Ethiopia opens new industrial park

Ethiopia has unveiled Africa’s largest industrial park in the city of Hawassa 275km southeast of the capital Addis Ababa – one of several it is building or planning to build all over the country.

The project is inspired by China and the Hawassa Industrial Park (HIP) – like many equivalents in China – will be dedicated solely to just one sector, textile and apparel.

At 1.3 million square meters it is the biggest in Africa and also the largest dedicated solely to export, said Zemdeneh Negatu, managing partner at Ernst and Young international consultancy firm.

Speaking at the inaugural ceremony last week, Ethiopian Prime Minister Hailemariam Desalegn said the manufacturing sector’s share in Ethiopia’s gross domestic product (GDP) for many years stood at only 0.5 percent, showing the need for economic re-structuring if the country was to fulfil its economic promise.

Ethiopia’s economy, despite a period of rapid economic growth, still largely depends on agriculture. Volatile commodity prices, a severe drought, and political unrest have all curbed expansion.

The HIP has attracted 15 major manufacturing firms from China, Indonesia, the US, and Ethiopia itself. But Yuan Li, chairman of the China Civil Engineering Construction Corporation (CCECC) which designed and built the industrial park, says it has even wider significance.

Ethiopia’s population is nearly 100 million, growing by 2.3 million a year, with a young labour force of 45 million people.

Ethiopia and the HIP were part of China’s one road, one belt initiative, a US1 trillion economic corridor that Beijing hoped would connect China to countries in Africa, Asia, and Europe.

He said industrial parks would be a powerful boost for the country’s economic development and the CCECC was a strategic long-term link between China and Ethiopia.

The CCECC is also engaged in other major projects in Ethiopia, including industrial parks in Adama and Kombolcha, and is also helping build the Ethiopia-Djibouti railway line which Ethiopia hopes will increase trade.
 

China, which has been for many the factory of the world, is now shifting to a higher-tech economy. Arkebe Equbay, special advisor to Desalegn and the brain behind Ethiopia’s industrial parks, said the parks could now attract lower-tech Chinese firms that were now moving overseas to find new markets.

Ethiopia’s population is nearly 100 million, growing by 2.3 million a year, with a young labour force of 45 million people.

Equbay said the manufacturing sector was best-placed to create jobs for all these people. In 10 years Ethiopia would be among the top 10 most populous nations on earth. For each direct manufacturing job, the equivalent of two indirect jobs were created.

The Industrial Park Corporation headed by Equbay is currently also constructing parks in Mekelle, Dire Dawa, Kombolcha, and Adama. It has plans to start construction of parks in September in Jimma, Bahir Dar, Arereti, Aysiha-Dwele, and Debre Birhan.

Despite Ethiopia recently attracting many foreign and local manufacturing firms, especially making textiles and apparel, the share of manufacturing in the GDP has remained small.
 

Desalegn said manufacturing contributed only 0.5 percent of the last decade’s 11 percent average economic growth.

“As annual manufacturing growth currently is 25 percent, in 10 years time it’s projected to increase its GDP share by four-fold and it’s share in exports to 50 percent,” Equbay said.

The key to achieving these targets and to realising Ethiopia’s ambition to become a middle income country by 2025 was Ethiopia’s cheap electricity, which was the cheapest in the world at four US cents per kilowatt hour, said Negatu.

Ethiopia had the second highest installed electricity capacity in Africa after South Africa. Negatu was not perturbed by landlocked Ethiopia’s current problems in moving goods because of a bottleneck at its primary outlet, Djibouti port.

“While Ethiopia is heavily dependent on Djibouti port, it shouldn’t divert us from looking for port alternatives in Somaliland and Kenya,” he said.

The Ethiopia-Djibouti railway line, nearly complete, would cut the transport time for exports and imports from four days to 10 hours.
Desalegn said the eco-friendly HIP “will be a showcase that environmental protection and development can go hand-in-hand to achieve a net zero carbon emitter country by 2025”.

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