SMEs receive grant to supply industrial parks with raw materials
Corporation in talks to build housing units
In an attempt to address the hinging shortages of raw materials for manufacturers, the Industrial Parks Development Corporations Enterprise (IPDC) has taken initiatives to subsidize and link Small and Medium Enterprises with foreign companies housed in the Bole Lemi Industrial Park.
On Thursday, IDPC signed a grant fund agreements with nine local SMEs with a fund matchmaking framework so that the SMEs will provide the needed raw materials. IDPC has provided USD 3.135 million out of which, USD 1.66 million is a grant and the remaining will be a shared contribution among the nine SMEs agreed to channel in. IDPC is running a Competitive and Job Creation (CJC) program in which industrial parks are considered as a source of massive jobs and supply chain values.
The SMEs engaged in the manufacturing of packaging materials, hangers, fabrics, price tags, chords, hand operated small machineries and spare parts have been granted the funds. Previously, seven SMEs have received USD 3.1 million, out of which USD 1.65 million was a grant provided in a cost-sharing agreement.
Lelise Neme, CEO of IPDC told The Reporter that the grant which is based on a 60/40 percent cost-sharing agreement is tasked to substitute imported raw materials. Currently, the manufacturing subsector of the industry depends on 80 percent imported raw materials. To change that considerably, the government has borrowed sums from the World Bank Group (WBG) and started providing grants to local SMEs.
Ewnetu Wedaje, business to business accounts manager with IPDC told The Reporter that the grant funding project dubbed: Integrated Linkage Development Plan — piloted in the Bole- Lemi Industrial Park – will seek to add four more SMEs to join until 2021.
Mindaye Getachew, manager of Tamra Techno Packaging PLC, was one of the grantees which specialize in polybag manufacturing. During the singing, he told The Reporter how difficult it was to convince FDI companies that operate in the industry parks. In fact, Tamra found a way to approach potential buyers of raw materials. He said he has been supplying polybags and other packaging materials for textile manufacturers for the past three months.
Therefore, once the linkages are created and supplies are well established, the SMEs are on their own to sell with competitive prices and guaranteed quality. The grant fund is solely provided for SMEs to enhance their capacities when needed, to buy machineries and equipment and alike. Channeling the grants to augment working capital shortages will be considered as a breach to the agreements resulting in penalties and Lelise warned such misconducts will not be tolerated.
So far, four industrial parks out of the 11 have become operational. Both Hawassa and Bole-Lemi Industrial Parks have been exporting for some time now performing way below expectations. Mekelle and Kombolcha are about to enter into operations. According to Lelisa, the construction of Adama Industrial Park, Dire Dawa, Bahir Dar, Jimma, DebreBerhan is about to be finalized soon.
When asked about the complaints of workers in industrial parks for low wages, she said that IPDC and the Commercial Bank of Ethiopia (CBE) are in talks to form a joint Private Limited Company that would construct housing units. Since the cost of living and inflation rates are the major sources of turnovers in both Bole-Lemi and Hawassa Industrial Parks, one of the interventions considered is to build houses for industrial workers. However, it is too early to talk about the details of the plan, Lelise stated.