Industrial Parks in Ethiopia
The African country Ethiopia, one of the world’s oldest civilizations, is also one of the world’s poorest countries. On top of that, the nation suffered its most sluggish period of growth in 2015 due to ongoing social unrest and a devastating drought. And so, to enable the nation to become a middle-income country by 2025, an ambitious plan has been set to construct 17 agro-industrial parks in Ethiopia.

The main challenges for Ethiopia are sustaining the economic growth it achieved and accelerating poverty reduction, which can best be done by creating more jobs and therefore expanding the work sector. The industrial parks in Ethiopia plan to do just that. The parks are a part of the second phase of the government’s Growth and Transformation Plan (GTP II), which will run from the 2015/16 year until 2019/20.

In the first year of GTP II, the government constructed two parks, both of which have created a much-needed influx of jobs. The first, Bole Lemi I Industrial Park, has created over 11,000 job opportunities and has exported products that have a value of 20 million USD. The other, Hawassa Industrial Park, also created jobs for over 60,000 citizens and is expected to export products valued at one billion USD per year. The government is expected to build an additional three parks in Mekele, Combolcha and Adama this fiscal year.

Industrial parks are known to have a great role in expanding a region’s manufacturing sector and tapping into their local talent. The idea to develop industrial parks in Ethiopia was modeled after those in Asia and Eastern Asian countries such as China, South Korea, Singapore, Malaysia and Vietnam.

The hope is for the parks to create an influx of jobs for the youth in Ethiopia as they did in other countries, which is an objective of utmost importance in GTP II. Luckily, among the total job opportunities created in the parks, 85% are covered by women and youth, and disabled citizens also have an opportunity to find work. By the time the parks are completed, Ethiopia’s working class will include the full range of the population.

These 17 agro-industrial parks in Ethiopia could be the first step to promoting investment, tapping into the country’s potential and laying the groundwork for a sustainable economy.

Mayan Derhy

Photo: Flickr

Ethiopia is in the midst of a US $75 billion dollar, 5-year growth plan. The plan includes infrastructure projects in and around Addis Ababa, the nation’s capital. According to Mathewos Bekel, head of the city’s planning office, Addis Ababa is already more than 125 years old so plans will change the existing situation of the neighborhoods in order to put in more infrastructure. Therefore, the main challenge developers will come when trying to redevelop the existing areas.

The plans will expand market areas, creating more space for leisure areas and transportation, and will bring in more services such as cafeterias and restaurants. The city and surrounding areas are expecting a population growth of about 5 million people in the coming, and as many as 8 million in the coming 25 years. Rapid population growth is a trend seen across Africa. 41% of Africans live in cities and that numbers grows by 1% every 2 years. The city planning office will work to transform 50% of the cities slums into permanent housing complexes within a decade. In order to improve the slum areas in terms of the quality of the buildings, the infrastructure, and services, they need to be redeveloped and updated.

Based on its Annual Competitiveness Report, the African Development Bank says a shortage of infrastructure reduces the continents annual growth by at least 2 percent. Infrastructure deficit has been identified as a major barrier to improved productivity, private sector development, economic diversification, and spatial inclusion. By spending just 5% of its total GDP on infrastructure, the bank estimates productivity could increase by up to 40%.

Ethiopia is one of the world’s oldest and poorest countries. The country’s per capita income of US$370 is significantly lower than the regional average of US$1,257. The government is working to reach middle-income status—US$1,025—over the next decade.

The economy has experienced strong economic growth over the past decade, averaging 9.9% per year in 2004/05-2011/12, substantially higher than the regional average of 5.4%. This economic growth has created positive trends in reducing poverty throughout urban and rural areas. In 2004-2005, 38.7% of Ethiopians lived in extreme poverty. Five years later this proportion was reduced to 29.6%. Using the Growth and Transformation Plan (GTP), the goal is to reduce this to 22.2% by 2014-2015.

Ethiopia’s investment in infrastructure will play a key role in continuing and accelerating the progress made in recent years towards economic growth and development goals. Over the past two decades, significant progress has been made:

  • Primary school enrollments have quadrupled
  • The number of people with access to clean water has more than doubled
  • Child mortality has been cut in half

Ali Warlich

Sources: CNN, AfDB, World Bank
Photo: Focus Africa