Entrepreneurial stimulus in Ethiopia

Due to poverty, the vast majority of Ethiopian youth are unable to get adequate and quality education. Neither do the circumstances of their families allow them to have the necessary financial support to start a business.

The few initiatives by foreign agencies to bridge such skill gaps through multifaceted interventions are encouraging. However, it will never be enough to serve the larger purpose of alleviating poverty though entrepreneurial interventions. That is why the government will have to adopt entrepreneurship as a priority national policy initiative.

This mission requires a holistic approach in which relevant stakeholders are actively engaged to achieve the goal. Creation of a national database of youth, especially unemployed ones, is an important task. This will help in classifying the training needs and creation of appropriate infrastructure to facilitate the trainings that they would need to start on their entrepreneurial journey. Diverse training requirements ranging from illiterate to semi-literate to literate youths in various age groups require different approaches at different levels.

Developing the skill sets of the youth in areas that offer a competitive advantage to the country’s industrial strength is also necessary. Agro-industries such as the leather, textile and garment, flower and horticulture, dairy farming, animal husbandry, and handicraft are some of the sectors where Ethiopia has a traditional competitive advantage. The organization of relevant skill training in these sectors brings a lot of advantage that ranges from attracting investment to enabling easy youth start ups.

Skilled labour creates products of good quality. Regrettably, the availability of cheap labour, which is semi and low skilled, has become the main comparative advantage the Ethiopian Government uses to attract investors from other countries. However, Ethiopia should work in developing a highly skilled workforce to effectively navigate the journey of youth entrepreneurship.

Instead of going for the business as usual approaches, the adoption of global standards in training can be useful to fill the skill-gap and create a globally competitive workforce. This will encourage overseas investors to establish their factories in the country. This, of course, requires further investment to develop the basic infrastructures. Connectivity of all the regional states is vital to generate balanced development and employment opportunities. This has been done very effectively in China, which has now become an important manufacturer in the whole world.

Ethiopia has been at the forefront of promoting manufacturing and industrial infrastructure in the continent. The concepts of ‘Made in Ethiopia’ and ‘Made for Africa’ will help the country emerge as a manufacturing hub in the continent.

The country, however, will need to invest more in developing its human resource. This will require having a global curriculum, well-trained faculty, modern labs, and rigorous apprentice programs where university students learn practical aspects of their profession. This builds the confidence of the youth to undertake job related challenges at ease.

For those who are illiterate and semi-literate, the country should plan the provision of free education with reasonable financial support to help them get the basic trainings. This is necessary to improve their employability and livelihood.

Also, motivating the private parties to participate in the skill development initiatives shall be beneficial. It should not be overlooked that knowledge of a global language like English has the potential to further enhance the scope of employment at the international level. Anywhere in the world, skilled workers with knowledge of widely spoken international languages earn better wages. Countries should take this seriously and improve the language education across their education system. Such investment will improve the employability of their citizens, thereby leading to a decent life in the long run for the vast majority of their people.

One of the major challenges newly industrializing nations such as Ethiopia face in their entrepreneurial journey is the critical shortage of foreign currency. The expansion of basic infrastructure and import of industrial raw materials consumes a great deal of foreign currency. As a result, the countries face severe foreign currency shortage and in fact the situation hampers their prospect for further growth. Ethiopia is no exception. Since the introduction of the Growth and Transformation Plan, the country’s foreign currency need has severely increased because the country has been implementing huge development projects that use equally, if not greater, amounts of imported raw materials in addition to the projects also being implemented by foreign companies who are paid in foreign currency.

One solution to solve this chronic problem is working on the repatriation of overseas money. Indian expatriates remitted USD78.61 billion in 2018, making the country the number one beneficiary of remittance in the world. In the same year, Egypt and Nigeria received USD28.92 billion and USD24.31 billion respectively from their citizens in foreign countries. With a huge diaspora population throughout the world, Ethiopia can benefit from remittance immensely. It currently receives about five billion US dollars, a little over a sixth of Egypt’s annual remittance.

Encouraging local manufactures rather than hugely depending on imports will boost the prospects of employment, provided that the country’s human resource pools possess the right set and mix of knowledge, skills and work ethic. Promoting local manufacturing will reduce the prices of goods and save on precious foreign currency. Therefore, industries that offer mass employment should be given wide-ranging support.

Furthermore, strengthening the agriculture sector with better roads, transportation facilities, markets, and information connectivity is important. This needs establishing a strong support, and collaborations with agricultural research institutions. In fact, it is such interventions that help to create more jobs in the rural economy which will eventually discourage people from migrating to major towns and cities such as Addis Ababa. In this case, developing food processing industries near farm areaswill encourage the farmers to grow more and earn better.

Co-operatives have transformed the lives of thousands of farmers across the globe. They help even small or marginal farmers to focus on production without worrying about selling. In India, AMUL-Anand Milk Union Limited has become a role model for many more cooperative movements. Amul became a household name in the country and has now become a global brand. It united thousands of milk producers of Gujarat State to cater to the bigger Indian market. Ethiopia can go the same direction to improve rural livelihood.

Two revolutions in India, the Green Revolution, and the White Revolution have made the country sustainable in food production and milk production. They created food security and reduced the dependence on imports. These revolutions improved the economic status of farmers and milk producers. It also discouraged their compulsive migration to towns in search of better livelihood, while encouraging entrepreneurship. Support from agricultural institutions and its scientists played a vital role in the success of the above resolutions.


8th Year • Oct.16 – Nov.15 2019 • No. 79

Ajay Prasher(PhD)

Ajay Prasher(PhD)

is professor of management & administration at Ethiopian Civil Service University. He can be reached at ajay.prasher@ecsu.edu.et


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