BY TEWODROS KASSA
Ethiopia and Russia have been friendly countries for many years. Yuvgeni Terrahin, Russian Ambassador to Ethiopia has paid a field visit to Bole Lemi and Kilinto Industrial Parks recently to further strengthen the relationship in the investment sector.
During the visit, the Ambassador met with Sandokan Debebe, CEO of the Industrial Parks Development Corporation, and discussed ways for Russian investors to invest in industrial parks in the country.
CEO Sandokan Debebe told the ambassador that the current investment opportunities in Ethiopia as well as the complete infrastructure and efficient service in the industrial parks are inviting. Therefore, the situation is welcoming for the Russian investors to invest in Ethiopia.
During his stay in the two industrial parks, Ambassador Yuvgani Terahin met with Daniel Terresa, Deputy Commissioner of the Investment Commission, and the commissioner briefed him on the industrial parks. Expressing his satisfaction over the visit, Ambassador Yuvgeni Terahin said his country will do its part to initiate Russian investors to come and invest in Ethiopia.
In addition to the convenient infrastructure and efficient services, the industrial parks are doing their best in making their surrounding more comfortable for their employees. This includes providing residential houses.
According to the UN habitat report, a formal housing finance system should be created in developing countries to provide affordable housing to middle and lower-middle-income households as a priority. This group can afford a house on the open market. In this case, the government should not subsidize this group. Indirect subsidies, such as tax incentives and the provision of development sites can be made available under the concept of enabling the private sector to be an efficient mechanism in helping house the poor. Availing affordable housing enables the working class effectiveness in promoting the country’s endeavors towards attaining its development aspirations.
Last year, the Industrial Parks Development Corporation (IPDC) announced its preparedness to avail residential houses for more than 21, 000 industrial parks workers at affordable prices. Currently, more than 55,000 people are working in various industrial parks in Ethiopia, and the number is expected to increase to 250,000 when all completed manufacturing hubs go operational in the time to come, according to the corporation.
Therefore, meeting the growing housing demand in the light of the inflow of people from across the country into areas where the industrial parks are built and made operational becomes a timely agenda. Hence, the IPDC is working with city administrations and local and international financial institutions on housing supply for employees of industrial parks.
The United Nations Industrial Development Organization (UNIDO) recommends that responsible management of industrial parks’ labor relations has a direct influence on the industrial parks’ sustainability as it affects the size, morale, and productivity of the workforce. Due emphasis should therefore be given to decent working conditions, freedom of Labor Union activity, and Labor dispute settlement. Modern industrial parks can and should, however, be leveraged as platforms to go beyond such basic protections and to promote superior worker welfare standards, and practices to attract talent, enhance workforce skills, and contribute to quality jobs and a knowledge-based economy.
Realizing that housing shortage is a major problem in Ethiopia, especially in industrial parks, Sirak Ambaye, Founder and CEO of Cornerstone Development Group (CDG) has come to Ethiopia after nurturing twenty-plus years of experience in the real estate business and the financial sector. He has gained motivation to join affordable housing construction for Ethiopian citizens with his experience from his American friends in the field.
The Hawassa Industrial Park Village Workers Dormitory is an innovative and scalable vision realized by Corner-stone Development Group (CDG), a company formed by seasoned American real estate developers with a development portfolio in the billions of dollars with brands such as Extended Stay America, Homestead Village, Echo Stone Housing to name a few. The co-founders of CDG are Sirak Ambaye real estate and finance expert, and Hal Wright, a pioneer in the extended-stay hotel sector.
Sirak has developed ample experience in the real estate business and financial sector from his colleagues when he was in America. He has been working for more than a decade in the real estate business and housing renovation in the U.S. Recently, Sirak’s CDG Company has signed an agreement with the Industrial Parks Development Corporation (IPDC) and the Ethiopian Investment Commission (EIC) to launch the construction of more than 6,500 residential houses for Hawassa Industrial Parks employees.
