TRENDS IN THE GROWTH OF CHEMICAL MANUFACTURING INDUSTRIES IN ETHIOPIA

Abstract

Abstract This research aims to investigate the growth of chemical manufacturing industries by assessing their contribution to the manufacturing sector and to the national economy and the factors that affect the performance of CMIs. Their contribution was studied based on nearly 20 years of time series data on major macroeconomic variables, such as gross value of production (GVP), employment, government tax revenue and investment. The factors affecting the performance of chemical manufacturing industries was studied based on selected sample factories comprised of paint, soap and detergent, plastics, candle and pesticide factories. To achieve the objectives of this study, both primary and secondary data were employed. Secondary data were collected from different governmental institutions. Concerning gross value of production (GVP), employment, government revenue through tax and investment, Likert scale questionnaires were analyzed using statistical analysis such as descriptive and inferential analyses. The information was obtained through questionnaire from a sample of 64 operators and managers, and through interviews with 16 managers of CMIs. The respondents were selected by using stratified sampling techniques. The interview questions were analyzed using descriptive narrations. By using empirical studies, eight major challenges were identified which seem to affect performance of CMIs: inadequate finance, lack of working places, marketing problems, inadequate infrastructures, poor management practices, and technological, tools and machineries and politico-legal problems including bureaucratic bottlenecks. The findings further indicate that there exists significant relationship between independent variables and dependent variable. Moreover, the selected independent variables significantly explain the variations in the dependent variable at 1% level of significance. Based on findings, financial factor is found to be the major problem faced. The government should make available foreign currency or other affordable alternative sources of finance for CMIs. This can be done by promoting export oriented sector and utilizing each hard currency in a proper way.