Ethiopia has commissioned the largest industrial park in Africa, signalling its intention to become one of Africa’s manufacturing hubs.
The Horn of Africa nation, which is among the fastest-growing economies in the world, recently unveiled the Hawassa industrial park, which is core to its efforts to become one of Africa’s manufacturing powerhouses.
The megafacility, built at a cost of $250-million, is intended mainly for textile and apparel manufacturing and agroprocessing.
Located in Hawassa town, some 275 km south of the capital, Addis Ababa, the industrial park is located on an area of 1.3-million square metres, making it the largest in Africa.
Ethiopia aims to export textiles and apparel worth $2-billion a year by 2020, up from $250-million currently.
Ethiopian Prime Minister Hailemariam Desalegn said at the official opening ceremony that the industrial park was part of government’s efforts to achieve growth through increased manufacturing output, attract foreign investment and ensure sustainable economic development.
He added that the Hawassa industrial park would create 83 000 jobs and that the construction of 16 similar industrial parks would be undertaken throughout the country.
“We want to sustain the growth of the manufacturing industry, as stipulated in our five-year Growth and Transformation Plan,” noted Desalegn.
Over the past decade, Ethiopia’s manufacturing sector grew at an average of 11% a year, driven by increasing export earnings from the footwear and apparel industries.
The country, which is endowed with fertile agricultural land, has adopted the Agricultural Development Led Industrialisation strategy, through which it aims to commercialise smallholder agriculture through product diversification, shifting to higher-valued crops, promoting niche high-value export crops, supporting the development of large-scale commercial agriculture and integrating farmers with domestic and external markets.
The Hawassa industrial park has already attracted 15 major manufacturing companies from China, Indonesia and the US.
In recent years, Ethiopia has become an attractive investment destination, thanks to the availability of land, cheap energy and labour and government incentives.
With a population of 100-million, the country boasts a young workforce of about 45-million people. It does not have a minimum wage policy, making it attractive to potential investors.
The country has also invested heavily in energy infrastructure, which has translated into a significant drop in electricity costs to about $0.05/kWh, compared with $0.24/kWh in neighbouring Kenya.
Ethiopia has also introduced incentives such as tax holidays and subsidised loans, while its interest rates are as low as 8% a year.