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Ethiopia: Industrial Parks – Paving Ethiopia’s Economic Transformation

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On all sides of the world, industrial parks are considered as an enviable vehicles for countries to provide a competitive environment for industries to take off. Industrial parks are, in fact, settled industrial plants in large and proper location with infrastructure, equipment and services conditions, and with perpetual management for its operation.

Currently, Ethiopia has about a dozen industrial parks around the country. This would assist the government to put the basics in place needed to attract both local and foreign investors. Considering the country's limited financial resources, the government at the time has adopted a strategy of concentrating industries in the same Centre with high growth potential, rather than driving out investments nationwide.

For instance, industrial parks drive the economies of other countries such as Thailand, Indonesia, Malaysia and the Philippines; and they believed to be the manufacturing hubs. Taking experience from such countries, the Ethiopian government has been developing industrial parks that can contribute to the development of the country's infrastructure and promote modernization. The development of such industrial parks would assist in creating ample employment opportunities and contributing to the relative consumption of natural resources.

In the near future, the government will inaugurate the largest and specialized apparel and textile park on the continent, Hawassa Industrial Park, constructed at a cost of 250 million USD in Hawassa town. The park is also considered as a pioneer park and could be a model for other industrial parks which Ethiopia aspires to build in the future. It has been expected to create 60,000 jobs in two shifts and generate one billion USD annually for the county.

Perhaps, Hawassa town would be an ideal investment destination for labour-intensive industries such as garment as its labour supply has reached up to five million people within a 50 km radius. Broadly speaking, Ethiopia's competitive and trainable workforce is a strong driver that will result in a thriving apparel and garment sector.

Therefore, through making the largest global apparel companies involved into the park, the government would gain significant benefits in the economic sphere thereby enable the manufacturing sector play a crucial role in the economy. This way the manufacturing sectors contribution to the Growth of Domestic Production would excel the agriculture and the service sectors. Besides attracting foreign companies, the national industrial park strategy assigned 25 - 30 per cent of the factories shed and space in the park would be secured for domestic investors.

Since an industrial park is a type of real estate property, the golden rule for property development must also be applicable. Unless the location is appropriately chosen, an industrial park will not attract many manufacturing firms. Thus, manufacturing firms need to fulfil various inputs including electricity, telephone, Internet, water, sewage treatment, transportation, and residence.

According to IPDC Board Chairperson and Special Advisor to the Prime Minister Dr. Arkebe Oqubay, the factories in Hawassa Industrial Park have been established at a convenient environment with access to all necessary infrastructures including power, telecom, and water. In addition, one-stop shop services would be established in the park to facilitate the provision of multiple government services to occupants.

As the government allocates a sum of 10 billion birr annually to develop industrial parks throughout the country, there is no doubt that the government has given special attention to industrial development and is striving hard to become Africa's light industries hub by 2025. Industrial parks could play a significant role for countries that are transitioning from an agricultural-led economy into an industrial-led transformation as a central element to the betterment of the economy.

Among the benefits from the establishment of industrial parks, the delivery of integrated power transmission, water supply, waste disposal and recycling mechanisms and raw material supply arrangements are basics to the development of industrialization. Import-export transport and logistics facilitation, shared market utilization and effective security as well as competent and effective management are also needed adequately.

In sum, the ongoing expansion of industrial parks will, of course, play a significant part in enabling the country move towards a middle income country by the year 2025. The parks that have been set up so far should increase their employment for women and men as well as increase their production competitively to supply to foreign markets thereby obtain huge foreign currency.

To unleash the potential of industrial parks, the government should develop and operate a wide-ranges of industrial parks in the country. Hence, the IPDC will develop 100,000 ha of land in the next ten years which is precisely 10,000 ha annually for a total factory floor area of 20 million meter square. Thus, working together, remarkable results would be registered in the years to come and further progress will be made in the second growth and transformation period.

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