It has been repeatedly stated that circumstances related to the war in the northern part of Ethiopia in the past years have been an obstacle for the investment sector. The suspension of Ethiopia from African Growth and Opportunity Act (AGOA) related to the war and the pressure of the international media is among the challenges that tested the investment sector.
AGOA is a free trade opportunity program that America has given to sub-Saharan African countries. Ethiopia has been a beneficiary of this opportunity. However, due to the political pressure of the American government in relation to the war, Ethiopia was prevented from the opportunity.
Following the instability, the foreign media as well as the international community’s campaign and pressure had an effect on the manufacturing industries so that they could not work calmly and new investments could not come easily to Ethiopia. It is also recalled that there was a lot of pressure from their embassies for the citizens of foreign countries to leave Ethiopia, so the manufacturers were forced to work under pressure. The damage happened to investment institutions resulted in interruption of product services and supply, reduction in product sales income, psychological pressure and other problems; it is also known that it remains an obstacle for more investment to come easily to Ethiopia.
The war had put a lot of pressure on the large manufacturing companies located in the industrial parks, which had created job opportunities for many citizens and were helping to achieve technology transfer. Companies operating in industrial parks and supplying their products to international markets were pressured to transfer their products to branch factories in other countries because they supply their products to buyers under long-term procurement contracts; purchases were also canceled.
Currently, three of the 11 industrial parks (Mekele, Semera and Kombolcha Industrial Parks) are located in the war-torn zones. As a result, these industrial parks have become victims of the direct and indirect effects of the war.
According to the data of Industrial Parks Development Corporation, Mekele and Semera industrial parks were not looted and destroyed during the war. The Kombolcha Industrial Park, which was built at a cost of 90 million Dollars and rests on 75 hectares of land, with nine sheds, has been looted and vandalized.
This industrial park is where four manufacturing companies from South Korea, Italy, America and China produce textile products and supply them to the foreign market. The park’s office equipment and information technology (IT) systems, offices and equipment of manufacturing companies, textile garments and leather products for export were looted. Various export standard products that were manufactured by companies that entered the park were stolen.
The raw materials used by the companies to manufacture their products were also stolen. Facilities in the offices of the companies, tools and production systems that cannot be easily replaced, service providers, security equipment, electrical and other cables, containers that were used as warehouses for additional construction of the park, vehicles and other materials in the industrial park were also either stolen or destroyed. The spare parts and other raw materials brought in by the manufacturing companies for their work were heavily destroyed and looted.
The park’s one stop service facilities, production areas, chemical refinery and other parts that provided services in the park were heavily looted and destroyed. Fortunately, this industrial park, which is preferred by investors, was able to recover from the destruction and return to work quickly due to various activities being carried out.
The Head of Marketing and Communication Department of the Industrial Parks Development Corporation, Zemen Jonedi, mentioned that the industrial parks in the war zone were that of Mekele, Semera and Kombolcha. Explaining the type and amount of damage (destruction and looting) to the industrial parks, he said, “War is known to be destructive and harmful in its nature. Therefore, although the damage to the parks is multi-faceted, a detailed study is needed to assess the damage in terms of money and to find out the loss in terms of the benefits that have been available so far, so further investigation will be done.”
Stating the main focus of the corporation is to get the parks back to work, Zemen explained that getting the investors and employees back to work is a priority. Following the peace agreement, work is being done to bring the industrial parks back to work.
According to him, the corporation has been without any information about Mekele Industrial Park for two years. Following the Pretoria Peace Agreement, a group of experts formed by the Corporation went to Mekele and observed the condition of the park. Thus, it was found that the park was not looted or vandalized. Therefore, works are being carried out to quickly put the park into operation.
After the Pretoria Peace Agreement, the Corporation has carried out several activities to bring the Mekele Industrial Park back to work, which has been out of business for a long time. For example, by setting up a team to observe the park, contacting the investors who were in the park, and making decisions on issues that require management decisions, especially the investors who have stopped working in the last two years, freed from shed rent, and activities have been done to enable them to return to work. It was possible to talk to the eight investors who were in the park by phone and e-mail. Soon, joint discussion forums will be prepared and more discussions will be held.
In addition to this, the Kombolcha Industrial Park, which had been looted and destroyed, was brought back into operation in a short time via efforts of the corporation and there is currently a large flow of investment in Samara and Kombolcha Industrial Parks.
Zemen said that there are challenges that are putting pressure on the efforts to return the industrial parks in the war zone to work. Convincing investors to go back to work, returning workers dispersed due to the war to their previous jobs, increased cost of transportation for workers, services provided in one center not being fully started and the problem of water supply are the main challenges.
He said while explaining about the solutions that have been taken and are in progress at Mekele Industrial Park to alleviate these problems; a committee led by the CEO of the corporation was formed and started working for the investors in the park. Finding investors and persuading them to invest has been done.
In order to know the situation of the workers who were working in the park and to prevent the investors from facing labor supply problems when they start working, a consensus was reached through discussions with the labor and social affairs sector of the Tigray interim administration.
The process of solving the transport problem was also facilitated by discussing with the transport office of the interim administration. Discussions have been held to eliminate power, data, and voice interruptions, and work is being done to resolve the problem in a short period of time. As for water supply, the water in the area reaches the park in a small amount beyond the community, so in order to solve the problem; purchasing a pump to draw water from a well is underway through talking to the administration.
It is believed that manufacturers in war zones are in need of a special incentive framework as they are faced with multiple problems. In this regard, Zemen said that the Industrial Parks Development Corporation will provide various supports and incentives to the investors to help them return to their jobs. In addition to regular support and monitoring activities, the investors will be free from the rent of the shed of the past two years. Discussions with the park officials and the local administration were held to quickly return to work the various services that were previously in the park.
In order to achieve the structural economic transformation that Ethiopia is making towards an industrial economy by using its potential in industry and increasing the income from this sector, it is necessary to increase and improve the manufacturing sector many times over the current performance. The growth of the manufacturing sector can be improved along with the expansion of investment. Industrial parks create favorable conditions for the expansion of investment by providing one stop services.
Therefore, it is necessary to achieve the structural economic transformation by solving the problems the industrial parks faced and improving their performance. For this reason, it is necessary to prepare and efficiently implement post-war investment promotion strategies that can guarantee the revival of the investment sector so that the industrial parks that were in the war zone can return to their production operations.
BY BACHA ZEWDIE
The Ethiopian Herald July 2/2023
