Tips for utilizing full potential of businesses in Ethiopia

By Andualem Sisay Gessesse – This morning I got the chance to chat with an Ethiopian educated in Europe and now runs a Café and restaurant in Addis Ababa, Ethiopia around Bole Medhanyalem Church.

He has experiences in consulting business. I wanted to get his insights about why most Ethiopian business e are under-performing while these businesses have huge potential for growth create more jobs, generate more revenue in taxes and hard currencies in exporting their products and services.



It is estimated that currently most of the businesses in Ethiopia are on average utilizing only around 40 percent of their capacity be it those in the manufacturing or service industry. Our discussion revolved around why these companies have not been able to fully utilize their potential.

Passion for Business
One of the major issues this business consultant has raised is lack of passion by the passion of the businesses. Most people open a business in Ethiopia such as a hotel, just because they saw someone, they know opened a hotel and succeeded.

He argued that just because one affords to open a hotel doesn’t make him or her build a nice hotel brand with quality services. He or she needs to have the passion for hospitality industry and willing to do what it takes to satisfy its customers.

Indeed, it is common in Ethiopia to see many people doing what someone they know has done and became successful. Meanwhile many business coaches suggest that one needs to find out what he or she likes to do before venturing into a business.

They often advice to look inside themselves understand their passion, strength and weakness and make sure that whatever they investing makes them happy and joyful. They question, ‘What is they use of collecting money doing something that doesn’t make you happy Afterall?’



Skills of the regulators
Lack of knowledge and private sector experience by the regulators is also one of the major bottlenecks for the under-performance of the private sector in Ethiopia. Each sector and industry has its own unique character. Those engaged in the regulatory of an industry has to have enough knowledge and proven experience (hands on the sector or the industry) before assigned to regulate a sector.

“How could a government official or regulator in Ethiopia, who has no prior experience in job creation, lectures or regulates an entrepreneur in Merkato who has the experience from shoes shining to building a big factory or a chain of business?” he questions.

Based on my experience as a self-employed, I have also noticed the lack of knowledge by the regulators about the industry they are assigned to regulate by the government. Just because one has a PhD in hospitality, he or she can’t necessarily be expert in the field. He or she needs practical experience of the industry within Ethiopia to understand about the phycology of the customers foreign or domestic, what are the major challenges, etc.

In my hamble opinion PR actioner is more expert that who studied a specific industry in school. But most of all someone who studied a specific field of business and also practiced the business, can be a good expert in that field. He or she can be considered as regulator of that industry in a country where he practiced the business.



Meanwhile this is not the case from my about two decades of business reporting experience. The experts found in regulatory have only the school qualification, but no hands on the sector in Ethiopia at all.

That is why they don’t understand the challenges a business practitioner is facing or the opportunities each and every sector in Ethiopia has for growth in terms of creating more jobs and generating more tax revenues to the country.

These regulators and their bosses such as ministers do not know what kind of incentives is required for a specific industry, why it is needed, and how it should be implemented and monitored from being abused. That is why we heard recently that 10 billion Birr allocated as a revolving fund for the youth to create jobs have vanished.

Instead of helping the growth a specific industry, these regulators are often obstacles for the growth of the sector they regulate. As a result, these regulators can’t be in a position to set a realistic standard for an industry and follow up on its implementation.

So, if Ethiopia has to utilize fully or at least most of its potential and benefit from the mushrooming private sector and entrepreneurs, I suggest the industry regulators (current or future) need to fist serve as intern in each and every industry they will latter regulate as a civil servant.

Indigenous knowledge to improve working culture
One of the key issues this consultant raised is the need to improve working culture of Ethiopians. Improving the working culture of Ethiopians in general can result in improving productivity and proper utilization of working hours and efficiency. Not all people in Ethiopia have problem with working culture, according to this consultant. There are some communities such as the Gurage, who have excellent working culture.



He argues that these communities have proven centuries old hands on planting a small business, nurturing it and growing it into a big business properly managing finance and human resources without going to school.

Capitalizing on such business culture and structuring into a modern management system, can help to replicate their working culture and business management knowledge into other communities. That can help to improve the working culture of Ethiopians.

In addition, he also suggests that a government agency in charge of promoting business in Ethiopia can facilitate a practical learning mechanism linking some of the successful companies such as Ethiopian Airlines, Commercial Bank of Ethiopia with emerging status or businesses which have huge potential for growth.

Facilitating knowledge transfer on working culture and business management from successful private companies in Ethiopia, such as East Africa Holdings, Abyssinia Business Group, among others, which have managed to succeed in the face of hardships, can also help to improve the working culture and business management skills of the business which have huge potential growth in Ethiopia.

Huge growth potential
By the way as Ethiopia recently joined the largest common market in the world with over 1.2 billion population, African Continental Free Trade Area (AfCFTA), micro, small and medium business primarily engaged in manufacturing of products such as leather, garment, furniture, construction inputs, processed foods including coffee, honey etc, have huge growth potential. I heard yesterday that during the current budget year of Ethiopia, micro-enterprises have exported 13 million dollars.



Addressing all the above issues I believe can enable these enterprises to easily double or triple this figure, while encouraging the entrance of hundreds of microenterprises into market.

I believe that if properly managed and regulated well with the right incentives, these business es in Ethiopia can easily double their number of employees, revenue for themselves and as tax for the government, and also generate huge amount of hard currency for the country from export.

Improving working culture of Ethiopians help them to improve their dedication and commitment, and proper utilization of working hours as well as improving efficiency.