Ethiopia announces four more industrial parks as debt fears grow

Ethiopia announces four more industrial parks as debt fears grow

Ethiopia has announced plans to commission four Chinese-built industrial parks by the end of the year as concerns grow over the level of debt the country is taking on.

(globalconstructionreview)—-Belachew Mekuria, the commissioner of the Ethiopia Investment Commission, said the government expected to give the go-ahead to parks at Jimma, Adama, Arerti, and Dire Dawa, reports Xinhua, China’s state news agency.

Jimma and Arerti Industrial Parks are expected to be built by China Communications Construction Company (CCCC) and Dire Dawa and Adama Industrial Parks are being constructed by China Civil Engineering Construction Corporation (CCECC).

Mekuria added that Arerti Industrial Park would produce building materials and Adama would contain a suite of factories to turn woollen fleeces into textiles. He did not give the projects’ construction costs, but did say Adama had attracted $1bn of investment finance.

Ethiopia is pinning its economic future on a series of Growth and Transformation plans, which will lead to the “Ethiopian Renaissance”, intended to give the country middle income status by 2025.

One of the main means of reaching that goal is to build 30 industrial parks, thereby increasing manufacturing output from about 5% to 20% of GDP (see Further reading).

These developments will go ahead in spite of Ethiopia’s struggle to find foreign currency, and amid increasing concern over its level of debt.

Although China is a major lender to Ethiopia, its mission to the African Union in Addis Ababa said on its website in July that some creditors were worried about repayment risk as government debt reached 59% of GDP, reportsReuters.

According to the Johns Hopkins School of Advanced International Studies, Chinese creditors have loaned at least $12.1bn to Ethiopia since 2000, on top of which the country has borrowed from the Middle East, the World Bank and others, and has a total debt of U$29bn.

One victim of China’s concern about debt levels is a plan to build an extension of the Addis Ababa high speed line, which opened at the beginning of 2018 after a difficult 15-month commissioning period, largely because the line was built without supporting infrastructure, such as dry ports and access roads.

The project, which envisages a northern extension from Awash to Woldia and Mekele, has suffered multiple delays and the full funding package from the Chinese Export and Import Bank has not been released yet, according to Reuters.

Image: Hawassa Industrial Park was completed in 2016 (Government of Ethiopia)

1 Comment

  1. Industrialization: If there is any nation that has learned hard way, it should be the Oromo people – from the public health and ecosystem disaster that occurred from floriculture industry in Showa zone and the MIDROC PLC Gold Mining Industry in Shaakkisoo, Oromia Region. The boost to the federal economy has left our people in a disastrous public health concern which will last for many hundreds of years and with health risk to future generation. One can imagine the number of victims from these two industries and the burden of disease to families (carrying for their loved once) without financial compensation from the government. I hope that the federal government has completed full risk mitigation approach prior to implementing any industrial work in Oromia (lama nansuufani jette sareen jedhan);
    1. Local Oromo people should be consulted
    2. The federal government financial gain should be transparent
    2. Strategy for potential risk mitigation should be shared with the local people at inception including financial compensation for potential risk to human and ecosystem
    3. Oromia regional state should get special benefit from the newly emerging industries in Oromia and Oromo people needs to know

    Why in Oromia and what does it means for Oromo people? This is the question Obbo Lama should answer to protect his people. Please!

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