CDG Founder and CEO Sirak Ambaye told The Ethiopian Herald that there is a huge housing demand and supply gap in Ethiopia. The availability of housing is fundamental to expedite the country’s productivity towards harnessing its potentials in the manufacturing industry.
“My company entered the housing project after witnessing that there is huge suffering from homelessness among industrial parks employees in the country. Controlling the cost of construction and utilizing financial sources effectively enable providing affordable housing in Ethiopia. On the other hand, the government should manage the increasing cost of construction materials and inputs,” he recommended.
He pointed out that his company intends to use simple concrete filling construction technology and other latest construction technology to expedite the housing construction and deliver at an affordable price. Leveraging innovative construction technologies will lower construction costs and delivery times. Thus, CDG set to utilize the latest construction technology to speed up the building and reduce the cost of cement, steel, gravel, and sand, which are the main inputs for construction, he added.
In addition, CDG aspires to expand affordable housing construction to other industrial parks and undertake other affordable housing constructions project in different industrial parks dispersed across the country. At the same time, the company is also planning to build affordable houses for Ethiopians in other parts of the country. To realize its vision of availing affordable houses in the country, the company plans to work with government bodies, banks, and foreign financial institutions.
CDG will innovate on affordable mortgage products, partner with the government to create a conducive ecosystem, and work with leading international development finance institutions to fund the projects and make affordable housing a reality for as many Ethiopians as possible.
Currently, the purchasing capacity of middle and low-income earners should be considered. The loan system should be long-term and low-interest to include low-income earners in the country. In this regard, the company has already developed extensive experience assisted with consultations of relevant government bodies and other pertinent stakeholders to find a tangible solution, he noted.
“We wanted to build a facility that the government and manufacturers would be proud of. More importantly, we aspire to create a conducive working environment for the workers. This type of housing is a crucial piece of the puzzle as Ethiopia tries to attract outstanding multinational manufacturers to its 13 industrial parks across the country,” he asserted.
In addition to the housing, CDG is partnered with education for Ethiopia.org to deliver online language, saving, financial literacy, sexual reproductive health, among others education in the learning center via a custom-built android application to the residents of the Industrial Parks village dormitory.
The participation of private developers such as Cornerstone Development Group has a significant role to play in solving the current housing crisis and provide affordable housing to citizens in the country.
Moreover, the construction of the residential houses in the industrial parks will reduce labor pressure and helps them to be productive. As a result, the country’s foreign exchange earnings will increase as the company’s exports increase. It also reduces the cost of transportation for companies in the industrial park.
According to him, the COVID-19 pandemic has put pressure on the construction sector. However, effective financial utilization alleviates the growing housing demand in Ethiopia. CDG becomes a pioneer in the country through undertaking affordable housing construction in Industrial Parks. The Hawassa Industrial Park Workers Village is a first-of-its-kind with a capacity hosting more than 6,500 workers. The entire complex will have 13 buildings, various sport facilities, plenty of green space, center quadrants with stores, banks, and other amenities to completely accommodate industrial workers on-site with a focus on optimal comfort.
The Hawassa Industrial Park is a textile-focused, cutting-edge industrial park that has attracted over 21 companies over the years, including some with brand names globally in the textile sector. Every day, approximately 30,000 employees, of whom 85 percent are women, walk three to five kilometers to and from work as house rent is not affordable for them in the city. One of the most significant challenges that companies face is being unable to increase efficiency by adding more shifts and employing additional workers as there is a serious scarcity of safe, affordable, hygienic and adequate houses in the city. It is common to hear that 10-15 workers of Hawassa Industrial Park are sharing one small room for living. Despite the companies’ best efforts to provide free bus transportation to and from work, workers are frequently fatigued since they must walk a long distance to catch the bus. Attrition rates are high, putting a significant impact on manufacturing productivity.
The Hawassa Industrial Park Village Workers Dormitory is estimated to cost ETB 600 million and the budget is approved by the Ethiopian Investment Board to be funded by Cornerstone founders, and co-financed by KfW, with additional local finance from Zemen Bank. The project is expected to be completed by mid-2023.
The Ethiopian Herald September 23/2021
