BY BACHA ZEWDIE
Dire Dawa the “oasis” is among the Ethiopian cities characterized as industry hub. Dire Dawa’s hospitality and its wonderful community have made it convenient and ideal for investment. Being an “industrial corridor” with better investment potential and favorable conditions in the manufacturing sector, Dire Dawa city has been achieving significant results in the large-scale activities it is doing in the investment sector in recent times.
Investment in Dire Dawa
Dire Dawa, which is located along the Ethio-Djibouti railway line, is a city famous for its commercial activities. However, though it has been trying to return to its former glory in recent years, this commercial center had been stagnant.
One of the activities that indicate this effort is what the city is doing in the investment sector. The sector has been managed by a board to increase the flow of investment via solving the sector’s problems. This is a step taken to ensure that all investment sector issues are addressed by the board, and the sector’s problems as well as investors’ questions get a quick and organized response.
According to Abera Mengistu, Head of Investment Research and Promotion Team of Dire Dawa Trade, Industry and Investment Office, the activity of the investment sector in the city is recording encouraging changes. The city has been able to record good performance in the investment sector in the last eight months. The Office has moved with a plan to grant investment license to 262 new investors in just eight months.
Out of this, it was possible to give investment license to 245 investors, of which 23 are associations. These new investors who received licenses have been able to register a capital of more than 20.8 billion Birr. The sectors in which the investors are engaged are services (173), manufacturing (62) and agriculture (10).
When the investment projects come into operation, it is expected to create job opportunities for more than 21,000 citizens. Out of this, 10,000 will benefit from permanent employment. Six of the newly licensed investment projects have completed construction and started production and services. Abera explained that the rest are under construction, machine installation and other stages of implementation.
Abera mentioned that in terms of infrastructure provision, the city has made efforts to increase the flow of investors by realizing better infrastructure provision. He stated that the 202-hectare Dire Dawa Industrial Village has its own power distribution system and is not connected to the city’s power supply, so there is no risk of power cuts.
Investors have given their testimony that they have a good view of this good infrastructure provision. They also said that the power distribution station is a reliable solution to the problem of power supply, which was frequently interrupted and had a significant impact on the productivity of investment institutions, Abera added.
Though the internal paved road of the industrial village is expected to be improved soon, the road is in good condition. As Dire Dawa has potential underground water resources and there is water allocated for investment from the city’s water supply, investment projects will not face water supply problems.
It is known that the operating system used to encourage investors has a legal framework prepared at the national level. In this regard, the Dire Dawa City Administration will implement procedures to encourage investors to enter the city based on the legal framework.
According to Abera, the one window service provided to investors allows investors to easily provide and receive quick responses when they request necessary resources for their projects. This system has changed the work process which used to be a waste of resources (time and money) and made it possible to provide fast service. Based on the incentive guidelines implemented at the national level, they are part of measures to encourage investors by offering land lease-free, facilitating efficient operations and other activities.
One of the benefits of investment projects is that they directly or indirectly benefit the communities in the areas where the projects are carried out. In this regard, the investment projects carried out in Dire Dawa city benefit the city and the local society in various ways.
Investors entered the city are expected to benefit the local community in various ways like job creation. The investment projects have created job opportunities for many city and surrounding residents. In addition to job opportunities, the residents are expected to benefit from product and service provision, technology transfer and market opportunities.
Since investors carry out infrastructure development activities in the areas where they do their investment work, the local community will also benefit from this activity. This benefit has made the community develop a positive attitude towards investment projects.
Dire Dawa Free Trade Zone and its investment
Establishing Free Trade Zones is one of the procedures that countries implement to streamline their export and import trade and to increase their foreign direct investment flow and to improve their overall economic growth. A free trade zone is a part of the trade and investment protection areas called “Special Economic Zones” and it is a place where value-added production, logistics, financial provision and similar activities and services are carried out.
In addition to producing products, importers and exporters can bring goods into the country and store there, process and export them back. Efficient logistics services and integrated financial and advisory services are also provided to facilitate the process. It is said that a free trade zone is an option that increases investment; helps create new job opportunities; and reduces bureaucratic procedures. It is also described as an area where there are no trade barriers and lowered taxes. The legal procedures applied there are relaxed and provide relative freedom compared to other areas.
With this in mind, the Dire Dawa Free Trade Zone, which is hoped to make significant contribution to the national economy by streamlining Ethiopia’s export and import trade and increasing investment flows, was inaugurated on August 14, 2022 by Abiy Ahmed (PhD) the Prime Minister of Ethiopia.
The free trade zone, which was put into operation after the completion of the activities to bring the industrial park and dry port in Dire Dawa into service by integrating it with international air transport, rail and road transport, as well as providing access to necessary banking and customs services; it has been stated that it will contribute greatly to the development of Ethiopia’s trade and investment sector which has been away from the free trade zone system for several years.
The current Free Trade Zone, which used to be the Dire Dawa Industrial Park, has been transformed into a free trade zone in connection with the development of the country’s commercial activity and logistics capacity. The free trade zone was built on 150 hectares of land in the first phase, and four thousand hectares of land has been prepared for expansion.
Currently, many investors are showing interest in operating in the free trade zone. A better flow of investors is seen than before. It is making a big contribution to increase the flow of investment, Abera said. It cannot be denied that multi-faceted arrangements are needed to effectively accommodate investors who want to operate in the Free Trade Zone by creating an efficient and comfortable investment environment. In this regard, Dire Dawa Free Trade Zone is making great efforts to create favorable conditions for investors.
Following the establishment of the free trade zone, it is making many preparations to increase flow of investors. Work guidelines and regulations have been prepared. Manufacturing, logistics and warehouse services are provided there. The service capacity of the trade zone, including land, has been expanded to match the increasing flow of investors.
Investment barriers and future directions
Although Dire Dawa is showing good performance in investment activities, there are still challenges that hinder its performance. Among these are reluctance in getting into work quickly and the land taken for investment activities are fenced and transferred. Good progress has also been seen in the last three years to solve these problems.
Other problems in the sector include the government’s failure to implement the support and follow-up and not to take prompt action against those who cause damage, according to Abera. Abera said, “The first task in identifying the direction of Dire Dawa’s future focus in the investment sector is to identify the investment potential of the city.” He explained that investment development will be done with this in mind.
The city is also known as “Industrial Corridor”. When the City Administration’s Trade, Industry and Investment Office conducts the Project Profile, most of them are focused on the manufacturing sector. 4185 hectares of land in the former Dire Dawa Industrial Park and the current Free Trade Zone are available for investors. The preparation also indicates the producer’s desire to expand the sector.
Therefore, the main focus of Dire Dawa’s investment is the manufacturing sector. The City Administration is paying great attention to this sector. The investment decree (1180/2020) pays attention to the manufacturing sector, so the city administration’s investment activities are also monitored according to the decree.
THE ETHIOPIAN HERALD TUESDAY 18 APRIL 2023
