Role of Handicrafts in the Economy      

The handicraft sector plays a significant role in the development of the economy of the
country. Ity and social life of Ethiopians. These includes preserving cultural inheritance, employment generation, transformation of local raw materials into useful goods and supplies to meet the needs of both rural and urban communities, income generation and linkage with other sectors.

Preserving cultural inheritance:
Ethiopia is a home of some
70 or more million people of diverse ethnic background and culture. Handicrafts has been playing a great role in preserving the culture identity of the various culture and ethnic groups by adapting and promoting their traditional crafts to modern requirements while retaining the essential indigenous characteristics in them. Handicrafts are expression of Ethiopian age-old culture and as a commercial commodity handicrafts have become an important component of the tourism industry. Handicrafts promotes the culture identity of various nationalities by adapting and promoting their traditional craft to modern requirements.

Employment Generation: Manpower is the primary in-put in the process of production of goods and rendering of services. This is especially true among less developed countries where most of the manufacturing establishments are labor intensive. In most developing countries including Ethiopia, there exist a chronic and ever worsening imbalance between the demand for and supply of labor. The reasons for the abundance of labor in Ethiopia are several of which scarcity of capital and high rates of population growth are the major ones. According to ILO/JASPA report
during the
national workshops in 1985, the problem of unemployment the country is facing is more acute on youth and women since the number of new entrants joining the labor forces (that is those who reach 15 years) is by far greater than those who leave the labor forces due to retirement (those who are 55 and above). In general, the handicraft sector provides the bulk of urban employment, especially for migrants from rural areas, school drop outs and for those women and youth that could not get the opportunity to be employed in the industry sector.

Income provision:
In Africa, millions of workers earn their livelihood in the informal sector, and the incomes they earn allow an additional 200 million children, out of school youths, old people and the disabled to survive (JASPA, 1993). The major element of informal sector is handicraft so that today most of the urban society base their life on the income generated from this sector. The sector requires only home based self-training and generates alternative employment for the peasantry, women at home or the handicapped thus giving families durable and sustainable extra income.

Linkage with other sectors: The handicraft sector has very important linkage among economic sectors (Agriculture, industry and Tourism). The linkage to agriculture is output linkage in which the sector provides the agriculture sector with farming tools, equipment and services, etc, the linkage with Industry is imput linkage to the sector as it provides equipment, hand tools and spare parts; the linkage to tourism is out put linkage as the sector supply handicrafts especially souvenirs to tourists.

Handicraft and Tourism: Based on the Ethiopian Tourism Commission, the forecast for tourist arrival was to grow at the rate of 4.5% from 1990 to 1995 and at 5.5% from 1995 to 2000.Intra African tourism was to grow by 36% in the 1990’s reaching as high as 42% in 2010. South and East Africa have the lion share of the increase. The basic elements of Ethiopia’s culture are themselves an essential part of the tourist products, also the variety of Ethiopian handicraft products has been playing an important role in the development of sustainable tourism at the national and regional levels in which case it brings general economic benefits through poverty alleviation and easing up of un-employment.




To consolidate efforts directed at revitalizing the traditional arts and craft meaningfully and in a lasting manner, there must be concrete and extensive measures taken to the development of handicrafts. Areas of interventions include product adaptation and development, marketing, finance and training.

Marketing promotion:
The majority of tourists coming to Ethiopia are most likely those who have developed a taste for high quality standards of handicraft. Handicraft products therefore form part of the hospitality package sold to tourists. Assistances in marketing are in the area of organizing special handicraft exhibitions; orienting handicraft production and selection of products based on trends analysis; designing and adopting a prestige image; presentation and packaging, etc.; set up coherent and advertising programs; establish net-works between artisans and customers hence minimize the role of intermediaries and speculators; and prepare catalogue and brochures for different handicraft products with special feature and description.

The main problem facing handicraft producers is one of low productivity, in part, due to low skill levels prevailing in the sector. Yet, evidence exists to show that most handicraft sector producers have the potential to perform at much higher skill levels than they currently possess. Projects should, therefore be formulated to assist as many of them as possible. The provision of facilities for technical and managerial training to upgrade the skills of operators is an important requirement.

Facilitate Provision of credit: In-accessibility of credit to the sector is a major obstacle to the progress of handicrafts. Formal credits are often inappropriate for the needs of handicraft entrepreneurs. Establishing and expanding the micro financing institutions is very important to ease the problem of finance in the sector. Such types of financing institutions contributes more to the economic development in most developing countries. The Federal Government through the Federal Micro and Small Enterprises Development Agency (FeMSEDA), however, is implementing a number of interventions to promote Micro and Small Enterprises in the Country. These interventions are outlined in the MSE Development strategy as the Creation of Enabling Legal Framework through the promulgation and proclamation of the Law of institutional arrangement for MSEs; the Inter linkages promotion law; the cooperatives promotion law; the Chamber of Industry and trade proclamation and the Micro and Small enterprises finance proclamation; Streamlining Regulatory conditions; and Other specific Support areas/programs mentioned in the strategy are access to finance; incentive schemes; encouraging partnership (joint ventures/Link up); training in entrepreneurship skills and management; ; access to market; access to information and advice; physical infrastructure; and institutional Strengthening of private Sector Associations and Chambers.
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