How to Become an Industrial Park Developer in Ethiopia

A brief history of Industrial Parks

Since the first industrial zone at Eastern Industrial Park was established around Dukem City in 2008 by Chinese Industrial Park developers; both government and private owned industrial parks have been popping up all over the country.

While Eastern Industrial Park attracted investments engaged in various manufacturing activities such as textile, garment, building materials, pharmaceuticals, and much more; the first government-owned Industrial Park developed by the Industrial Parks Development Corporation (IPDC) at Bole Lemi in 2015 became the first specialized park in the country, attracting investors engaged in Textile and garment per the country’s priority sectors of investment.

Following this, other federal/ regional governments and private-owned industrial parks specializing in one or many manufacturing activities were established. (see list of industrial parks here)

Industrial Parks and Industrial Parks Developers

An industrial park as defined by the Ethiopian industrial parks proclamation 886-2015 is an “area with a distinct boundary designated by the appropriate organ to develop comprehensive, integrated, multiple or selected functions of industries, based on a planned fulfillment of infrastructure and various services such as road, electric power and water, one-stop-shop and have special incentive schemes, with a broad view to achieving planned and systematic, development of industries, mitigation of impacts of pollution on the environment and human being and development of urban centers, and includes special economic zones, technology parks, export processing zones, agro-processing zone, free trade zones and the like designated by the Investment Board.”

In addition, the same proclamation defines industrial park developers as “any profit-making public, public-private or private developer including the Corporation (IPDC) engaged in designing, constructing, or developing industrial parks in accordance with Investment Proclamation and Investment Regulations. industrial park developer permit and industrial park developer agreement.”

How does one become an Industrial Park Developer?

The Ethiopian Investment Board (EIB), headed by the prime minister, is responsible for designating a plot of land as an industrial park. However, before this request gets to the EIB, private industrial park developers will have to submit a detailed project proposal to the Ethiopian Investment Commission (EIC).

The project proposal submitted by a potential park developer should contain:

  • The profile of the promoter which includes the promoter’s experience in developing industrial parks/ zones or related constructions in the last ten years
  • The nature/ specialization of the project and the type of enterprises it plans on attracting.
  • A breakdown of the project’s investment cost. Including its debt to equity ratio if any, and its potential source of foreign currency.
  • Intended location, size, and the perimeter of the proposed industrial park.
  • Proof of clearance of the land up for designation as an Industrial Park from encumbrance /third party interest.
  • A detailed land utilization plan, including manufacturing areas, residential quarters, greenery, waste treatment facilities, administrative centers, social services provision centers such as police stations, clinics, firefighting brigade, and recreational area.
  • A description of the phases of developing the land (if any) and a timeline for completion.
  • Potential of the industrial park to create employment and transference of knowledge to local professionals.
  • Its compatibility with the city/area master plan and its conduciveness to become a population center.
  • The park’s proximity to human resource, industrial inputs, and its linkages to and contribution to the development of national infrastructure.
  • The project’s potential to increase the export market share of the country and/or substitute imported items.
  • Economic Feasibility/business case of the area to up for designation.
  • Hydrological study indicating the presence of water in the area.
  • The potential developer must disclose evidence of the financial capacity to develop the proposed industrial park.
  • Topography and nature of the proposed Industrial Park area for construction.

What’s next?

The EIC will then review the proposal and provide a summary of the project at an EIB meeting. After reviewing the project, the EIB will then decide on designating the proposed area as an industrial park.
The EIC will then conclude an agreement with the industrial park developer that at least contains:

  • the purpose or subject matter of the agreement.
  • the exact geographical boundaries of the land.
  • financial, social, and environmental protection obligations.
  • timeframe for commencement and completion of project construction.
  • provisions that prevent the use of land for unintended purposes as well as the transfer of undeveloped land.
  • methods of ensuring the safety of the perimeter of the construction.
  • standards and time limit for the construction of temporary dormitories for workers’ cafeterias and offices made during park development.
  • list of items to be imported free from customs duty and tax.

And with this out of the way, the Industrial Park developer can go through the licensing and registration process to obtain a developer’s permit.