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 mega facility, built at a cost of $250-million, is intended mainly for textile and apparel manufacturing and agro processing.
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.
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The manufacturing industry came under the spotlight at the Gauteng Economic Indaba on Thursday. Gauteng Premier David Makhura highlighted the importance of partnerships between government and the private sector in creating an economy which is sustainable and inclusive.
Government announced that it is looking at creating manufacturing hubs to revive the struggling sector as well as other sectors of the economy.
The province of Gauteng has over the past number of years made a significant contribution to the country’s Gross Domestic Product (GDP).
In 2015, it contributed over 35% and is also a leader in driving Africa’s new industrial revolution.
The Indaba was held under the theme: “A Partnership for a Sustainable and Inclusive Economy”, and it came up with ways in which the Gauteng economy can be supported.
It unveiled the new economic development plan which is aimed at assisting to propel the province’s economy to greater heights.
Makhura says, “We need these partnerships in order to ensure that the township businesses don’t remain small and on the margins. They have to [be] part of the mainstream economy. The economy of South Africa and Gauteng remains challenged with the following structural challenges … is faced with.”
One of the speakers, Stefan Sakoschek, who is the regional director of the European Union’s EU Chamber of Commerce & Industry in Southern Africa, says unfair competition is killing the manufacturing sector.
The Premier also acknowledged the manufacturing sector, saying “We have a problem in South Africa. We have 7000 container arriving at the port of Durban. Out of the 7000 container, we have a market flooded with counterfeit goods competing unfairly with products from the EU.”
Gauteng health MEC Qedani Mahlangu agrees with Sakoschek and says there is a need to increase the support for locally produced goods. “There is cost to localise and we must all localise and overtime there will be gains. There is a mind-set shift that we need to have going forward.”
Deputy President Cyril Ramaphosa says government is looking at setting up manufacturing hubs to support the struggling sector. It has been shedding thousands of Jobs partly due high costs of electricity as well as cheaper imports out of China.
“We have seen how when government supports a particular sector of the economy, the automotive sector is proof of that. This country can really start to pump and emerge as one among the top in the world. Alongside this work we have made an undertaking to massively expand local procurement,” adds the Deputy President.
The indaba takes place at the time when the economy is struggling with the country narrowly escaping a downgrade by ratings agencies. The Government has appealed to all stakeholders to work together to ensure that more is done to support the ailing economy.
“We meet under very difficult economic conditions colleagues, as we work to overcome the dreadful legacy of apartheid we must confront the immediate challenges that have weakened global demand, that have lowered commodity prices, and the impact these have had on our economy. These are external factors. But we have our own internal factors which we have to deal with. We must contend with a number of challenges we have.”