Monday, May 20, 2024
BusinessEthiopia ready to privatize industrial parks

Ethiopia ready to privatize industrial parks

IFC is providing technical assistance

Efforts are underway to transfer the ownership or management of industrial parks across Ethiopia, authorities confirmed.

It is a policy departure from the past, whereby the initial plan was to keep industrial parks under the ownership of the government at the time when the parks were constructed.

The privatization will be overseen by the Macro Economic Committee, formed by the Prime Minister and the Ministry of Finance, along with the Industrial Parks Development Corporation (IPDC).

“We are ready to sell the parks if we get a buyer at any point in time,” said Ahmed Shide, Minister of Finance, while reviewing last year’s performance of IPDC at an event held at the Hilton Hotel.

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Following the departure from previous regimes by PM Abiy Ahmed (PhD) and opting to deregulate the economy, all state-owned industrial parks are up for sale. Currently, there are 13 industrial parks developed and operated by the government, excluding the industrial parks owned by foreign investors in the country.

While Bole Lemi is the first industrial park inaugurated in 2014, Hawassa Industrial Park (HIP) is the largest constructed by the government to the tune of USD 250 million in investment. HIP was followed by the construction of industrial parks in Kombolcha, Adama, Mekelle, Bole Lemi, and Dire Dawa, among others.

The ownership transfer can be either full or partial, with all modalities being brought to the table, including joint venture arrangements with buyers. The International Financial Corporation (IFC), the investment wing of the World Bank, is providing technical assistance for the Finance Ministry and IPDC on the privatization of public assets. The technical assistance includes asset evaluation of the parks.

Officials at the IPDC hope to use the proceeds from the privatization for the construction of other parks that are planned to be constructed in the next decade.

“We have been relying on bond and external loans to construct the parks thus far. Now after the ownership transfer, we will construct more new industrial parks using the proceeds,” said Sandokan Debebe, CEO of IPDC.

Proceeds from the privatization can also be used to pay for the loans taken to build the parks and not fully paid so far.

Privatization of public assets and liberalization of key sectors have been major policy shifts seen in the last four years in Ethiopia.

With the telecom sector being the first to be opened to foreign competition with the joining of Safaricom Ethiopia, with USD eight billion total investment, the banking industry has been liberalized after the Council of Ministers introduced a new policy to govern the sector.

Preparations are also underway to allow private entities to provide water utility services under a public-private partnership arrangement, in tandem with the ongoing deregulation. The ongoing reform policy is targeted at rebalancing the state capitalism under the previous regime towards a private sector-operated economy.

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