promotion of industrial parks, which circumvent business climate impediments through simplified procedures, tax advantages, and easy access to financial services.”

The IMF positive assessment comes in the context of the continuing Programme for Country Partnership (PCP) for Ethiopia. The PCP Ethiopia was announced by the United Nations Industrial Development Organization (UNIDO) in June 2014. It brings together development partners, UN agencies, financial institutions and the business sector ─ under the leadership of the national government ─ to help achieve the goals set out in the country’s industrial development strategy and Growth and Transformation Plan II (2015-2020).

The PCP focuses on three light manufacturing sectors: agro-food processing; textiles and apparel; and leather and leather products. These sectors were chosen due to their prospects for job creation, strong linkages to the agricultural sector, high export potential and capacities to attract private sector investment. They will act as a springboard for the transformation of Ethiopia's economy from one based on agriculture to one driven primarily by light industries.

As part of the PCP Ethiopia, three integrated agro-industrial parks are under development in the Amhara, Tigray and Southern Nations, Nationalities and People’s region respectively and the fourth one in the Oromia region will start soon.    

In addition, UNIDO is supporting the government of Ethiopia in establishing an environmentally friendly leather tanning district with a state-of-the-art common wastewater treatment plant to reduce the environmental impact of the leather processing industry.

Under Article IV, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the IMF Managing Director summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities.

Further reading

UNIDO gives industrial development in Ethiopia a helping hand

Ethiopia inaugurates integrated agro-industrial park as part of the Programme for Country Partnership