The development of industrial parks is one of the activities that the government has focused on that will contribute to the realization of the structural economic transformation. Industrial parks have three main basic missions. Their missions are to attract foreign direct investment, expand job creation and carry out technology transfer. The parks will make a great contribution to the national economic development by creating job opportunities for the community living in the areas where they will be built and creating a working environment that is suitable for the environment.
Among the things that make industrial parks preferable are the fact that they bring together and provide many services in one place; build appropriate infrastructure and connect them with other manufacturers. From this point of view, efforts have been made for large international companies to open their factories in Ethiopia by establishing many industrial parks in the country as well as by providing relatively low cost supply of manpower and electricity, tax-free importation of machinery, credit provision, one-center service and infrastructure constructions.
Currently, including the Dire Dawa Free Trade Zone, there are 13 industrial parks across the country; they are making a significant contribution to the development of the national economy through job creation, foreign direct investment attraction and technology transfer. In general, the development of industrial parks, where it is hoped that Ethiopia will play an important role in facilitating the efforts to become the African manufacturing hub, has seen many promising results.
The Industrial Parks’ Development Corporation, which manages the industrial parks in various areas of Ethiopia, has been implementing various operational reforms since the last year in order to expand the results achieved so far and improve the relationship with the investors. These reform activities are believed to be key resources for the Corporation’s efforts to accelerate the country’s industrialization process.
In the past nine years, the corporation has helped the country earn more than 1.2 billion Dollars from foreign trade and save 750 million Dollars by making imported products produced in the country via implementing import substitution scheme. Through these activities, it has contributed to alleviating the country’s foreign exchange shortage. Apart from this, it has created job opportunities for more than 80,000 citizens. It has made the workers possess the knowledge and skills of new technologies in their fields of work.
Aklilu Tadesse, CEO at Industrial Parks Development Corporation (IPDC), pointed out that among the efforts made to increase the development of the industrial sector, the construction of industrial parks in various parts of the country is mentioned. Based on this effort, Industrial Parks Development Corporation is fulfilling its role to speed up the industrialization process. According to him, the reform agendas, which are part of the efforts to make the corporation suitable for the times and convenient for investors, will make Ethiopia a preferred investment destination.
Clear investor recruitment criteria, direct international investment promotion methods and preparation of local investor incentive frameworks; new structural research and implementation; the creation of coordinated cooperation of stakeholders and the activities of the digital operating system are mentioned among the reform activities that the corporation is implementing.
“The government is making multifaceted efforts to create a favorable investment environment for local and foreign investors. In order to utilize Ethiopia’s economic potential, the government publicized important macro-economic reform agendas in the fields of industry, agriculture, tourism, mining and information technology. The reform agenda of the Industrial Parks Development Corporation also aims to effectively implement these national economic reforms,” he said.
Aklilu further explained that a number of promising results of the corporation have been registered. The “Golden Reception” system implemented by the corporation is an operational system that allows investors to be welcomed by the corporation’s senior officials when they come in. This practice has solved the operational problem that forced the investors to come and stay for several days and extend their stay.
A clear recruitment criterion has been prepared to evaluate the investment proposals of investors. The corporation started the “Zero Waiting Time” operating system; it is a quick service delivery method that allows investors to be immediately directed to the park; view the park and hand over the site so that the investment proposal is evaluated and finalized on the day of submission.
Market search and investment promotion activities are also part of the reform. “Investment should not come in search of us, but we have to seek and bring it. We have set up a special team to monitor this for the markets of Europe, Asia and some African countries. Therefore, the investor need not come to us and wait for long time seeking our accommodation; rather, it is we who bring the investment by introducing and asking for it,” he explained.
Previously, the products produced in the industrial parks were intended for the “AGOA” market. This created problems for producers when Ethiopia was canceled from “AGOA”. This practice has been changed through the reform works of the corporation. In the past, the type of production was mostly focused on textiles and garment with “AGOA” in mind. But now, the products of the parks are more diversified and focused on agricultural processing, machinery and automobile, pharmaceutical and textile production.
According to Aklilu, many companies were affected and were leaving Ethiopia in 2021 and 2022 due to pressures related to its cancellation from “AGOA”. But in 2023 and this year, not a single company left the parks. This is due to the diversification of products and the search for European and Asian markets. Previously, the corporation was not responsible for searching market linkage. Through the reform, taking this responsibility as gap filler, the corporation is fulfilling its responsibility to find a market. In 2022, there were no more than 10 investors who entered the industrial parks and applied for investment. In 2023, however, 53 new investors entered the industrial parks.
Among the 177 sheds in the industrial parks, only 20 are waiting for new investments; 157 sheds are occupied by investors. Many parks were previously empty; now five parks (Adama, Bole Lemi, Addis, Semera and Dire Dawa (manufacturing section)) are full and cannot accommodate new investors.
“Nine months ago, there was only one company in Adama Industry Park. Seven months ago, Semera Industrial Park had no any company. But Now, many companies have signed contracts, paid fees and some of them have started working in these parks (for example, all the companies in Adama Industrial Park have started working); Others are entering and installing machines. The work we have done in the reform; the Pretoria Peace Agreement and the macroeconomic reform activities implemented by the government have greatly helped to stimulate the investment sector at a high level,” he said.
The activities carried out by the development of the Integrated Agricultural Processing Industrial Parks have made possible to benefit the farmers by improving the relationship with them. For example, “Akshay Jay Oil” company, which produces avocado oil in Jimma Industrial Park, made an agreement with the local farmers and receives their products. “Soufflé Malt Ethiopia” factory, which produces beer malt in Bole Lemi Industrial Park, created linkage and is working with more than 70,000 Arsi and Bale area farmers. “BOORTMALT” company, which entered Debre Berhan Industrial Park, has created a market connection with more than 50,000 local farmers.
Mentioning that one of the problems in the past was lack of space for local investors, Aklilu explained that in 2023, activities were carried out to fill the financial and other gaps in which local investors were stimulated. Therefore, more than half of the registered investors in 2023 and this year are local investors,” he said.
He also announced that it is not appropriate to continue to depend on foreign investment, which wraps its luggage up and leaves the country when some problems arise; so that the work started with the belief that it is important to involve a competitive local investor is bringing results. He pointed out that the center of the reform is to make foreign investors stay where they are by solving their problems and strengthen investment promotion activities to attract new investments.
In general, Aklilu pointed out that efforts will be made to enable Ethiopia to become a preferred industrial hub that gets its due share from the international industrial value chain by effectively implementing the reform agenda.
BY BACHA ZEWDIE
THE ETHIOPIAN HERALD THURSDAY 11 JANUARY 2024
