africa Ethiopia industry and commerce Infrastructure

Ethiopia: Prospects and challenges of industrial parks

Industrial park (IP) is, more or less, a geographic cluster of self-reliant corporations that are assembled together to achieve economies of scale and positive externalities by sharing common infrastructures. They also may take advantages or opportunities for mass procurement and selling, training and related services. IPs will involve open production areas, controlled working environment, knowledge hubs and common research facilities that have an advantage to all members of the park. IP further have modern infrastructure and general physical infrastructures that may include: communications, roads, water, power, drainage, sewerage and its treatment plants among others.

Recently, Ethiopia has concentrated on developing industrial parks as a viable strategy to maximize foreign exchange revenue. The country is striving to finalize a total of 30 industrial parks over the coming years. Ethiopia’s industrial parks include Hawassa, Bole Lemi, Mekelle, Kilinto, Kombolcha, , Jimma, Dire Dawa, and Debre Birhan among others.

Of course, Ethiopia has secured more than $100 million export earnings from products manufactured in the industrial parks over the last fiscal year. The performance has increased almost by 40% when compared to last year same period. Textiles, shoes and other leather products were among the manufactured items that generated hard currency for Ethiopia. The active industrial parks in Ethiopia have created jobs for over 70,000 people thus far.

However, the following three main important things should be considered

  1. Some of the industrial parks have partially started operation and some others are already operational even though internal conflicts in different parts of the country in these days have hardly influenced the performance of the parks. Accordingly, special security precautions should be in place to ascertain the safety of the industrial parks throughout country.
  2. The industry vs. community relationship is something that affects investment efforts in the third world countries. The main problem is lack of corporate social responsibility policies by the industrial park administration that should link the industry and the society. The same shall apply in the Ethiopian industrial system that lack similar platforms.
  3. Private industrial villages are the main investment structures in the different developed countries. There are cities anchored to a single industry or corporation. In this regard, the Ethiopian industry park shall incorporate the private sector as the main stakeholder and actor. Even though, this is the main purpose of forming industrial parks in the Ethiopian legal framework, which is stated in the industrial park proclamation No. 886/2015 article 4(3) as “encouraging private sector participation in manufacturing industries and related investments” .

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