INVESTMENT AND BUSINESSES OPPORTUNITIES

AndINDUSTRIALIZATION

IN

ETHIOPIA

April 25, 2017

National VisionJoining Middle Income Group by 2025

Sector visionMaking the country Africa’s leading in light manufacturing(Economic Transformation)

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Industrial Development Strategy• Leading role of private sector

• ADLI link (use of domestic raw materials)

• Export oriented & strategic import substitution industries

• Focus on labor-intensive light industries (young,

trainable & low cost- 70% < 30 yrs)

• Expansion of Domestic & Foreign Investment

3

IDS....contd.

• Supportive role of state

• Close cooperation & integration, tri-partite partnership for development :

Government & private sector,

Owners & employees,

Industry & agriculture, education

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Guiding Principles

1. Productivity and competitiveness

2. Market development

3. High value addition and diversification

4. Technology and innovation

5. Fair trade practices

6. Growth and Graduation of SMEs

7. Employment Creation

8. Environmental Sustainability

9. Education and Human Resource Development

Growth and & Transformation Plans

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GTP 1 Performance (2010/2011-2014/15)

Sector Growth

Share of

GDP

Agriculture 6.4 38.5

Industry 21.7 15.1

Manufacturing 15.8 4.8

LMEs 20.3 3.7

SMEs 2.9 1.1

Service 10.2 46.3

GDP 10.2

GTP 2 Plan (2015/16-2019/20)

2015/16 actual

SectorGrowth(av.)

Share of

GDPGrowth

Share of

GDP

Agricult

ure

8.0 33.5 2.3 36.6

Industry 20.0 22.3 20.6 16.7

Manuf. 21.9 8 18.4 5.4

LMEs 21.8 5.9 22.9 4.4

SMEs 22.3 1.8 2.5 1.0

Service 10.0 44.3 8.7 47.3

GDP 11.0 8.0

GTP 2 Sector plan as an opportunityCreate conducive environment for investment, export market and

reduction of BOP

Export growth at an average rate of 29%

Contribution of manufactured export to reach 25% by 2019/20and 40% by 2024/25

Manufacturing contribution to GDP to reach 8% by 2019/20 and

18% by 2024/25

Increase the current level of employment (350K) by 1.5 million by

2024/25

Investment to GDP ratio of 41.3 by 2019/20 7

Areas of growth

1) production, productivity and competitiveness

2) Investment

• Quality FDI

• Domestic investors promotion and support

3) Diversification of existing priority industries

a) Textile and garment industries

• Synthetic fibers

• Natural fibers

• Technical textile8

b) Leather and leather products industries

• rubber, plastics and canvas footwear

c) Agro-processing industries :

• Wood industry

• Industrial aquaculture and processing

• Spice industry

d) Metal and engineering industries-technological capability

• Machineries, components and s/parts

• Iron & steel

• automotive 9

e) Chemical industries

• Petro-chemicals

• Construction and paint chemicals

• Alcohol based chemicals

f) Pharmaceuticals industries

• Herbal medicines

• Food supplements

• Pharmaceutical inputs

• Cosmetics

4) Emerging industries

• Bio-technology

• Electrical & electronics

• Information technology equipments and software, Packaging 10

Instruments for promoting investment

Development of industrial, agro-parks and specialized clusters (One

stop shop Service)

Preferential Cost of investment finance and forex allocation

Quality incentives based on performance

Export Credit Guarantee Scheme

Tax holidays

Preferential Transport and Shipping Rates

Building competitive capacity through linkages and handholding

programs

Enablers & conducive environments

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Enablers/targets for GTP 2

1) Transport and logistics Global ranking to improve from 104 to 57

Transit time for import-export to reduce by 50%

Containerization to reach 100% (currently 7%)

Port handling days to reduce from 40 to 3 days

Multi-modal transport to cover 90% of cargos

2) Infrastructurea)Road access and quality:

Express ways to link major transport corridors

All weather roads linking urban and rural

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Key enablers targets for GTP 2…..

b) Railways

Ongoing three projects and 5 new ones (2,782 kms)

c) Air

Air transport hub of Africa and linkage to key investment countries

d) Energy Increase per capita to support manufacturing & export

- 17,347 MW by 2012

Improve quality of supply (interruption & down time)

- Increase transmission line from 12,825 Km to 21,728

- reduce wastage from 22.3% to 11%

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Key enablers targets for GTP 2 ……e) Telecom Complete the IT park

Increase per-capita use of computers-ICT manufacturing development

Improve international linkage quality & capacity (20Gbs to 1,485Gbs)

3) Human resource (focus on science & technology) Increase number of TVETs from 1,329 to 1,778 (one in each woreda)

Additional 11 public universities

Capacity to transfer, adapt and improve technologies-Institutes

Hands on capacity building through linkages

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Key enablers targets for GTP 2 ……

4) Finance Infrastructure – address the factors in the financial framework that inhibit capital supply

for operations and expansion.

