Back in February 2015, the Ethiopian government announced it was set to start the construction of four agroprocessing industrial parks in four states. Construction started within a year and some of the parks are now completed and have started production and export.
The country is striving to complete a total of 30 industrial parks over the coming years with a view to create job opportunities for citizens, diversify the export base and earn a large amount of foreign currency. The establishment of these industrial parks will help speed up the transformation of the economy from farming to industrial. To trigger, complement and support comparative advantage, as validated through strategic planning, Industrial Parks Development Corporation of Ethiopia (IPDC) is mandated to develop and operate wide ranges of industrial parks in the country.
IPDC was established in 2014 and is becoming an engine of rapid industrialization that nurtures manufacturing industries, accelerates economic transformation, promotes and attracts both domestic and foreign investors. To activate both pre and post investment servicing, it avails serviced industrial land, pre-built sheds equipped with all-encompassing utilities and infrastructural facilities that fit international standards, with no compromise on workers’ security and environmental safety.
IPDC, in collaboration with Ethiopian Investment Commission and Ethiopian Revenue and Customs Authority and more institutions, also provides one-stop-shop service for investors investing in designated industrial parks. Recently, the Ethiopian Investment Commission (EIC) disclosed that 103 million USD export has been generated from industrial parks in the past nine months. According to ENA, the performance exceeded that of the same period last fiscal year by 40 percent, it was learned.
Investment Commissioner Abebe Abebayehu said that 70 percent of the planned earning from industrial parks during the stated period has been accomplished. Footwear and other leather products, as well as textiles and apparel, have been exported to European countries, the USA, Asia and other export destinations. Various industrial parks across the country have also managed to generate employment opportunities for more than 70,000 persons.
In terms of Foreign Direct Investment, the country has managed to attract 2.5 billion USD in FDI over the last 9 months. Special security precautions are put in place to ascertain the safety and security in and around the industrial parks, Abebe said. He added that although a number of foreign investors have already signed agreements with the government, shortage power supply and other infrastructural facilities have hampered implementation.
While they are specialized in various manufacturing industries including pharmaceuticals, the parks have given due emphasis to textile – as the government sees the sector as a right path or springboard to achieve a successful economic transition. If set up in the right contexts, economists and policy advisors believe that industrial parks are an effective instrument to promote industrialization and structural transformation.
They have already brought about significant economic success stories particularly in East Asia in advancing industrialization, economic efficiency, FDI inflow, and urbanization. There are also cases where such initiatives failed to bring about the desired outcomes in a few African countries for various factors. The IPs are also termed as special economic zones, free economic zones, export processing zones, trade zones, industrial parks, and the likes in different countries’ contexts.
In fact, the experiences over the last 50 years in economic zones around the world portrayed mixed images. Export processing zones (EPZs), the integral part of export-oriented industrialization policy package in newly industrialized Asian countries such as Taiwan and Korea, and Chain’s SEZ’s, which are initially established after the model of EPZs in other Asian countries are prominent success stories in giving rise to rapid industrialization, economic growth and hence structural change.
While EPZs were initially an Irish invention, Tatsuyuki Ota, in his study Industrial Policy in Transitional Economy: The Role of China’s Special Economic Zone in Economic Development stated they were introduced as one tool of the policy packages of the outwardoriented development strategy in Taiwan and Korea and they have been highly responsible for their rapid economic development in Taiwan and Korea. The first Asian EPZ installed at Kaohsiung, Taiwan as an essential part of the outward industrialization strategy was a key element in Taiwan’s economic achievement from thenceforth.
While the success of the Asia countries has stood the test of time, some countries have failed to make similar progress. One important reason for the failure of some African countries could be a weak business environment. In general, evidence shows that so far very few African zones appear to have made significant progress toward taking advantage of the dynamic potential of economic zones as an instrument of sustainable structural transformation.
Hence, the construction of the IPs by itself is not a success. Some African countries that established industrial parks failed to deliver the expected outcome of industrialization. What really matters is they attract an adequate number of foreign and domestic investors, commence operation and production and contribute to the country’s vision of industrialization.
And it seems this is what is happening in Ethiopia as it is committed to emulating the success stories through its newly built state-ofthe-art industrial parks.
The Ethiopian Herald, May 9/2019
BY ABIY HAILU
