Ethiopia, a country located in the Horn of Africa, has been making significant strides in its economic development over the past decades. One of the key drivers of this growth has been the establishment and expansion of industrial parks across the country. These industrial parks have transformed Ethiopia into a burgeoning hub for manufacturing and investment, attracting both domestic and foreign companies. In this article, we will explore the remarkable growth of industrial parks’ development in Ethiopia and its implications for the country’s economy.
Ethiopia’s industrial park development is part of the government’s ambitious plan to achieve middle-income status by 2025. The vision is to transform Ethiopia’s predominantly agrarian economy into an industrialized and manufacturing-led economy. The development of industrial parks plays a crucial role in realizing this vision, as they provide a strategic platform for attracting investment, creating employment opportunities, and driving economic diversification.
Industrial parks in Ethiopia are strategically located near major cities and transportation hubs, ensuring easy access to markets and transportation networks. They are equipped with modern infrastructure, including reliable power supply, water resources, ICT connectivity, and transportation facilities. This infrastructure ensures that businesses operating within the parks have the necessary resources and support to thrive.
The Ethiopian government has implemented a range of investment incentives and favorable policies to attract both domestic and foreign investors to its industrial parks. These incentives include tax holidays, duty-free importation of machinery and equipment, access to credit facilities, and simplified administrative procedures. Additionally, the government has established a one-stop-shop service to streamline the investment process and enhance the ease of doing business within the parks.
Industrial parks’ development has been a catalyst for job creation in Ethiopia. These parks have created a significant number of employment opportunities, particularly for the country’s growing young and skilled workforce. By providing training and skill development programs, the parks contribute to human capital development, equipping the workforce with the necessary skills to meet the demands of the manufacturing sector.
Ethiopia’s industrial parks are designed to attract a wide range of industries, including textiles and garments, leather and footwear, agro-processing, pharmaceuticals, and electronics. This diversification of sectors helps reduce the country’s reliance on traditional agricultural exports and promotes value addition and export-oriented manufacturing. The export-focused nature of the parks contributes to foreign exchange earnings and promotes Ethiopia as a competitive manufacturing destination on the global stage.
As Ethiopia pursues industrialization, it is also committed to sustainable development. Industrial parks in the country are developed with an emphasis on environmental sustainability. Efforts are made to incorporate green technologies and practices, such as renewable energy sources, waste management systems, and water conservation measures. Additionally, the establishment of industrial parks in rural areas has the potential to drive regional development and uplift local communities through job creation and infrastructure development.
According to ENA, Yirgalem Integrated Agro-Industrial Park, located in Ethiopia’s Sidama Region, has been creating economic benefits for the local community by strengthening their participation in the supply chain.
The Park, which covers 294.5 hectares, concentrates on processing organic dairy, avocado, and coffee for export, is also playing a pivotal role in the national economy by exporting its products abroad and enhancing import substitution.
The Park’s Chief Executive Officer, Hailu Yetera said that more than 16,000 citizens have been able to benefit from the park by engaging in the supply chain.
The park is assisting youngsters in the area in preparing seedlings of various plants, including avocado, in order to enable them to supply the seedlings for local farmers, he added.
Hailu further stated that efforts are also underway to enhance the benefits of the local community around the park by designing development projects, citing activities being carried out in the production of honey and other agricultural products as well as the construction of schools, health facility and the supply of potable water.
Indicating that the park was officially inaugurated three years ago, the CEO revealed that the park has secured 15.5 million USD from the export trade of edible oil extracted from the pulp of avocados during the stated period.
Yirgalem Integrated Agro-Industrial Park has also enabled the nation to save close to 14 million USD through value added products of milk and other agricultural outputs to domestic market, the CEO pointed out.
There are three Rural Transformation Centers (RTCs) situated within a 100-kilometer radius of the park at Bensa Daye, Aletawondo and Morocho.
The RTCs are rural development initiatives of the Government of Ethiopia that not only facilitate inclusive rural development, but also serve as a linkage to Yirgalem Integrated Agro-Industrial Park in terms of raw material supply.
For most farmers, the RTCs are the main point of contact with commercial agricultural value chains, according to the park.
In addition to the Industrial parks of manufacturing sector, the government of Ethiopia has given a great deal of attention to the development of Integrated Agro-Industrial Parks with a view to accelerating rural transformation.
The development of industrial parks in Ethiopia has been a transformative force, propelling the country’s economic growth and industrialization agenda. By creating an environment conducive to investment, job creation, and sector diversification, these parks have attracted both domestic and foreign companies, positioning Ethiopia as a competitive manufacturing hub in Africa, as the country continues to advance its industrial parks’ development; it is poised to reap the benefits of sustainable economic growth, increased exports, and improved living standards for its people.
To attract more investment in industrial parks, the government of Ethiopia can undertake several measures: The government should enhance its efforts to promote industrial parks and highlight the advantages and opportunities they offer to potential investors. This can be achieved through targeted marketing campaigns, participation in international trade fairs and investment forums, and engagement with potential investors through road shows and investment missions.
Continued investment in infrastructure development is crucial to attract more investment. The government has to focus on improving transportation networks, expanding power generation capacity, ensuring reliable water supply, and enhancing ICT connectivity within and around industrial parks. Upgrading infrastructure will increase the attractiveness of the parks and provide conducive environment for businesses to operate.
Streamlining administrative procedures and reducing bureaucratic hurdles is essential to attract more investment. The government can further simplify licensing and permit processes, establish a dedicated one-stop-shop service for investors, and introduce online platforms for faster and more efficient business registration and approvals. By prioritizing ease of doing business, Ethiopia can create a favorable investment climate.
The government is needed continuously review and refine its investment incentives and policies to align with changing market dynamics and investor needs. This may include extending tax incentives, offering customized incentives for specific industries or types of investments, and providing support for research and development activities. Regular assessments and consultations with investors can help identify areas for improvement.
A skilled workforce is crucial for industrial development. The government should collaborate with educational institutions, vocational training centers, and industry stakeholders to develop programs that align with the skills required by industries operating in the parks. By establishing training centers within or near the parks, the government can enhance the availability of a skilled labor force and attract investors looking for a capable workforce.
Collaboration between the government and the private sector is vital for the success of industrial park development. The government can encourage public-private partnerships by facilitating dialogue, providing support for joint ventures, and creating platforms for engagement between investors and government officials. By working together, the government and the private sector can address challenges, share resources, and jointly promote industrial parks’ development.
A stable political environment is crucial for attracting investment. The government should maintain political stability, ensure the rule of law, and provide a secure environment for businesses to operate. This includes protecting intellectual property rights, enforcing contracts, and addressing any security concerns promptly.
The government can promote the development of industrial clusters within the parks by creating linkages between companies in related industries. By clustering companies with complementary products or services, economies of scale can be achieved, supply chains can be strengthened, and knowledge sharing can take place, making the parks more attractive to investors.
By implementing these measures, the government of Ethiopia can create a more investor-friendly environment, enhance the competitiveness of its industrial parks, and attract a higher influx of domestic and foreign investment. This will contribute to further economic growth, job creation, and the development of a vibrant and diversified manufacturing sector.
BY LAKACHEW ATINAFU
THE ETHIOPIAN HERALD WEDNESDAY 20 MARCH 2024