– an increased role of development finance institutions (DBE and CBE), including more flexible collateralization rules.

5) Sectoral Policy frame work– Design of manufacturing and export focused policies

6) Scalable Firms in Selected Sectors – Foster the emergence of firms capable of operating at significant scale

and exporting (quality investment).- Model companies

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Integrated Agro-Industrial Parks To attract private domestic and foreign

investors to set up agro-processing industries

To reduce post-harvest losses, to add value to

local content of primary products

To provide forward linkages for the processed

produce

To link farmers and farmer clusters to agro-

processing industry

To create jobs and drive rural economic growth

Zones within IAIP

1. Industrial zone

2. Specialized agri. infrastructure zone

3. Logistics zone

4. Institutional and amenities zone

5. Multi facility complex utilities

6. Residential zone

7. Greenery and walkways

IAIP Development Corridors

S.N Region No. of IAIP 1St Phase Development

1 Oromiya 5 1

2 Ahmara 3 1

3 SNNP 3 1

4 Tigray 2 1

8 Somali 1

9 Benishangul 1

10 Afar 1

11 Gambela 1

Total 17 4

IPS Development

1.Targeting manufacturing Investment-Quality

FDI and domestic

2. Quality infrastructure, skills & competitiveness

Focus areas:

1.Light manufacturing (textile, leather, agro-

processing, electronics, & Equip.,

pharmaceuticals, )

2. Strategic & import substitution (steel, machinery &

equipment, chemical and pharmaceutical)

3. Strategic (energy, ICT and bio-technology)

Status of IPs Development1. Bole Lemi, Hawassa and Eastern IP -operational

(3)

2. Mekelle, Kombolcha, D/Dawa, B/dar, Adama, Jima,

Bole Lemi 2, Kilinto (7)= under construction

3. Debre Birhan = Bid process

4. Aysha = Bid process

5. Arerti = Award process

Companies Operating in IPs

1) Bole Lemi (I)-12

Country of origin

Sub-sector

No. of Cos

Sub-sector

No. of Cos

India Garment 5

China/Taiwan/HK

Garment 2 Footwear & Glove

2

S. Korea Garment 3

Companies Operating in IPs

2) Hawassa - 25Country of origin Sub-sector No. of CosUSA Garment 1India 4China/HK 7Sirilanka 2Singapore 1Belgium 1France 1Indonesia 1UAE 1Ethiopian 6

3) Eastern (Chinese-private) - 15

Country of

origin

Sub-sector No. of Cos

China

Textile & Garment 4

Metal & Engineering 3

Chemical 3

Construction materials 2

Footwear 1

USA/SA Chemical 1

India Food 1

Clusters development plan S.N Region Size of Cluster 1St Phase Development

250 Ha 100 Ha 250 Ha 100 Ha 50 Ha

1 Oromiya 14 15 6 5

Woreda level

Developments

(30%)

2 Ahmara 9 12 4 4

3 SNNP 8 11 3 3

4 Tigray 3 4 1 1

5 Addis Ababa 4 1 3

6 Dire Dawa 1 2 1

7 Harar 1 2 1

8 Somali 2 2

9 Benishangul 1 1

10 Afar 1 1

11 Gambela 1 1

Total 40 52 19 (48%) 18 (35%)

Skill Development Clusters/CentersS.N

Region Skill Development Centers

S.N Region Skill Development Centers

1 Federal • SME Agency• Sub-sector Institutes (6)• TVETs

4 SNNP (3) • Awassa PTC • SODO PTC• Bonga PTC

2 Oromiya(5)

• Ambo PTC• Nikemit PTC• Shasemenie PTC• Adama PTC• Jima PTC

5 Tigray (2) • Mekele PTC• Shire PTC

6 Others (each 1)

• ADIS ABABA Winget PTC• Afar PTC• Diredwa PTC• Benishangul PTC• Gambela PTC• Harar PTC• Jigjiga PTC

3 Ahmara(4)

• Gonder PTC• Baher Dar PTC• Dessie PTC• Deber Berhan PTC

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ARIGATOU

GOZAIMASU

Thank You