Industrial Parks as Engines of Economic Growth in Ethiopia

Ethiopia aspires to become one of the manufacturing hubs in Africa. In order to achieve this, the government has undertaken huge infrastructural projects including electric power, railways, highways, industrial parks and other enabling projects.

I am very proud to be part of this great national undertaking. Between 2015-16, I was fortunate enough to be part and lead the effort to draft the Industrial Park Proclamation, Regulations and Directives. The Proclamation has broad objectives: 1) accelerate the development of the country’s technological and industrial infrastructure; 2) encouraging private sector participation in manufacturing industries and related investments; 3) enhance Ethiopia’s economic development and global competitiveness, and 4) create employment opportunities for a growing population.

As a result of the Proclamation, the Ethiopian Investment Commission was reformed to play the leading coordinating role to implement the industrial parks strategy. The Industrial Park Development Corporations were established at the federal and regional levels with the aim of developing industrial parks, the necessary infrastructure and to supporting investors.

To date, more than 100 investors have been attracted in the manufacturing sectors in more than 15 industrial parks built by public and private industrial park developers. One of the important elements of the Proclamation is its encouragement to private industrial park developers. To date there are 5 private industrial park developers and many more are likely to come alone or through the new public private partnership (PPP) arrangement.

In the first phase of implementing the Proclamation, the focus was on efficiency seeking investments mainly labor intensive and export focused industries like apparel, footwear, textile and leather products. More than USD 4 billion worth of investment have been attracted to date and many more are on the pipeline.

The government is side by side engaged in implementing the second phase of Industrial Parks Development: resource seeking industries. In the second phase, the aim is to add value to commodities that are being exported raw. These include coffee, sesame seeds, fruits, honey, livestock, and so on with the aim of continuing the economic growth, transforming agriculture, creating the much needed jobs, earning foreign exchange among others.

The development of the second phase of the industrial parks enables the improvement of agricultural productivity as small holder farmers will produce for the market through, contract farming, out-growers scheme, improved supply chain management and Rural Transformation Centers.

One of the four Integrated Agro-Industrial Parks is being built in Yirgalem town. Yirgalem is a town in Sidama, Ethiopia, located 290 km from Addis Ababa or 40 km from Hawassa. It was selected due to its resource base, labor and infrastructure availability. Sidama is generally known for its hard working people, high quality organic coffee, dense avocado trees, honey, etc.

The construction of Yirgalem Integrated Agro-Industrial Park began on March 14, 2017.

Visiting the site

Sunvado Plc., began implementing its project inside Yirgalem Integrated Agro-Industrial Park in 2018, with the vision of offering local avocado farmers access to export markets.

Sunvado provides agronomic services to 73,000 smallholder farmers which produce premium value organic avocados. To date in addition to the construction works employment opportunities, hundreds of processing jobs have been created at Yirgalem Integrated Agro-Industrial Park.

During the avocado harvesting season, Sunvado employs some 60 workers, half of whom are women. There are also 200 extension workers, field staff, harvesters and collectors.

Organic avocadoes are grown by more than 73,000 smallholder farmers with a local variety. Sunvado employs a team of 30 extension workers and support staff, who help guarantee the traceability of their organic avocados.

Sunvado is providing different types of trainings to its employees and extension services to its supplying agents and farmers. It is also providing mobile phones and motorcycles mainly for coordinating the collection.

Professional tree climbers training

Sunvado is setting up local nurseries that hand out seedlings to farmers. The farmers can plant these seedlings to rejuvenate their plantations. In addition, they are distributing beehives. The bees help to pollinate the avocado flowers and produce honey. They are also using the avocado waste from their processing facility to produce compost. This compost is handed out to farmers, to help them fertilize their plantations.

Sunvado has the following certifications: EU-Organic, USDA-NOP, JAS & FSSC22000. Sunvado has set up an organic certification scheme for their farming suppliers, which gives them access to a premium organic price, making it a win-win for the Ethiopian farmer, investing processor and the final consumer.

I want to congratulate Sunvado an anchor investor and for being “a leading agro-processor in Ethiopia”, for achieving a big milestone of exporting the first batch in short time!

