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Industrial parks spreading across East Africa, with eye on economic growth

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Chinese-owned Huajian shoe factory in Dukem, Ethiopia. FILE PHOTO | AFP

Chinese-owned Huajian shoe factory in Dukem, Ethiopia. Ethiopia has four industrial parks, leading the region in adopting the Chinese Industrial model. FILE PHOTO | AFP 

By ALLAN OLINGO

Posted  Thursday, August 25   2016 at  14:58

In Summary

  • Tanzania has eight such industrial parks spread across the country. But while the country grapples with underperformance at these industrial parks, last month, Ethiopia unveiled one of the world’s largest — the $250 million Hawassa Industrial Park.
  • China’s ambassador to Ethiopia La Yifan said the Hawassa Industrial Park “is a good model not only for the rest of Ethiopian industrial parks but also for other African countries. We need to see complete products leaving the continent instead of raw materials; this park is meant to address that,” said Mr Yifan.
  • Kenya has announced that it had received 10 applications from investors interested in setting up factories and tanneries at the proposed 500-hectares Leather Industrial Park at Kinanie in Machakos County, eastern Kenya. Through this facility, the country hopes to increase its earnings from leather exports from the current annual figure of $40 million.

It is around midday when I meet Idris Luwasa outside the cotton godown where he works as a records officer.

He is yet to receive any cotton lint from farmers for the day. But he tells me this is not new. Farmers no longer deliver the commodity as regularly as they used to.

“There are days I go without logging any deliveries,” said Luwasa. “Sometimes that goes on for three straight days.”

Launched in late 2014 as part of an industrial park, the godown where Luwasa works is the only one of its kind in Kiyegeya district of eastern Tanzania. But since its launch, it has attracted little interest from investors, and now serves as a collection centre for ginneries.

Tanzania and China signed the deal to construct a modern agricultural industrial park in March 2013 in Kiyegeya, at a cost of $65 million. Under the deal, Dahung Group from Jiangsu, China was to handle the construction. Chinese investors expressed interest in setting up shop in the park, where the lint would be turned into textiles that would then be exported.

The first phase was completed by 2014 and was to host a cotton processing factory, a textile factory, a packing factory and an agricultural demonstration school.

However, these projects have failed to take off, thereby delaying the second phase of the park, which was set for completion mid this year.

“The low production of cotton affected the supply end of the project while a failure to allocate warehouses to crop marketing boards has been the project’s main undoing. We have also seen a slack in marketing the facility to investors,” said Mr Luwasa. “The procedure for processing incentives is also lengthy.”

Raw materials

However, the investment manager at the Export Processing Zones Authority, Grace Lemuse, said that the Ministry of Agriculture was addressing the challenge of raw materials.

“These kinds of investments are designated areas for specifically targeted economic activities supported by special economic zone arrangements We expected this region to have the capacity to feed the park but we have experienced some challenges, which however, are being addressed,” said Ms Lemuse.

Tanzania has eight such industrial parks spread across the country. But while the country grapples with underperformance at these industrial parks, last month, Ethiopia unveiled one of the world’s largest — the $250 million Hawassa Industrial Park.

It was designed and constructed by the China Communications Construction Company in under a year. The park will house 15 textile and garment firms from China, India, America, Sri Lanka, and six Ethiopian companies. The park has 35 factory sheds and 19 buildings to house these firms.

“The buildings are expected to host factories, exhibition halls, food courts and living quarters for the workers,” said Kalkidan Betre, one of the project engineers. “This covers 100 hectares and the second phase, whose construction will begin this year will be twice as large.”

China’s ambassador to Ethiopia La Yifan said the Hawassa Industrial Park “is a good model not only for the rest of Ethiopian industrial parks but also for other African countries. We need to see complete products leaving the continent instead of raw materials; this park is meant to address that,” said Mr Yifan.

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