The State of Manufacturing Infrastructure and Business Environment in Tigrai: Challenges and Recommended Policies

Abstract

The Government of Ethiopia has set a number of national development goals to be achieved by2025. These include, among others, attaining lower-middle-income status; diversifying and doubling the country's export capacity; lifting the contribution of the manufacturing sector from
its current level of 5% to 17%; turning Ethiopia into a leading manufacturing hub in Africa and creating decent jobs and a dynamic private sector that contributes to the growth and structural
transformation. The industrial sector in general and the manufacturing sub-sector, in particular, is expected to play a pivotal role in attaining these goals and pave the way towards successful economic transformation. However, the performance records of the manufacturing sector at both
the national and regional levels have been somewhat disappointing. The main aim of this paper was therefore to explore the bottlenecks of the manufacturing sector focusing on the infrastructure and business environment and to develop strategies and actions to overcome these bottlenecks. This was achieved through the review of existing studies, key informant interviews, surveys as well as intensive consultation meetings with policymakers that produced both qualitative and quantitative data. The result shows that there is a lack of serviced land (23.9% of respondents), access to electricity, ICT infrastructure, and a conducive business environment. Accordingly, important strategies and directions considering national and international best experiences are recommended in this paper to overcome these challenges.