The role of industry parks in the local economy : The case of SMEs in Ethiopia


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The role of industry parks in the local economy : The case of SMEs in Ethiopia

April 15, 2024

In recent years, Ethiopia has tried to undertake an industrial policy to emerge as a manufacturing hub. Central to this strategy has been the operationalizing of multiple industrial parks post 2014. The study accordingly asks four key questions: What is the pattern of industrial policy in Ethiopia overtime? What is the role of industry park to the local economy, mainly performance of SMEs? What is the implication of political economy on the performance of industry parks in Ethiopia? What are the lessons on industry park to be drawn from best practices of Asian countries?

The study has several key findings. In Ethiopia, manufacturing in general is lagging in terms of value added and value added per-capita compared to other sectors and has not been a strong performer despite some successes. There are many reasons for this, including limited access to finance and raw materials, market demand constraint, poor logistics, quality constraint, skills constraint, forex restrictions, and regulations. The public industrial parks in the country with a major focus on textile and garment have revealed mixed performance in terms of output and employment. The parks have varied occupancy rates depending on management and location, with those closer to bigger cities performing better.