Processing organic avocado

Processed avocado oil
Exporting the first batch

Ethiopian women in industry

”No country can ever truly flourish if it stifles the potential of its women and deprives itself of the contribution of half of its citizens”
Michelle Obama

Ethiopia has made substantial and positive steps to transform its economy in order for manufacturing to drive job creation. I’m proud to say that most of the jobs created in our industrial parks have gone to women (80-90%). However, as women increasingly participate in Ethiopia’s labour force, we’re still far off in accommodating their needs as they enter the workplace. Once they join the workforce, they’re not on a level-playing field. Women face many challenges in and outside of the workplace just to hold down their hard-earned jobs, let alone thrive and progress.

Having recently read an excellent report on Women in Manufacturing in Ethiopia prepared by the UNDP, I have been reflecting on the magnitude of the challenge before us in making manufacturing inclusive in Ethiopia. From discrimination and harassment in the workplace to a lack of health and childcare services outside, women even suffer a lack of safety in the urban areas that they migrate to in order to work. Specifically, women in manufacturing are on average less educated, younger, and earn much less than their male counterparts.

The UNDP report stated that, while women workers are preferred over men by managers in many industries, they still earn 77% of what the men get even after taking education and experience into account. Their roles are also gender-segregated, which is part of the pay-gap problem. According to the study, women consist of 60% of the garment production workforce in the cutting stage, 95% in the sewing stage, but only 15% in the finishing stage. There are both societal and institutional factors at play here. But ultimately, we have to change the gross misconception that high-skilled and managerial tasks are “difficult” for women.

At the risk of stating the obvious, it is important to highlight that we cannot have a productive and thriving workforce unless we tackle these issues of inclusion head-on and more deliberately. Too often, our sector development strategies have been gender blind and that is now costing us in terms of productivity, export and job creation. The study also pointed out challenges and opportunities for women as entrepreneurs and employers. Women-owners are better represented (22%) in small firms concentrated in low-productivity, low technology and low-growth sectors, as opposed to large and medium scale factories, where they only make-up 16%.

Here it is important to ask why women are not penetrating male-dominated sectors. The report found that women mostly enter business for survival, while men enter the market to capitalize on ideas. Access to markets and raw material, lack of business development services and a lack of access to finance are major limitations for women entrepreneurs in particular. Their lack of information is also a major challenge and this report aptly highlighted that market information is often exchanged on informal platforms and networks dominated by men.

That is why we need a multi-layered set of policy and programmatic interventions to tackle these roadblocks to women’s participation. However we are not starting from scratch. We need to acknowledge the many strides made on the policy front to empower women along with a range of programs launched through partnerships with the private sector and development agencies. The Government of Ethiopia, in partnership with development partners, has already launched several interventions targeted at achieving the short and long-term goals outlined in the report.

For instance, the Ethiopian Investment Commission in partnership with DFID’s Enterprise Partners Programme has developed and delivered gender relations training packages to the women workers and their – often male – managers in the Industrial Parks. The women receive training on sexual and reproductive health, personal and menstrual hygiene, nutrition, sexual harassment, communications skills and confidence-building. We are now jointly working with DfID-EP to enhance the Human Resource Management System for Industrial Parks to systematically create a more gender-friendly working environment.

Yet there is still so much more to be done, both on the ground as well as at the policy level, both within and outside of the workplace. We need to examine our policies and strategies through gendered lenses and develop recommendations and action plans with measurable gender indicators. One potential way forward to address these gaps would be by developing a gender strategy for the manufacturing sector. The strategy would strengthen the sector’s structures and systems towards gender equality.

There’s no question about the value and necessity of an inclusive approach to development. Prime Minister Abiy has taken an exemplary lead by having women lead the government on an equal basis with men, including Africa’s sole female head of state! Business now needs to follow his example and play its part to ensure that women are well-represented AND on a level playing-field at all levels of the economy as workers, managers and owners. The global body of evidence is loud and clear. No sustainable growth and transformation can ever be achieved without the meaningful participation of women.

Fitsum Arega, 2019.

Hawassa Industrial Park