Ethiopian Business Review

"Import Substitution Strategy Should be given the major attention to resolve foreign currency crisis"

Rajeev Kumar Sharma is the general manager of Anmol Products Ethiopia, an Indian based company engaged in paper converting business in Ethiopia since 2009. The company was established with ETB 76 Million. The Indian investor also serves as deputy chairman of Indian Business Forum, an institution established in Ethiopia to represent Indian investors in different platforms. EBR sat down with Sharma, who was also part of the Ethiopian business delegate that went to India last year, to learn more about the trade and investment relationship between the two countries, the existing challenges and what both countries are doing to uplift the level of partnership.

EBR: How did you choose Ethiopia as your investment destination?

Economic councillor stationed at the Ethiopian embassy in New Delhi has contact with our promoters. He kept in touch with them and briefed them about the investment opportunities in Ethiopia. Then our promoters visited Ethiopia and they were attracted by the opportunities.  It took us two years and we managed to open the factory in 2009. 

How do you evaluate Ethiopia’s investment regime? 

Systems that are intended to support investors are already in place. But just like any developing country there are challenges in Ethiopia. The main thing is how serious is the government to resolve the problems facing investors. 

In my 10 year in Ethiopia, I learned that the government is focused and committed to improve the situation. Government officials are aware of the challenges and trying to come up with solutions step by step. Because resolving the challenges at once is not possible, the government is constructing industrial parks in different corners of the country, which dramatically diminish the challenges for companies that choose to operate inside the parks. 

But, challenges like scarcity in foreign currency is widely visible in Ethiopia? 

The foreign currency shortage, which is the biggest problem nowadays, is happening because the government realized that the industry sector needs to change dramatically in order to bring economic transformation. To do this, row materials and machineries should be imported to facilitate the endeavour. Once these projects started to produce and export, the foreign currency crisis will decline gradually. 

India has experienced the same foreign currency crisis in the past. How did the country managed to resolve it? 

Indeed, in 1990’s, India went through the same experience. The solution that played the major role is the implementation of import substitution growth strategy that helped to boost the local production. Although export promotion strategy can be part of the solution since a given country cannot control the dynamics of the international trade, it is not always dependable. So, import substitution strategy should be given the major attention to resolve such crisis. 

What is your future plan in Ethiopia?

We are planning to invest more in Ethiopia. In fact, we undertook expansion project with ETB40 million and finalized recently. 

Recently the Indian President visited Ethiopia with the representatives of close to 500 Indian companies. What is the importance of such visits?

Such visits are important to strengthen the partnership between the two countries. For instance, during the recent visit a joint committee was established from both countries that identify challenges facing investors. The committee is also expected to boost the growing bilateral trade between the two countries as well as improve the unbalanced trade relation by resolving problems for Ethiopian exporters. 

How do you evaluate the role of the private sector in Ethiopia? 

It is low but it is as a result of the short life span of the sector. We do not expect the private sector to be vibrant like that of India’s because India started this journey long time ago. The government is privatizing a growing number of enterprises in Ethiopia each year. So, the private sector is expanding gradually. 

In which areas should Ethiopia learn from India? 

India managed to educate its youth, which accounts 65Pct of the population. Ethiopia can learn from such experience. The other area is the use of Information Technology (IT) to uplift the level of different sectors. India has proven its strength in IT. In fact, IT is one of the major sectors that contribute greatly for India’s annual export earnings.


6th Year . November 2017 . No.55


 

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