BY MENGESHA AMARE
Ethiopia is devising a range of mechanisms to boost its economy thereby making aid dependency history. The country has well understood that this mission can be accomplished through buttressing local capacity for production and productivity. One of the very means the country has planned to practice along this line is developing industrial parks.
Yes, Ethiopia has recently tossed an ambitious program of industrialization. The government of this fast-growing, densely populated country hopes to attract foreign investment in its brand-new industrial parks by offering a large workforce, competitive wages, cheap electricity and good infrastructure. Several garment factories have already started production in the industrial parks established in various parts of the country. However, despite the initial enthusiasm, many companies that operate in the parks have not yet reached the productivity levels that would make their investment sustainable.
While approached by The Ethiopian Herald, an Industrial Engineer, Assefa Bultuma, who is conducting studies in industrial parks such as Kilinto, Hawassa and Bure industrial parks said that the government is working hard aiming at boosting worker retention and productivity in the industrial parks and knowledge of what firms can do to retain workers and improve their morale and productivity.
The Industrial policy in Ethiopia needs to emulate Ethiopia’s move towards industrialization. As a result, the demand on the side of private investors to engage in the industrial park development is gushing.
“Ethiopia has eyed at fostering production and productivity in the industrial parks as the government has planned to construct a number of state-of-the-art industrial parks located along key development corridors each with distinct specialty in priority sectors,” he said.
As to him, it is a promising step that companies are shown keen desire to get in to industrial parks, and once an investor decides to operate within the industry park, the Ethiopian Investment Commission along with the Ethiopian Industrial Parks Development Corporation will facilitate the entire process.
Eligible local investors who present feasible proposal would have the opportunity to join the parks, and the government of Ethiopia follows a specialization or cluster approach the development and designation of industrial parks.
An investor can request any size of shed or land so far as planned to utilize it as soon as possible. An integrated agro-industrial park (IAIP) is a geographic cluster of independent firms grouped together to gain economies of scale and positive externalities by sharing infrastructure and taking advantage of opportunities for bulk purchasing and selling, training courses and extension services.
IAIPs will include open area production zones, controlled environment growing, precision farming, knowledge hubs and research facilities, rural hubs, agri- infrastructure, collection centers, primary processing hubs, social infrastructure and agri-marketing infrastructure, among others.
Besides, they will have modern and general infrastructure including roads, power, water, communications, drainage, sewerage, a sewage treatment plant and an effluent treatment plant, among others. According to Assefa, specialized infrastructure consists of cold storage units, quarantine facilities, quality control labs, quality certification centers, raw material storage and central processing centers, among other specialized infrastructure. Each IAIP is served by a network of rural transformation centers which provide linkages to producers.
“Rural transformation centers include warehouses, input supply, sorting, grading, extension services, pre-processing activities and microfinance. Public and private partners support farmers to increase production and productivity to supply raw materials of required quantity and quality to the industries in the parks. Market information centers will provide information on business development, prices, market trends, and current market demand in terms of products and quality, among other services,” he stated.
Inputs such as bioenergy, greenhouse cultivation, agri-chemicals and renewable energy have to be made available to foster agri-food processing in a bid to produce fruit juice, pulp, slice, concentrate, dehydration, tomato paste and puree, coffee and tea.
For instance, Ethiopia produces the best Arabica coffee in the world and is known for having a wider genetic variety of coffee than any other coffee producing country. Ethiopian coffee is well known for its special aroma and flavor, a uniqueness that makes it preferable for blending with coffee from other countries. Currently, Ethiopia is among the top five coffee exporters in the world.
He said sesame is another export item. Ethiopia produces a variety of different sesame seeds which are highly valued on the international market. Currently, there are efforts to improve yields and there is potential to expand sesame seed production in Ethiopia through additional land cultivation.
Besides, as to him, varied agro-climatic conditions and biodiversity favors a diversity of honeybee flora and a large number of honeybee colonies. Ethiopia is the tenth largest honey producing country in the world and the largest in Africa. It ranks fourth in the world in terms of bee wax production and export.
