The government has been undertaking various efforts to transform the country’s economy from agriculture to industry-led one. To achieve the target, the government has been attracting investors to develop their businesses in building industrial parks.
Recently the Ethiopian Press Agency has approached with Shiferaw Solomon, Deputy General Manager of Industry Parks Development Corporation (IPDC), to discuss on how the Corporation works to achieve its target, the impact of Coronavirus on the sector, and how the Corporation works to curtail the challenges that the industries has now faced with. Here is the excerpt:-
EPA: What were the objectives for the development of industrial parks?
Shiferaw: The development of industrial parks intends to scale up the role of industries in economic growth as in the directives set by the government. It also aims to create conducive environment for manufacturers who are engaging in industrial sector, thereby to raise the income that could be generated through industrial parks. The government first observed the importance of getting industries at one place so as to fulfill their infrastructures and environmental protection works at the same time.
EPA: How do you explain the achievement made so far?
Shiferaw: The success obtained in industry sector is as good as expected. Obviously, the government launched the development of industrial parks in the first Growth and Transformation Plan period. Thus, the first four industrial parks were constructed in some parts of the country. But, there was no legal framework that could guide the way how they are constructed, how they are administered, and who could manage them. In this regard, it is not praiseworthy to say the effort was successful. Remarkable achievement has been formally obtained following the establishment of industrial parks in 2017.
Since the industrial parks participate foreign investors, there should be stable political environment and conducive economic system. In fact, the government could also achieve tremendous achievements even in the previous unstable years.
Until now, more than 80 local and foreign companies are engaged in industrial parks. It is by itself encouraging; however, a lot remains to reach the expected result amid limited infrastructures, weak implementation capacity, and political instability.
It was noticeable that there were security threats to move industrial products to ports. Facing these challenges, the government could create ample job opportunities and play its significant role to achieve the goals planned in GTP. If there was more conducive situations, it was possible to attain incredible achievements in the sector.
EPA: How many industrial parks are constructed so far? And what are the criteria to identify appropriate cities to build industrial parks?
Shiferaw: First of all, the government planned to construct 17 industrial parks up to the end of GTP-II period. Currently, there are only 12 industrial parks whose constructions have been completed and readied for productions. Of these, nine are now found in full operation while the remaining three such as Bole-Lemi, Kilinto, and Bahir-Dar industry parks are nearing to provide full operation. Moreover, conducive environment has been created to expand the development of industrial parks in the future. There were also many local and foreign investors who could build their own industrial parks based on the requirements set by the government.
The criteria to identify the places for the development of industrial parks are depends on the recommendations set by World Bank. The cities are selected if they are located in suitable places for moving raw materials and finished products.
Therefore, industrial parks such as Mekele, Arerti, Kombolcha, Adama, Diredawa are constructed following the train track stretched from center to the north of Ethiopia.
In addition to World Bank’s recommendations, the government of Ethiopia has also formulated a single economic zone in 2017 fiscal year, to identify suitable places as first, second and third stages. All industrial parks are being constructed based on these criteria.
EPA: Do you think the infrastructures in Industrial Parks are well situated?
Shiferaw: I believe that there is no other industry sector other than industrial parks who give priority for the development of infrastructures in industrial parks. Some limitations like access to electricity are observed. For instance, nearly 231 Megawatt are provided to industrial parks. But, industrial parks are now using 30 per cent of their total demand. When the industries get in to full operation in the future, they may need huge electricity demand; in which the one who utilize three megawatt of electricity now will scale up its demand to ten megawatts. Most of the time, industrial parks utilize huge amount of electric power better than other industry sectors.
EPA: What are the role of industrial parks in attracting foreign direct investment?
Shiferaw: in fact, providing tax exemption and other supports are the customary ways to attract foreign investors as in other countries’ experience. At this time, building industrial parks is the best way to attract foreign investors in to the country. Because, foreign investors usually prefer to install their machineries than building their own industrial parks. The new flourishing industrialization in Africa has been started due to the development of industrial parks and the coming of foreign investors with the need to enter into the manufacturing sector. Indeed, some foreign investors have signed agreements right after the beginning of the construction of industrial parks. Foreign investors did not stop coming to invest in Ethiopia even during the instability occurred before two years ago. These local and foreign investors could able create huge job opportunity for citizens as well as play a role to improve the country’s economic growth.
EPA: How about the opportunity of local investors to participate in state own industrial parks?
Shiferaw: The number of local companies who want to engage in industrial parks is small due to their engagement is limited to service sectors such as hotel, and trade exchanges. In fact, the government announced a call for local investors to enter in industrial parks. Now, there are three local investors in each of industrial parks in Hawassa, Dire Dawa, and Mekele; whereas there are two who are engaged in Adama industrial park. In general, the participation of local investors in industrial parks are definitely low.
The Ethiopian Herald May 23/2020
TRANSLATED BY ZELALEM GIRMA
