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BusinessIPDC, banks partner for cheap loans

IPDC, banks partner for cheap loans

The Industrial Parks Development Corporation (IPDC) and two private banks signed a strategic partnership agreement on Thursday June 24, 2021 intended to provide cheaper consumer loans to its employees as well as project financing for the Corporation’s future investments.

This partnership with Awash Bank and the Cooperative Bank of Oromia (CBO) is said to be part of the Corporation’s ten years’ strategic plan that entered into force this year. The plan has a string dealing with enhanced access to finance for the employees of IPDC.

Accordingly, the deal with the two banks is to provide housing and car loans as well as other consumer loans for IPDC employees. The Corporation has about 800 employees working in 13 industrial parks across the nation.

Apart from this, the deal will enable investors within the industrial parks to get premium services from these banks when they need loans. In return, the banks will have access to industrial parks to open their shops and provide a one-stop-shop service within the parks, it was said.

According to Addisu Mammo, the head of IPDC CEO Office, the criteria to select the banks that would partner with them included long- and short-term loans options they offered, and the diversity of loan types the banks offer, among others.

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He also indicated that as part of the Corporation’s 10 years’ strategic plan, they intend to engage in other business activities other than industrial parks development and this partnership is believed to help achieve this plan.

It is to be recalled that IPDC announced that it won’t construct industrial parks anymore but will facilitate for the private investors to construct industrial parks in places of their preference.

Sandokan told The Reporter that their plan it to transit from a policy enterprise to a business enterprise which he believes is a departure from its current stature. For example, they plan to construct industrial parks and provide operational services for other African countries. In addition, the transition will change the current model of rental spaces in the industrial parks from subsidized price to a commercial price, which eventually will increase the rental cost of investors within the industrial parks.

Until now the focus of investments by the IPDC was on the construction of manufacturing sheds and development, but in the future, the Corporation intends to engage in industrial real estate, and residential real estate, hotels and recreational areas construction in partnership with the private sector. This, he says, will be done without abandoning the core business of the Corporation.

He also said that the 13 industrial parks fetch a sum of USD 24 million annually which he says will be a huge source of deposit as well as forex for the banks. This money comes from leasing manufacturing sheds, waste treatment plant service costs as well as other utilities such as fire brigade services, water and power. The Corporation collects 80-90 percent of this revenue in forex, Sandokan explained to The Reporter.

He also believes that this will be a lesson for investors within the industrial parks to partner with these or other banks to arrange loans to their employees.

Signing the agreement at Hyatt Regency hotel, the CEO of IPDC Sandokan Debebe thanked the two banks for showing interest to work with the Corporation. Sandokan also highlighted that working with these banks will create more access to finance which in turn helps enhance service provision within the parks and expand the Corporation’s projects.

Sandokan said the Corporation invited all the 18 banks operating in the country before selecting the two. Thirteen banks had shown interest to work with the corporation although the two were selected from the shortlisted six banks.

He also stated that investors within the industrial parks have an ever-increasing need for financial services near them, creating more opportunity for the banks to mobilize finance. In addition, huge amount of money circulation is common in industrial parks. Sandokan also said working with such banks with large capital invested in them enables smooth financial transaction and facilitate services of the one-stop-shop within the parks.

By virtue of the agreement, the two banks are expected to provide short- and medium-term loans for the corporation for its activities within the thirteen industrial parks and its projects in the pipeline. In addition, based on the strategic partnership agreement, the two banks will provide loans to the corporation employees through different modalities.

Deribe Asfaw, President of CBO, for his part said that the partnership between the Bank and the Corporation benefits both the management and employees of the IPDC in addition to other routine banking services to the Corporation.

Awash Bank’s CEO, Tsehay Shiferaw, said that the bank will facilitate consumer and other types of loans to the Corporation’s employees along with its commitment to support companies that invest in the industrial parks.

Multiple studies on the challenges of industrial parks identified finance as one of the bottlenecks hindering industrial parks’ development and infrastructure expansion. This has been the case both for privately and publicly owned developments.

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