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Hard currency shortage melts plastic industry

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Plastic manufacturers’ put government on blast as a result of their sector not receiving the required attention; despite it being crucial for economic development and highly driven by industrialization demands. The sector has been hit hard by currency shortage to which sector experts explain it will have a ripple effect to the whole economy.
The Ethiopian Plastic and Rubber Manufacturers Association (EPRMA) officials claimed that although the sector is crucial for the country development whilst also playing a huge role for job creation, the proper attention that is required from the government has not been fully tapped into.
Mintesinot Lemma, President of EPRMA, said that there are over 4,500 plastic and rubber industries in the country that invest billions of birr and create millions of jobs. However, the sector is heavily affected by input shortage that is visibly seen in the sector and other industries that are using plastic products as input and packaging like commodity exporting companies and bottling industry.
“As per our survey conducted recently, over 85 percent of plastic and rubber industries are running below half of their capacity, which is highly damaging the sector,” he told journalists at the press conference held on Saturday March 26.Plastic manufacturers
“We understand that the country is in a dire hard currency situation, but our sector a huge number of jobs and offers significant contributions to the economy. Thus, it should be given the much needed attention,” he said, “the plastic industry does not only run for itself but is part of the greater supply chain as input supplier to other industries, thus its problems are felt further in other major economic player as well.”
He added that the sector development in the country has contributed to the full cutting of the import of finished plastic products from neighboring countries and even replaced the major segment that was imported from China.
Samson Ketema, General Manager of EPRMA, said that although the sector shall does not contribute directly to export, it plays a huge role indirectly. “For instance most of Ethiopian agricultural commodities are packaged and exported through the PP bag which is produced from local plastic factories. If the hard currency shortage hit the local plastic manufacturers, the export sector shall also feel the pinch.”
He added that the plastic and manufacturing products are aligned with other different sectors like construction, which uses plastic products like PVC, light and heavy industries, and almost all of socioeconomic sectors.
The association leaders put the latest packed water as example of how the plastic industry is directly connected to bottling industry.
Samson told Capital the hard currency shortage on the plastic industry is growing from time to time and in the last one year the problem has gone out of the frying pan and straight into the fire.
He recalled that the latest decision of the National Bank of Ethiopia which imposes to take 70 percent of the hard currency earned from export has made the problem to escalate further.
Mintesinot said that when the central bank introduced the new threshold to access the major share of the hard currency industrialists were happy. “We were expected that the government to channel the foreign currency for sectors like us through the Commercial Bank of Ethiopia, which is commonly the major source for the industry sector, but that has not transpired.”
The General Manager said that before the introduction of the new hard currency surrender threshold, factories received the input from the local market, and that remains even as of now.





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