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Hawassa Industrial park points to an industrialization era

(Helen Mato 07-18-16)

This week Ethiopia inaugurated the largest industrial park in Africa. The Hawassa eco-industrial park, which is built on 300 hectares of land, is dedicated to host mainly textile and garment products.

Currently, fifteen leading global apparel and textile companies from America, China, India, Sri Lanka as well as six local manufacturers are operating within the park. It also has thirty-seven factory sheds, and its own renewable electricity source.

Furthermore, Hawassa eco-industrial park also consists a provision of all government services one-stop shop service center and also employs Zero Liquid Discharge (ZLD) that enables to recycle 85 percent of sewerage disposal water and fulfills international standards.

Indeed, the park have additional area allocated for shared facilities, as it encompasses an area of 1.3 million square meters, of which 300,000 meter square is factory shed build up area.

The park will serve as a prototype for the industrial parks being built in other parts of the country.

Prime Minister Haielmariam Desalegn said that

"the eco-friendly industrial park will showcase that environmental protection and development can go hand in hand. The manufacturing sector's share in Ethiopia's Growth Domestic Product (GDP) for many years stood at only 5 percent, showing the need for economic structural challenge if the country is to meet its economic promise."

Special advisor to the PM, Arkebe Equbay, said the park can attract Chinese firms that are moving overseas to open plants. Ethiopia with a young labor force of 45 million people has a huge potential in the manufacturing sector. "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".

The Hawassa Industrial Park is expected to employ 60,000 people at full capacity and be able to generate export revenue amounting to 1 billion U.S. dollars.

Indeed, Hawassa industrial park is the beginning of many to come.

The second Growth and Transformation Plan envisages that “7 million square meters land will be made available for investor engaged in manufacturing and related sectors, four pilot agro industry parks will be established which will be linked with millions of smallholders to supply inputs, regional administrations, cities and towns will get the necessary support to develop standardized industrial clusters and parks for those investors promoting from small to medium industries, and hence generate employment opportunities”.In this regard, agro-industrial parks are the main change drivers.

An ‘agro-industrial park’ focuses on the processing required of ‘agricultural products’ and the mix of ‘non-agricultural’ industries may be low or non-existent. Of primary importance is access to viable environs, where a range of productive agro-horticultural initiatives may exist.

Management, information, transport, storage and packaging services can be pooled across a range of agro-industrial processing firms. There will also be prospects for reprocessing wastes and using subpar product of one processing system as the raw material for another. Furthermore agro-industrial parks offer networks of exchanges between producers, markets and processors, but also offer the physical arrangement essential for transforming industries.

In this regard, the role of the planner, public servant, professionals and the entrepreneur and those within the local finance industries that support them. Joint investment and industrial planning are central to issues of park construction and operation.

There are a number of distinct benefits with launching a dedicated agro-industrial park that will attract similar or complementary enterprises. Working in close vicinity provides for streamlining of management, of supervision, of services and of shared market utilization. The different initiatives are able to pool and exploit the complementarity of raw materials, utilities, information resources, transport, import-export arrangements, and similar co-ventures that comes from a cooperative and well-coordinated industrial estate supported by both local government and private businesses.

The concept of the agro-industrial park, with the setting up of common infrastructure and services that may be used by similar processing enterprises on site, provides potential to minimize expenditure and thus reduce both borrowings and risks to investors and industrialists.

There is also economic-scale involved with the provision of services and of plant for treatment and/or disposal or recycling of wastes. These may require a minimum throughput that would be prohibitive to provide economically by the many separate enterprises involved. An agro-industrial park may have a greater chance of becoming self-sustaining from the outset, with costs pooled across the many enterprises involved.

Ethiopia has the potential to trail the examples Vietnam and similar of developing countries which succeeded in creating millions of employment opportunities in the light manufacturing sub-sector by pulling similar advantages and by inviting leading investors.

It can surely become globally competitive in large segments of light manufacturing, such as apparel, leather products, and agribusiness and, if successful, could create millions of employment opportunities in the process by leveraging its labor cost advantage, that is low wages combined with high labor productivity in good-practice firms, and comparative advantage in the natural resource industries, such as agriculture, livestock, and forestry. Indeed, Hawassa industrial park is the beginning of a shining industrialization era.

 


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