The two banks are bidding to enter the HIP after the government offered private banks to join
Lion and Awash banks are vying to open a branch in Hawassa Industrial Park (HIP), following the government’s offer allowing private banks to join the Park where the Commercial Bank of Ethiopia (CBE) is the exclusive banking service provider since last year.
After getting a go-ahead from the Ethiopian Investment Commission (EIC), the Industrial Park Development Corporation (IPDC) approached the banks to submit their bids to rent out a two-room space of 84sqm designated for banking service.
“Many private banks have approached us to enter the Park,” said a senior executive at HIP, which became operational last year, hosting 20 well-known international brands including H&M, PVH, CK, Arvind, Raymond, and Hirdaramani.
Allowing the state-owned giant, Commercial Bank of Ethiopia (CBE) which grossed 14 billion Br profit last year, to operate exclusively in the Park was not taken well by the private banks which consider it as a potential business domain.
With 52 sheds designated for textile and apparel manufacturing destined for the export market, HIP is expected to supply 50 containers of products daily. During the past fiscal year, the Park earned 200 million dollars- 15pc of the country’s total export revenues. The amount is also significantly higher than what Bole Lemi and Eastern industrial zones have generated- 24 million dollars each.
“Private banks were not operating in the Park for lack of space” Fistum Arega, commissioner of the EIC, told Fortune.
The bid, announced late December 2017, was opened two weeks ago. The IPDC is evaluating the financial offers from both banks. Though the Corporation had announced a tender and claims that it had notified all private banks to bid for the area, only Awash, which netted one billion Birr last year and Lion, having bagged a net profit of 268 million Br, responded.
“We were not notified of any tender,” said a senior executive of one of the mid-sized private banks. “The announcement does not clearly invite banks to bid for the spaces.”
Companies pay two dollars a square metre monthly as rent for sheds in HIP, which is one out of the 15 industrial parks the country is aspiring to have by June 2018. The government is massively expanding industrial parks in its effort to boost the manufacturing sector’s and export volume contribution to gross domestic product (GDP) to 20pc and 50pc by 2025, respectively.
The winning bank will reside in a building lying on 938sqm, occupied by the China Communications Construction Company (CCCC), which completed the construction of the Park for a quarter of a billion dollars within nine months. The building has six rooms and a 258sqm shopping mall which will host a supermarket, pharmacy, laundry and similar businesses.
Sprawled on a 410,000sqm plot in Hawassa, the capital of Southern Nations, Nationalities & Peoples’ Regional State (SNNPR), the Park has a clinic, police station, and fire and emergency services centre, making it a mini-city.
“HIP is a potential market for us as it has many employees and multinationals” said Getachew Solomon, president of Lion, one of the banks which has approached the Corporation to enter the Park.
The Park will have a maximum absorption capacity of 60,000 employees once fully operational, but currently, it hires close to 25,000 workers.