Export-oriented industries also bring in much needed foreign currency. Ethiopia has come a long way in attracting investments in such value chains. While labor-related issues such as low productivity and retention were frequently reported as challenges in the early days of Ethiopia’s industrialization efforts, recent evidence points to significant improvements across industrial parks. Stakeholders need to work closely together to provide targeted support that protects firms and jobs. Similar schemes are plausible in the Ethiopian context and may be more feasible given the tight fiscal space, he underlined.
As to him, Ethiopia is one of the fastest growing countries in the world. Its current population of over 110 million is expected to double in the next 30 years, hitting 210 million by 2060. Due to this accelerated surge in population growth, the country is facing a critical challenge of creating enough jobs.
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 by 2025. But growth in the manufacturing sector lags.
The country looked to a new model to promote growth and create jobs. Given the importance of small and medium enterprises (SMEs) to the Ethiopian economy, the government started focusing on private sector growth and support for SME competitiveness, to help facilitate the creation of three million jobs each year.
The project aims to attract investments and improve the competitiveness of companies in selected industrial parks (IPs)- Bole Lemi I and II and Kilinto, Hawassa and others in Ethiopia.
Ethiopia has some of the lowest gender equality performance indicators in Sub-Saharan Africa. The investors also face significant challenges in worker’s turnover and productivity.
If high-performance industrial parks exist in the country, it implies that there is capacity in the country to develop an eco-industrial park. In this scenario, technical assistance should include a stronger focus on knowledge dissemination, sharing experiences, and peer-to-peer learning between industrial parks and the regulating authorities. Industrial parks managed by public–private partnerships and the private sector show a higher average EIP performance than industrial parks managed solely by the public sector.
This seems to illustrate that industrial parks perform better if they run like a private business or public–private partnership, rather than a government-managed initiative. It is wise that if EIP assessments are undertaken in more industrial parks, they will assist them in their transformation into eco-industrial parks.
According to Assefa, industrial parks are normally classified according to different characteristics such as park specialization in terms of a science and technology park, research park, eco-industrial park or export processing zone or free trade zone.
Booming in the industrial sector along with other sectors is promising to healthy growth of the nation’s economy. Besides, strength of the economy can be manifested in its potential of passing through critical times like the present situation of Ethiopia.
Taking part in a weekly press briefing at the Office of the Prime Minister, State Minister of Finance Eyob Tekalign (PhD) stated that despite the numerous challenges like coronavirus pandemic, global economic slowdown, the locust invasion, as well as the challenge that Ethiopia has been facing in its northern part, the economic progress in the country has gained momentum.
The economic progress witnessed right this time is believed to be the outcome of the broad-based reform the nation has been implementing across the economy within the last two and half years after the launching of home-grown economic reform program which predominantly aims at macroeconomic stabilization, unlocking new potential, setting the foundation for a long term sustainable development.
Dr. Eyob further said, “We have implemented profound reforms that have helped the country ensure stability, encourage economic activities and private sector development, foster job creation as well as empower institutions to be capable of discharging respective responsibilities towards bringing about sustainable growth and national prosperity.”
“The nation registered about 6.1 percent economic growth over the previous Ethiopian fiscal year, 2020/21, despite global economic slow-down, and this year the Ministry is still waiting for the data from the federal Planning and Development Commission. It will be probably disclosed at the end of September or early October. There might be economic progress better than what the nation registered in the preceding fiscal year,” he said.
According to Dr. Eyob, the ten-month data of agriculture sector shows that annual production was about 5.56 percent, much higher than the usual 4.5 percent. The dry seasonal irrigation has also increased by 220.6 percent.
The gold extraction and export figures which have increased by 23 percent, the well swelled overall revenue of commercial bank and development bank, the sustainably increasing insurance companies’ revenue are attributable to the remarkable economic performance of the country amidst a range of hurdles, he underlined.
The Ethiopian Herald September 4/2021
