Page 83 - Azerbaijan State University of Economics

Abrehet Mehari: Factors Affect The Productivity of Large And Medium -Scale
Manufacturing Industry In Ethiopia

Value-added:

The value added by the large and medium scale manufacturing industries is
sustainable increment throughout the given year. Not only the total value-added but
also the value-added per worker is increasing continuously. The value added by the
large and medium scale manufacturing industries was worth about 1.6 billion Birrs
in 2001. In the same year, the value-added per person was 17,507 Birr. In the next
decade, these figures (value-added and value-added per worker) have almost
doubled to 3.7 billion Birr and 30,996 Birr in 2006

After 2006, the value-added and value-added per worker has tremendously increased
and reached 80.3 billion Birr and 273,930 Birr in 2017, respectively. This seems
promising performance, though the share of the manufacturing industry to the entire
economy is still very low. This research also indicated that the largest value addition
was come from the agro-processing industries (food & beverage subsectors), non-
metallic mineral industries, and textile and wearing apparel, which together
accounted for close to 60% share between 2001-2017. However, the relative share of
the value added by the food and beverage industries declined after 2006.

Exports performance:
Regardless of the continuous rise in manufacturing value-added and employment,
there has been no similar progress in manufactured exports. As reported from the
survey, the ratio of export to a gross value of production is highly volatile. In the
year 2001-2017, the highest export to a value of production (9.4%) was recorded in
2003 while the lowest ratio (2.8%) was in 2010. The composition of the export
reported in the survey, almost all the manufactured exports were low-value products,
which were generated in the leather and leather product, agro-processing, and
textiles and apparel industries. This could be due to weak international
competitiveness that results from low productivity, low-quality products, and a lack
of support for market integration.

Firm-level major operational problems

Based on the 2017 CSA annual survey on Large and Medium Scale Manufacturing
Industries in Ethiopia, the first major operational problem faced by the LMSMIs is all
manufacturing industries reported a shortage of supply of raw materials as the first
major operational problem faced during each survey year due to the weak linkage with
the agricultural sectors and shortage of foreign currency. Next, the industries reported
the absence of demand for products (except for Leather and leather products) as the
second major operational problem they faced.

83