Ethiopia Set to Combat Contraband Trade to Improve Export Earnings

Ethiopia has set a strategy to cut extended chains of export market to combat contraband trade which significantly affected the export earnings of the country, according to Ministry of Trade.

 The new strategy mainly focuses on shortening the extended chains of export market, creating fair and competent market system and controlling illegal brokers among others, Wondimu Flate, PR Head at the Ministry told ENA.

 Despite the unexpected achievement in coffee export, the performance of the country’s foreign trade in 2016/17 was below the target.

 

The country earned 2.91 billion USD, 61.2 percent of the target, of which 30 percent of the revenue was secured from coffee.

The government blamed mainly contraband trade which consumed up to 50 percent of the country’s export earnings particularly in some major export items for the low performance.

The mining sector particularly gold, live animals, coffee and sesame are mentioned among the major export items which were affected by contraband trade.

To improve the share of foreign trade to the GDP during the remaining years of the GTP period, activities are being undertaking by establishing a command post drawn from institutions from federal to the Woreda level to monitor and manage contraband trade, Wondimu said.

“Be it at the national level or with neighboring countries, contraband trade has a major impact on export trade.  Be it in 2010 E.C or during the coming three GTP years, for the trade sector to play its role and to compensate the FDI earnings we lost in previous years, it needs to control contraband trade. So the Contraband Trade Controlling Command Post which stretching from federal to the Kebele level has started its activities”, he said.

Learning from last year`s best practice in controlling contraband trade, the country has managed to shorten the extended chain of coffee trade.

By doing so, it enabled producers and suppliers directly supply coffee beans to the Ethiopian Commodity Exchange, the trading floor that traded agricultural commodities that the country is exporting.

The efforts in controlling contraband trade enabled the country to export large amount of coffee to the global market – 225,668 metric tons, a record high over the past two decades.

In addition to controlling contraband trade, value addition, development of industrial parks and widening market destinations will be among the priority areas set to improve performance of the sector.

For Dr. Costantinos Berhutesfa Chairman of Ethiopian Infrastructure and Tunneling Co., enhancing the capacity of the private sector is critical to improve earnings from the export sector.

“If we see from history the bulk of exports, in terms of goods and services that are producing in a country come from the private sector and Ethiopia, the private sector has not been biggest participant in this in terms of goods and services that are exported except the raw materials in terms of coffee and sesame” he said.

Noting that some private companies have already started to supply roasted coffee, Costantinos emphasized the need to encourage and support investors to engage in value addition rather than exporting raw commodities.

In addition to supporting investors, the government should also consolidate efforts to ensure good governance at all levels, since it determines the effectiveness of private investments, Costantinos said.

“Investors have to be able to get good public administration system and good governance at the local level this will ensure that the policies of the country, the kind of incentives they are provided for investors are implemented properly.”

In the original GTP II matrix that the government published two years ago, exports were forecast to earn USD 6.78 billion.

source ena