EFFECTS OF EXCHANGE RATE ON SOAP AND DETERGENT INDUSTRY’S PERFORMANCE IN ETHIOPIA

Abstract

This research was carried out to find out the effect of exchange rate on the performance of soap and detergent industry, in Ethiopia. It has been employed annual time series data (1996-2014) which was generated mainly from NBE, CSA, MoFED, and ERCA. After a major preliminary data test descriptive statistics and OLS was employed for the purpose of data analysis. The regression result revealed that exchange rate (devaluation of birr) is positively and significantly correlated with SDI; implying that devaluation of birr has contribution for the growth of soap and detergent industry. Furthermore, since manufacturing sector plays a crucial role for once economic development, capital flow and investment should be encouraged through creating enabling environment by reforming a well-designed industrial policy which could encourage the sub-sector.