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Harnessing resources towards industrialization
Tesfaye Lemma 07-04-17
The wide-ranging development in the Ethiopia has been gearing towards ultimate goal of developing its industrial sector, which is believed to shoulder a large number of employments, meaningfully maximize the country’s import substitution, diversify export and eventually transform the entire economy.
Ethiopia during the second Growth and Transformation plan (GTP) intends to elevate the contribution of the manufacturing sector to 25 per cent from the current 5 per cent.
One of the major steps taken to transform the economy is the integrated approach. It is investing on the agricultural sector, developing it and integrated it with industry through the expansion of agro-industry. This has contributed to improve the productivity of the country’s majority population in the rural area who relied on agriculture. This has moved the country from none to double economic growth rate, which also sparks to agro-industry development.
Having taken this economic stride as a springboard, the country has planned to expand its industry through opening up a number of giant industrial parks. The parks, which are designed mainly for textile manufacture, garment products and agro-industry, are believed to boost the country’s export.
These parks are built as part of the government’s plans to expand the industrial development, which is believed to play a crucial role in realizing the country’s dream to be continental leading manufacturing powerhouse.
The parks will not only have a significant input in transforming the country’s economy but also will play a crucial role in attracting foreign direct investments. It could also contribute a pivotal role in transforming small-scale manufactures.
The Hawassa industrial park is built in an area of 1.3 million square meters with the cost 250 million USD. One of the significant features of this eco-industrial park is that it has 35 factories equipped with one stop service centre and its own renewable electricity source so as to avoid power interruptions.
Another crucial feature is the fact that the park meets its international standard. In this park 15 foreign companies from America, China, India and Sri Lanka as well as six local companies have finalized preparations to start their operation.
These parks will create job opportunities for tens of thousands of citizens, about 60 thousand jobs in the just completed phase and 80 thousand when expansion project of the park is completed.
In order to achieve its ultimate goals, Ethiopia is investing billions of Dollars to build 12 Industrial parks across the country. Among which the Dire-Dawa, Kombolcha and Mekelle industrial parks are underway properly to be completed as schedule.
The country is striving to raise its annual earnings of At 110 million USD from the textile sector. The currently developing industrial parks will significantly rise this earning. For instance, up on its complete operation, the Hawassa Industrial Park is expected to generate 1 billion USD per annum.
The industrial parks will focus on agro-industries as a means to drive rural industrialization and job creation. The country aimed at fostering rapid industrialization through nurturing manufacturing and agro-processing industries, thereby to accelerate economic transformation and attract domestic and foreign direct investments. It is obvious that the government has given top priority for the development of industrial parks in order to facilitate the economic transformation of the country.
The country’s national plan is to develop the industrial sector. This was widely exercised since the past fifteen years. In the first Growth and Transformation Plan the major focus was on the integrating the agriculture with the industry.
Whereas, in that period consolidated activities had carried out to transform the agricultural sector so that it enabled thousands of farmers to be not only food self reliance but also change their classes. There are also a considerable numbers of farmers who have become potential investors.
The country has also strengthened its consolidated efforts and planned a better growth scheme in the 2016-2020 periods that would be a better time to Ethiopia to strengthen its efforts towards poverty alleviation and efficiently execute the second national plan having considered the experience in the first GTP period.
Developing the industrial parks could help the country to expand its industry and thereby strengthen its efforts to alleviate poverty and ensure sustainable economic growth.
The people at every corner of the country have come together and cooperate with the Government to maintain the fast sustainable economic growth. They have been working industriously so as to realize the various development projects in different parts of the country including the industrial parks which are believed to bring the structural changes of the country’s economy. The commitment of the government coupled with the willingness of the people to exert strong participation will certainly ascertain the overwhelming economic progress in the country.
It is so exciting that Ethiopia is at a juncture where it strives to be the hub of light manufacturing industries in the continent as it is developing world class industrial parks at the moment.
The government has pursued extensive development of industrial parks that can serve for sectors including textile and apparel, leather and leather products, pharmaceuticals and agro-processing. Multinational companies commonly prefer countries with well-established and reasonably developed infrastructure in order to utilize the imported machinery.
In the course of constructing the industrial parks, we have explored proven experiences of other countries that have benefited from the sector; as a result, our success is becoming evident. In the coming 10 years, the government would work strenuously to speed up expansion of the manufacturing sector.
The country's vision is to see vibrant manufacturing sector in 2025. Nowadays, the sector is contributing about 5 percent to the GDP; we are striving to raise the figure four folds in the coming ten years. The sector has created 360,000 up to 380,000 jobs and we are working to increase this to 2 million in the same period.
Though most of the investors who have begun functioning in the Hawassa Industrial Park are foreigners, the government is implementing special incentives to encourage local investors to operate in the park so that they can support in order to increase the participation of the local investors in the parks.
Since the sector creates jobs for thousands of citizens, the government is working to encourage both local and foreign investors to invest in the sector. It is working to ensure affordable, reliable, sustainable and modern power supply and reduce any constraint in this regard.
The recent report of the United Nations Conference on Trade and Development also indicated that the Foreign Direct Investment has grown by 46 percent that Ethiopia stands second next to Vietnam in textiles and apparel industry in the world as it created favorable environment for FDI in such short period of time.