Industrial Parks for Industrial Transformation

Of late, accompanied by Foreign Minister Dr. Workneh Gebeyehu, the Eritrean High Level Delegation to Ethiopia headed by Eritrean Presidential Adviser Yemane Gebreab and Foreign Minister Osman Saleh made a tour to visit development projects in Hawasa, capital of the Southern Nations, Nationalities and Peoples’ Regional State.

They were briefed on the overview of the Hawassa Industrial Park and its single window services. Among the park’s manufacturing industries, they also visited a textile processing factory. The delegation also visited the technological facilities built at Hawassa Industry Park for sewage treatment.

According to Dr. Workineh Gebeyehu, the visit of Hawassa Park by Eritrean delegation is an important step in resolving the controversy between the two countries. Eritrea received positive response following the call by the Government of Ethiopia to reinforce the relations between the governments of the two countries.

Besides allowing local investors entering in to industrial parks and mega projects, the Ethiopian government will spearhead the process of industrial transformation, on which the government is currently hugely investing. This bent enhances the share of industries to national economic growth.

It was not a simple forecast Ethiopia would portray a remarkable growth as planned in the national transformational plans. The upward swing witnessed in the economic sector was a well calculated, thoroughly analyzed, and properly documented prediction. Ethiopia’s current economic growth is not only ascribable to its sound policy, but also to its translation in to action.

Indeed, the economic achievement is attributable to the country’s thrust towards agricultural development. Agriculture is a major source of employment. A larger sector of the population depends on it, and it has a lion share in export.

Ethiopia’s agricultural development policy has focused on supporting smallholders in terms of building farmers’ skills, developing marketing and putting in place road infrastructures, providing input, rendering quality education, ensuring health, as well as improving access to variety of crops and breeds of livestock.

All sorts of development in technology, information, communication, infrastructure, agricultural production and productivity have to display an upward spiral. With no doubt, the country’s agriculture, which is the major contributor to GDP, could not exhibit growth as expected unless the government gives priority for value-added agricultural products, creates an enabling environment for smallholders to improve productivity, invests in infrastructure, creates market access to farmers. Thus, Industrial parks are now a path to improve productivity and enhance value-added agricultural products.

In this regard, the government has been playing positive role particularly in promoting economic diplomacy and increasing the number of Foreign Direct Investments (FDI). In the 2017/18 fiscal year, the government plans to push the volume of export to 4.6 billion USD, which was 2.9 billion USD last year, according to Ministry of Foreign Affairs. Efforts are geared towards achieving these targets, which are cascaded to the 56 embassies that the country wants to implement across the world.

Ethiopia has the target to buoy up the number of tourists from 820 thousand to 1.2 million till the end of the current fiscal year. Towards the materialization of this end, the country has identified the potential sources of tourists.

By the Ethiopian Investment Commission side, FDI is set to reach 4 billion USD this fiscal year. The targets are set on the grounds of major five years’ targets that are entailed in the Growth and Transformation Plan document. There are also yearly plans set by the different relevant institutions which work closely with diplomatic missions.

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Apart from increasing FDI, foreign investors are also partners for our economic diplomacy. Bringing huge capital from outside in the effort of lobbying and mobilizing international companies and organizations to come and invest in Ethiopia are considered as key contributions of the diplomatic effort. Investment is one of the core pillars of the economic policy of Ethiopia.

Other than promoting investment, companies need to help the country in transferring technology, building development projects and participating in educational research endeavors. Without fostering its economic growth, a nation cannot think of FDI, which by itself is an input and an output for national economic growth.

Currently, the share of service is mounting while the share of agriculture is steadily decreasing. This resulted from the commitment to properly translate domestic and foreign policies in to action thereby to facilitate and make Ethiopia experience an economic take off.

According to the 2015 Ethiopian Economic Report, economic transformation can be considered as a dynamic process through which a country’s economy, society and institutions modernize and leap to more developed levels. Economic structural changes significantly play a role during the transformation period, when industrialization triggers a rapid increase in the share of manufacturing in the economy, and in agriculture sector.

In 2015, the share of the total labour force employed in the agricultural sector falls, while that in other economic sectors rises. The report also highlights the recent economic growth in Ethiopia has been credited for the political and macroeconomic stability, improved domestic policies, and favorable terms of trade for a number of export commodities.

Now, Ethiopia has planned to increase the number of its industrial parks to 15 by June 2018 as part of its efforts to boost manufacturing and export. Ethiopia’s aim in building more industrial parks is to enable the manufacturing sector to contribute to 20 percent of Ethiopia’s GDP and 50 percent of the export volume by 2025, according to the Ethiopian Investment Commission.

These extensive development of industrial parks would be world-class sustainable eco-parks ready for ‘plug & play’. They are dedicated for specific sectors such as textile & apparel, leather & leather products, pharmaceuticals, agro-processing and aimed at coordinated production along value chains.

The Industrial parks are also located along key economic corridors & connected to ports as well as surrounded by Infrastructures such as airports, railway lines, dry ports, universities etc.

Regarding the incentives, the Commission has put applicable incentives for investors engaged in industrial parks. Of these, manufacturers are exempted from income tax up to 8 – 10 years. They are also exempted from duties & other taxes on imports of capital goods, construction materials, spare parts with a value of 15 per cent of capital goods after business license, raw materials for the production of export commodities & vehicles.

Thus, it is true to say the country is committed to boost industrial parks development through the highest standards of professionalism; to drive industrialization, promote exports, create employment opportunities. The remaining thing is investors’ role to eye on or take action to invest in development projects, which will be able to assist the country to reach the middle-income status by 2025.