Ethiopia is one of the top countries in Africa for attracting investment in many areas for a variety of reasons. One of these major parts is the development of industrial parks, which are meant to be long-term investments since they are fully equipped with advanced infrastructure and manufacturing equipment to assist investors in getting their businesses up and running.
Intensifying and augmenting industrial parks more is one part of the effort geared towards fostering economic development in Ethiopia. If this is so, the country has to expedite the new model to promote growth and create jobs, thereby ensuring sustainable economic growth, as the expansion of industrial parks has been providing citizens with an opportunity to grow and further develop their businesses.
Taking this fact into account, The Ethiopian Herald had a stay with Zelalem Waqgari, an industrial engineer graduated from Addis Ababa University in engineering, to gain professional point of view.
He said, “Industrialization is essential element of growth and has an important role for poverty reduction and sustaining prosperous future. The pursuit for industrialization is regarded as the most feasible option for structural transformation. Likewise, industrial parks are a fundamental industrialization strategy that have a significant contribution to boosting economic output, absorbing scientific and technological progress, creating conducive platform for openness to the foreign world, economic experiment, and demonstration effects, and induce local and global value chain, ecological preservation, and environmental protection.”
Basically, he said, an industrial park might include companies that provide manufacturing, transportation, and storage facilities, such as chemical plants, airports, and beverage manufacturers. Industrial parks can be useful in bringing companies together that provide services and features that are complementary to each other.
They are of significantly useful in fostering mutually beneficial partnerships between industrial parks and surrounding communities via creating ample job opportunities. Principally, they are playing a pivotal role in Ethiopia’s economic development by substituting imports, diversifying exports, and creating employment opportunities, he added.
According to Zelalem, inclusive and sustainable industrialization that supports poverty eradication is one major pillar recognized by the 2030 Agenda for sustainable development. Yet, industrial parks are considered as a catalyst to facilitate industrial development with its overarching objectives. As Asian countries like China, the republic of Korea, Indonesia, and Taiwan industrialization has played key role by promoting growth and decreasing poverty rates though the level of contribution varies across the countries, Ethiopia needs to draw important lessons in this regard.
Yes, still, there is evidence on the socio-economic impact of industry parks to Ethiopia’s local economy in terms of promoting trade, innovation, employment opportunities, export, knowledge, and technology transfer, he added.
To attract more investment in industrial parks, the government of Ethiopia can undertake several measures. It should enhance its efforts to promote industrial parks and highlight the advantages and opportunities they offer to potential investors. This can be achieved through targeted marketing campaigns, participation in international trade fairs and investment forums, and engagement with potential investors through road shows and investment missions, as to Zellalem.
To this end, he said continued investment in infrastructure development is crucial to attract more investment. Hence, the government has to focus on improving transportation networks, expanding power generation capacity, ensuring reliable water supply, and enhancing ICT connectivity within and around industrial parks. Upgrading infrastructure will also increase the attractiveness of the parks and provide apt environment for businesses to operate.
As to Zelalem, streamlining administrative procedures and reducing bureaucratic hurdles is also essential to attract more investment. The government can further simplify licensing and permit processes, establish a dedicated one-stop-shop service for investors, and introduce online platforms for faster and more efficient business registration and approvals. By prioritizing ease of doing business, Ethiopia can create a favorable investment climate, indeed!
In Ethiopia, industry parks have to be a success story mainly attributed to multiple factors such as commitment of government leadership, focused legal and regulatory framework, favorable location advantage, duty-free raw material imports, updated and modern technologies, export tax exemptions, tax breaks, strong local manufacturing firms’ absorptive capacity, skilled labor, strong public-private partnership, political goodwill, and heavy infrastructure investment. Yes, he said they have also played a key role in attracting investment, transferring technology, promoting export-led growth, economic diversification, industrial development, and structural transformation.
Since factors such as weak governance, weak implementation capacity, inadequate infrastructure, poor institutional and regulatory framework, lack of effective strategic planning and others are severely hindering the progress of industry in general and industrial parks in particular, the sector has to be given due focus.
Besides, un-affordability of imported raw materials, delay on logistic services, foreign exchange shortage, raw material shortage, government bureaucracies and others are expected to be met for the smooth flow of industrialization in the nation. The country even remains heavily dependent on imports of substantial amounts of semi processed and processed manufacturing food products that could potentially be produced by local SMEs.
Yes, since employee job satisfaction, employee work motivation, ethical leadership and organizational justice have had significant impact on the performance of the employees and the productivity in the industrial park firms, these factors have to receive due attention to make a difference.
Basically, the development of key economic zones in Ethiopia has been one of important economic development policies implemented since recently. The government has worked to bring shared development and spreading it to all people in the economy and all geographical area of administration to increase the specialization, increases resources use efficiency that can accelerate the development of regions in the country though results has been quite limited.
Industry Parks in Ethiopia like the Bole Lemi II and Debre Birhan industry parks are relatively the best practices in Ethiopia in terms of value chain as they have factories that connected their respective production with the local economy.
For instance, Zelalem stated Clinton and Bole Lemi-II have provided various sectors with quality industrial infrastructure for augmenting subsectors like garment, textiles, and pharmaceuticals.
The industry sector in Ethiopia is expected to contribute to GDP growth, job creation, and small and medium-sized enterprise (SMEs) development, as the overall goal of the Industrial Development Strategy (IDS) is to accelerate structural transformation via enhanced industrialization and by raising the share of the manufacturing industry in GDP.
Likewise, agro-industry development in the country is expected to realize the potential of agriculture modernization, rural industrialization, and ultimately the structural transformation through the operational advanced industrialization process in the country, he underscored.
The case of Yirgalem Integrated Agro-industry Park established with an aim to increase export of processed agricultural products and to substitute import can be well cited here. It also aims to induce employment and value chain with the local farmers in the country. This site started production in 2021 and manufacture avocado oil, honey, milk, and coffee capsules. It uses the raw materials from local firms which strengthens the impact of the park on the local economy linkage.
“Obviously, in recent years, Ethiopia has tried to undertake an industrial policy to emerge as a manufacturing hub. The public industrial parks in the country with a major focus on textile and garment have revealed mixed performance in terms of output and employment. The parks have varied occupancy rates depending on management and location, with those closer to bigger cities performing better,” he stated.
Economic growth in Ethiopia is progressing at an impressive rate, where industrial parks have piqued the interest of international investors in the country’s economy.
Industrial parks play a pivotal role in fostering economic development in both developed and developing nations. These zones serve as hubs for industrial activities, offering a range of benefits to businesses and the local economy.
By housing multiple businesses in close proximity, industrial parks foster a clustering effect. This leads to increased collaboration, knowledge sharing, and synergy among companies, which can drive innovation and competition.
The presence of various industries in industrial parks creates opportunities for skill development and knowledge transfer. Local workers have access to training and experience, improving their employability and income levels.
The Ethiopian government has worked hard to create jobs in the country’s industrial sector. Foreign investors have been encouraged through beneficial schemes, but also Ethiopian authorities themselves have put vast sums into a growing industrial sector. Creating jobs to lift people out of poverty has been a hallmark of development interventions to boost capital and encourage entrepreneurship.
In sum, the Ethiopian government identified industrialization as the means to transform the economy, reduce poverty, provide jobs, and achieve the ambitious aim of transitioning the economy to lower-middle-income status within the shortest time possible.
BY MENGESHA AMARE
The Ethiopian Herald October 13/2024
