After the demise of the command economic system installed by the previous regime, many private investors in Ethiopia had been encouraged to establish various private manufacturing enterprises.
Though there are countries which achieved high economic development without having an advanced industrial parks, inauguration of industrial parks is amongst the prioritized projects that many countries undertook to modernize as well as enhance their economic contribution to the manufacturing sector.
Agro processing sector is amongst the areas given priority in Ethiopia’s current national development plan – the second Growth and Transformation Plan (GTP II). This agriculture based sector’s major goal is to expand value-added, export-ready agricultural products. Needless to say, this can only be achieved if the agriculture and industry sectors are highly interlinked.
As an agrarian economic country, the government of Ethiopia has been devoting time and commitment into constructing agro-industrial parks in various parts of the country. As part of this, the construction of Integrated Agro-Industrial Parks (IAIP), which is one of the pilot projects, is being undertaken in four States – Amhara, SNNP, Tigray and Oromia.
According to Shimeles Sisay, Senior Public Relation Officer at the Ministry of Trade and Industry, Bure town in west Gojjam, Yirgalem in Sidama, Bulbulla in East Shewa and Baeker in Western Tigray are the sites of the IAIPs. The Yirgalem Park is already on its trial production phase and will soon be fully operational.
The major objective of the IAIP is to drive forward the structural transformation of the country’s economy, reduce rural poverty, and create a better environment for increased investment in agro-food and allied sectors, sources indicate.
Accelerating rural development transformation so as to fasten the country’s vision of transitioning to industrialization is said to be the other primary goal of the pilot project.
Moreover, the constructions of highly developed and modernized IAIPs, apart from creating jobs for many, has multipurpose use in expanding export industry, creating stable macroeconomic flow and increasing flow of foreign currency, he noted.
The expansion of these integrated agro industrial parks could open doors for the emerging of various small and medium manufacturing industries.
With the aforementioned significances being the major case in the agro processing sector, the government has been providing various incentive packages for investors who are engaged in the sector.
He indicated that customs duty exemptions of up to 100% on imports of capital goods, duty drawback scheme, voucher scheme and bonded factory and manufacturing warehouse schemes, income tax exemption are amongst the incentives offered by the government.
In 2018/19, the country earned about 89.97 million USD from Meat and Milk sector while raking in 53.72 million USD from Food and Beverage sub sector. Though the performance has shown increment, the result is still not satisfactory compared with the desired rate, as to Shimeles.
Long supply chain, lack of infrastructure to support supply to processors, poor knowledge of farmers, less incentive for producers (farmers), frequent power interruption, fragmented nature of the country’s agricultural system are still pulling the agro industry back.
While the nation has the potential to produce ample agricultural products, the country has failed to benefit as per the sector’s potential. Due to many reasons, the country has failed to produce value added agricultural products. As a result, the government should give due emphasis in adding value to its export agricultural items, said Shimeles.
Though private sectors takes the lion share for the growth of the manufacturing sector as a whole and agro processing sector, in particular, creating strong collaboration with farmers as well as linking the agricultural sector with the manufacturing industry is crucial, as to him.
Having a clear understanding of the country’s industry strategies, putting a national effort towards addressing the observed gap as well as maintaining the positive area of the sector is highly recommended moving forward.
The Ethiopian Herald August 28, 2019
BY BETELHEM BEDLU
