Ethiopia's Industrial Parks Attract Foreign Investors
The government of Ethiopia has announced a new three-pronged incentive package to assist investors operating in the country’s industrial parks, in order to ease the economic impact of the coronavirus pandemic. As part of the effort to ease the impact of COVID-19 on the investment sector, the Ethiopian government has made available these three major incentives for investors operating inside Industrial Parks.
The package was revealed by the Industrial Parks Development Corporation (IPDC) Director-General Lelise Neme on 26 June 2020. Investment laws of Ethiopia provide a wide-ranging incentives package for investments in priority. The incentives are intended to help investors shoulder and sustain the blow the pandemic is anticipated to have on foreign direct investments into Ethiopia.
The first incentive allows manufacturers based in the parks that have not received any orders from abroad during the past two months and that have lost procurement agreements with overseas clients, to be allowed to also offer their products for sale on the local market.
The second incentive extends the free transport of goods on the Ethio-Djibouti Railway from the Modjo dry port to Djibouti port, the main seaport servicing land-locked Ethiopia. Modjo (or Mojo) is situated strategically at the centre of Ethiopia, and served by a railway station, as well as road connections to the rest of the country. The free transport service has been in operation since 1 May 2020 according to the Ethiopian Investment Commission.
Finally, Ethiopian Airlines, the country’s national airline and one of Africa’s biggest air cargo operators, will provide industrial park-based businesses with a six-month discounted cargo service.
The country has a number of other incentives to assist businesses operating in the industrial parks according to the EIC. These include 50% discounted export freight services for export manufacturing industries that do not use railway services due to location.
There is also a 50% cost reduction on inland transfer from industrial parks to Modjo rail connections; and demurrage costs at the dry port have been waived until the Covid-19 pandemic is controlled, as well as discounts on a number of government fees and services.
Industrial parks in Ethiopia are an important initiative for boosting the country’s foreign investment and foreign currency reserves. The parks have only generated about US$152 million during the nine months of the 2022 Ethiopian fiscal year, which is only 75% of the government’s target. However, this is a substantial increase over the same period in 2021.
With the vision to make Ethiopia a leading manufacturing hub in Africa by 2025, the government places high focus on industrial park development and expansion. Ethiopia is Africa’s second most populated nation with a population of around 120 million.
