Made in Ethiopia, But Stuck in a Dream

It may seem obvious but there is nothing that makes consumers happier than buying a brand product. From cellphones to clothes to automobiles, almost everyone is obsessed with brands. That might be because the brand speaks to the consumer in a way no other brand does. Thanks to the brand obsession they created, international companies have benefited from such an opportunity.

The sportswear company, Nike, known for its footwear and apparel, made USD 44.5 billion in revenue last year. The popular cellphone producer, Samsung, reported a USD 76 billion in revenue during the same period. Both companies’ earnings are not far from the annual Gross Domestic Product of Ethiopia, which reached an estimated USD 110 billion last year. The two companies, whose products are household names in Ethiopia, are a great example to show the benefits of building-up brands. Few in Ethiopia have succeeded to create such a brand visibility.

Branding is almost alien to Ethiopian businesspersons due to a tendency to focus on short-term profit gains, rather than making long-term investments for a better tomorrow. It does not take a month for the name of a local brand to disappear from the product it is printed on. There are even products with no description of where they are produced. Packaging, although it is important to create a brand obsession, has been almost forgotten.

In fact, the packages of some products even discourage consumers from buying the product, no matter how good it is. But this does not mean there were no attempts made to buck the trend. The last two decades saw the design of several strategies and the drafting of different legal frameworks to boost valued-added products made in Ethiopia.

But little has been achieved thus far.

Ethiopia is still a country that imports leather products from abroad despite hosting the largest livestock population in Africa. It is also a country that imports cotton despite having a favorable weather condition, with more than half of the arable land uncultivated. It appears the administration of Abiy Ahmed (PhD) wants to make a shift by capitalizing on the opportunities created by the growing sentiment to products made in Ethiopia.

Last week, the Deputy Mayor of Addis Ababa, Jantirar Abay, launched Buy Ethiopian Exhibition and Bazaar at Mechare Meda. The move targeted to promote locally made products to the diaspora community, which the government hopes will do the same in the international market by creating linkages with local producers and enable exhibitors from the market opportunities created by the Diaspora Homecoming Initiative.

Even though the Bazaar might be welcomed by exhibitors willing to benefit from the new initiative, producers say it contributes little to the myriads of challenges that local companies face to boost productivity and turn the growing acceptance of ‘Made in Ethiopia’ products into opportunity. They have a point.

“Utilizing our capacity to the fullest is unthinkable due to the lack of inputs, which we were not able to get because of critical shortage of foreign currency in the country,” said Elias Tesfaye, General Manager, founder and owner of Eltex, a company that has been involved in manufacturing apparels.

With 1400 employees, his company owns two plants in Kality and Bishoftu, with a registered capital of over 70 million birr. Having built one of its plants recently, the company hoped it would increase its productivity, even though little has changed in that regard. The plant is utilizing only half of its production capacity.

“We are capable to export and tap into the international market but lack of inputs has prevented us from doing so,” Elias added.

It is undeniable that the acceptance of ‘Made in Ethiopia’ products grew locally and internationally. Industry products shipped to the global market more than doubled in the last decade. In particular, the exports of textile products grew from less than USD 50 million to over USD 170 million in the last five years. The export of processed oilseed has also more than doubled in a matter of a year. Even if these might be considered as a bigger stride forwards, it is still way below the potential of the country, compared to neighboring economies like Kenya.

The leather sector, one of the promising segments of the economy, failed to capitalize on locally made products. The continuous shortage of inputs with no end in sight meant less productivity in the sector, affecting the overall productivity of producers, leading to the decline in exports of leather and leather products from USD 132.4 million to USD 72 million in the last three years.?

“We were not able to satisfy the local demand, let alone boost shipments to the global market, despite the growing appetite to Ethiopian-made items,” said Mekdes Zerfe, corporate service manager of Peacock footwear manufacturing Co. Established two decades ago, her company can produce 1,500 shoes per day, a capacity that has not been upgraded for over a decade due to lack of trust on the supply chain.

“We are hardly getting input to fully utilize our existing capacity. Imagine the difficulty we face had we expanded,” added Mekdes.

Industry insiders also share her view.

Amanuel Mengistu, who closely follows the manufacturing sector, blames the system. “The existing system encourages players at the end of the supply chain, manufacturers and retailers. It gives little attention to the backward integration, which is critical and was supposed to be handled first,” said Amanuel.

Considering the years of pressure applied by experts who believe the backward chain should be given attention; he has raised a valid point. Such a gap has already created too many textile manufacturers that import cotton and leather producers that spend a lot of forex to bring in soles from abroad.

“It is critical to incentivize those willing to involve in the production and supply of inputs. Otherwise investors would only go where there is a better profit margin, producing and selling the end product,” Amanuel concluded.