Industrial Parks are Agents of Transformation
Amen Teferi
Last week, the Industrial Park Development Corporation (IPDC) had organized a grand event to commemorate the full operationalization of phase one of its flagship project -the Hawassa Industrial Park. This event was held on June 20, 2017, with the presence of Prime Minister Hailemariam Desalegn.
Industrial parks development is a key sector in Ethiopia’s effort to transform its economy and in curbing the daunting problems unemployment. Industrial parks development has huge impact in speeding up the growth of Ethiopia’s economy and in fulfilling its aspiration to become a leading industrial hub in Africa. Industrial parks development will have immense contribution in job creation to the ever-growing youths of the country, especially to those who are graduating every year from the institutions of higher educations.
When this park is fully operational
High-level officials from the Ethiopian Investment Commission (EIC) and the Industrial Park Development Corporation (IPDC) have been busy last week preparing for the grand production inauguration of the flagship, Hawassa Industrial Park. One of the preparations was arranging a briefing for members of the press. The briefing mainly focused on announcing the inauguration Hawassa Industrial Park and alleviating concerns that the Park is discharging waste to the city.
Arkebe Oqubay, special adviser to the prime minister, Fitsum Arega, commissioner of EIC and his deputy Belachew Mekuria have announced that Arvind Envisol has already installed a technology that ensures zero liquid discharge to the environment, treating 11 million litter of liquid waste daily.
The Park that rests on 1.4 million square meters has already attracted 18 international and 8 local companies that are engaged in the textile and apparel industry. The producers include PVH Corp, Wuxi Jinmao Co. Ltd, TAL Apparel, Raymond, and CK. The eight local investors who have secured entry into the Park will have huge opportunities to learn from the international companies engaged in the textile industries. The 18 leading textile and garment companies are from America, China, India, Sri Lanka.
During the inauguration of the full operationalization of phase one, the guests had highlights on the completion of 15 new sheds. The itinerary of the inauguration also included the laying of a cornerstone for construction of phase two. Besides the CEO forum will be launched.
The Hawassa Industrial Park is located 275 km from Addis in proximity to one of Ethiopia’s premium holiday destination, Lake Hawassa. Hawassa Industrial Park is an Eco-Park, centered on the textile and garment products, and it is fully integrated to the city, in collaboration with the newly built Hawassa University.
As an Eco-Park, Hawassa is mostly powered by renewable electricity sources (hydro-electricity). The design and construction of Hawassa is conceived around energy and water conservation principles – including maximization of natural lightning and natural ventilation, fitting of low consumption bulbs, recycling of rain water, and solar powered LED street lights – making it Ethiopia’s first major eco-friendly development.
The serviced land with pre-erected factory sheds has made things very easy for investors to go operational as soon as possible. In parallel, the Government of Ethiopia is improving Hawassa’s connectivity with the extension of the Addis-Adama highway to Hawassa, the construction of a domestic airport, and the extension of the Addis – Mojo – Djibouti railway to Hawassa.
The Construction the Hawassa eco-industrial park has attracted 18 leading global apparel and textile companies and has consumed more than 250 million USD and built in record time of less than one year. It covers an area of 1.3 million square meters, of which 300, 000 meter square is factory shed build up area. The park have additional area allocated for shared facilities and implement Zero Liquid Discharge (ZLD) that enables to recycle 85 percent of sewerage disposal water and fulfills international standards. It has also accompanied with all government services including One Stop Shop.
At present the industries within the park have created 10.000 jobs, but when the park is fully operational it is expected to create 60,000 jobs in double shift. Upon going fully operational the park will generate huge revenue and it is expected to hit one billion USD from the current 150 million USD per annum from textiles and garment. Moreover, the park will be used as a model for other industrial parks to be built in other parts of the country such as Dire Dawa, Kombolcha, Adama and Mekele.
The Ethiopian Industrial Parks Development Corporation (IPDC) Board Chairperson Dr. Arkebe Oqubay told journalists that the park is a pioneer park and could be a model for other industrial parks which Ethiopia is building now. Dr. Arkebe, who is also Special Advisor to the Prime Minister, said the earning from the textile sector at present is not more than 110 million USD a year.
As a model park, the factories in the park have a convenient environment with access to all necessary infrastructure including power, telecom, water. It was also noted that one-stop shop services established in the park will facilitate the provision of multiple government services to tenants.
Ethiopia also planned to have six industry parks in the coming years and this will boost the manufacturing sector’s share in Ethiopia’s Growth Domestic Product (GDP) that stood at only 5 percent for many years. If the country is to meet its economic promise and realize the much needed economic transformation it should work hard on developing industrial parks.
Ethiopia with a young labor force of 45 million people has a huge potential in the manufacturing sector. “As annual manufacturing growth currently is 25 percent, in 10 years time, it’s projected to increase its GDP share by four fold and it’s share in exports to 50 percent,” said Arkebe Oqubay.
As Ethiopia wants to become a hub for light manufacturing industries, it has planned to build four industry parks in the next two years investing up to $500 million in each. Offering cheap labor, improving power supply and transport infrastructure, Ethiopia has made admirable strides to attract low-end manufacturing businesses seeking new factory locations as wages soar in China.
It has so far finalized the construction of the 156-hectare Bole Lemi Industrial Zone south of Addis Ababa. Korean garment-maker Myungsung Textile Company and Taiwan’s George Shoe Corporation have operations in the park, which is currently undergoing expansion work. The industrial zones offer land for factories at $1 per square meter a month, tax holidays for up to seven years and customs and other services on site for those investing in the nation of about 100 million people. Investors are also attracted because the country benefits from the United States’ African Growth and Opportunity Act (AGOA) trade pact allowing duty-free exports to the U.S. market.
Ethiopia wants to shift away from farming and agriculture and sees manufacturing as a vital sector to create jobs and maintain high growth. Hence it has already kicked off the Construction of Adama Industrial Park.
The Industrial Parks Development Corporation (IPDC) of Ethiopia and China Civil Engineering Construction Corporation (CCECC) has concluded an agreement that enables the latter to build the first phase of Adama industrial park at a cost o of 125 million US dollars. The Adama industrial park will be erected on 100 hectares of land.