John Snow, 43, is the General Manager of J&S Metals, the only company in Ethiopia that produces steel roofing nails. J&S Metals exported steel nails to Ethiopia from China for ten years before it established a factory on the outskirts of Addis Ababa five years ago. The company, which currently employees 130 people, produces roof nails. Snow sat down with EBR’s Ashenafi Endale to reflect on the challenges manufacturers are facing particularly in relation with the labour force.
EBR: What do you think is the major attracting factor for foreign investors in Ethiopia: cheap labour or market potential?
Snow: I think the primary attracting factor is the availability of a huge and untapped market. My company invested in Ethiopia because we believe there is a huge market potential. We can improve the lives of many people, especially the poor, by manufacturing and selling products at a reasonable price, and at the same time, improve their living standard.
Did you find the investment and business environment as expected after you came to Ethiopia?
I think we got what we expected. But it doesn’t mean we are not facing challenges. For instance, we requested land almost two and half years ago in order to expand our factory. It is still in progress.
How do you evaluate your current business activities compared to the previous year?
Last year was a tough time mainly because of the foreign currency shortage. But since three month ago, this is no longer a problem.
What about the repatriation process?
It is still a big issue. But for right now we are focusing on our expansion project. So we divert the profit we earn towards that.
What are the other major problems you are facing?
I think it is the tax system. Many companies complain about the inefficient tax regime existed in the country.
Is the tax rate high?
No, I think the penalties are tough. When the tax authority audits the balance sheet and income statement, if some mistakes are found the penalty is stiff. Of course, following laws and regulations is important. But the government should create an environment that allows local and foreign companies to operate and reinvest. You don’t have to kill the chicken to get the egg. All you have to do is take care of the chicken in order to get even more eggs.
What challenges do you face in relation with the labour force?
The main problem especially in recent years is the labour force is they easily dragged into political issues. Whenever there is a demonstration or unrest around the factory there is a disturbance inside the factory as it happens in our company a few weeks ago. Because most of them are young they are easily pulled to such situation. Currently, the behaviour of the labour force is changing along with the political system.
What mechanisms did you implemented to circumvent this problem?
One of the methods we used is to increase the salary of employees. In the current fiscal we increased the basic salary as well as overtime payment.
How do you evaluate their current skills compared with the past?
Compared with five years ago, it is much better now because our employees have much more experience.
Is employee absenteeism big problem for your company?
Yes, this is part of the problem, which is lack of work discipline. What we can do is talking and discussing with them in a bedside manner. We have a tradition that encourages each of the employees to discuss with the supervisors. We let them know it is by only working hard they can change their family and the nation. If employees refuses to do their jobs or went on strike regularly who will take care of their families.
How do you deal with employee absenteeism?
Whenever employees are absent constantly we hire other people because we don’t want to disturb operation. Also, there is no solution that will come from writing warning letter repeatedly when employees are absent frequently.
But, we here many labour abuse accusations involving Chinese companies working in the country.
Chinese companies do not abuse employees. But they know the benefit of hard work and work discipline. Ethiopians should learn these attributes starting from their young age. Complaining doesn’t bring results. China reached its current pick by working hard and maintaining strict work discipline.
The country is trying to industrialize its economy. But it doesn’t have disciplined labour force to attain this goal. Do you think Ethiopia can reach to the level where its labour fully supports the nation’s economic endeavours?
I think, it is possible to reach at that level step by step. Most of the labour force working in the manufacturing sector comes from rural areas where agricultural activities are dominant. But as times goes by and the labour force become experienced and realized the benefit of modern job opportunities, the working culture will eventually improve. This is evidenced by the experience of many countries such as China.
Just like China, Ethiopia is working to create a skilled man power by expanding higher and vocational education institutions. Does this help the country to achieve industrialization?
Definitely! But the government should pay attention to the location where these education institutions are constructed. The colleges and universities are located far from industries and when students graduate from these institutions they are thinking about sitting in the office. In order to develop the manufacturing sector, the nation needs skilful labour force. Education institutions should be located near industries so as the labour force can get the necessary skills. So, industry university linkage is important.
Under the current political and economic situation existed in the country do you think more Chinese investors will come to Ethiopia?
Sure. But because the country has new government, officials should talk to the business community and give them assurances and build their confidence.
8th Year • Jan.16 – Feb.15 2019 • No. 70