| Abstract: | The world-acclaimed economic trajectory registered during the last couple of decades in
Ethiopian economy has left the economy with lowest manufacturing sector contribution to GDP.
As the Ethiopian economy goes the largest in the region, the demand for industrialization and
structural transformation is critical need of the economy to sustain the growth trajectory. After
taking Industrial Parks Development as a policy direction to catalyze industrialization, Ethiopia
has embarked up on constructing Industrial Parks and more than 22 parks have been constructed
in different parts of the country. The first Industrial Park in Ethiopia is a private one called
Eastern Industrial Park constructed by Chinese investors in 2007. The first public Industrial Park,
Bole Lemi Industrial Park (BLIP), was built at the outskirt of the capital six years back with a
total cost of 2.7 bln. Birr. This paper assesses the viability and sustainability of this oldest
Industrial Park in Ethiopia BLIP to come up with lessons both for further industrial park
development efforts and a better conducive policy formulation inputs for the sector. Looking back
to its six years journey using a Cost Benefit Analysis, BLIP’s Economic and Social viability
assessment looks feasible when its feasibility is assessed by considering both direct and indirect
benefits. Assuming that the Park will have a life of 25 years; the social cost benefit analysis of the
park showed that it has a pay Back period of 9 years and 3 months, a net present value of Birr
132,788,534.15 and internal rate of 10.70%. It implies that the project is somehow feasible from
the government perspective though the return is not that much lucrative. This is because the rate
of return is less than the lending rate of commercial Banks. Its financial analysis through looks
not viable as its payback period is estimated to be 49 years while the Net present value and the
Internal Rate of Return are estimated to be Birr -2,003,621,605.86 and -5.01% respectively. On
top of working on its financial viability, as a government project meant to catalyze development,
Economic, Social and Environmental feasibility and sustainability variables as assessed. As a
recommendation, in detail with a recommendation that enhances viability and sustainability of
BLIP in the future. Policy fine-tuning on competitiveness and productivity of IPs – facilitating for
industrial parks to be developed and managed by private sector, with active participation of the
domestic one is put forward. Besides, strengthening pre-feasibility and feasibility assessment
before any public investments through a stronger Public Investment Management – PIM system is
recommended on the other hand, blending the One-Stop-Services (OSS) systems of Industrial
Parks with ‘Innovative supports’ of IPs designed through a sector-specific challenges of
companies is recommended to improve service deliveries in IPs. The other key recommendation of
this paper is on cautions IPs in Ethiopia should take when they specialize on specific sectors as
x
BLIP did on textile sector. As the 4th Industrial Revolution and a growing protectionism have
been a challenge for the global textile industry, sector specialization in Industrial Parks
development in Ethiopia needs to seriously consider global trends and future challenges of the
specific sector and devise a relevant coping mechanisms. In boosting the competitiveness of BLIP,
a proper companies has to be attracted and for that, a targeted approach of promotion and
attracting an anchor companies needs to be done with a shift of focus from the current trend of
attracting CMT (cut-make-trim) operating companies (which is the smallest form of business in
the value chain) to an integrated companies that accumulate lines of profit margins in
accumulated functions in the value chain. |
