"Welosefer" High-Density Mixed-Use: Building Project

“WELOSEFER” HIGH-DENSITY
MIXED-USE
BUILDING PROJECT
A TECHNICAL PROPOSAL
EIPP-JICA September 2020

Part One: Introduction
Part Two: Basic Analysis
Part Three: Normative & regulatory Framework of
PPP
Part Four: Cost & Funding to Develop the Project
Area
EIPP-JICA
PART ONE
Introduction
EIPP-JICA
▪ Objective (s)
❖ The overall objective of this assignment is to assess the existing condition of IPDC’s plot area, which
is located at Wolo-sefe and to forward potential finance source as well as development options.
❖ The assignment is also expected to suggest a win-win development and marketing approaches for the
plot area.
❖ The project area is proposed to construct Head Quarter and Visitors Attraction center for IPDC.
Therefore, this preliminary study will have the following specific objectives:
✓ To explore appropriate land use function to optimize revenue for IPDC;

✓ To identify appropriate/viable project/ business activity that optimize both the private investors and
IPDC’s interest
✓ To explore and identify appropriate project development and implementation business model
▪ Methodology
❖The team employed site visits, key informant interviews and document reviews were used as basic
methods.
❖These methods help the team to collect primary information using checklists and question guides; and
secondary data from different statistical reports, policy documents, the city Master plan and the study
area local development plan etc.
❖The team also examined a few organizations experiences which have direct nexus to the project.
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▪ Description of the Area
Location:
- City - Addis Ababa
- Sub-City – Kirkos
- Woreda – 02
Project
Area
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▪ Absolute Location
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▪ Relative Location
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▪ Shape
Shape of the area Rectangular in size (3,702.2m2) ,
which is good for proper utilization of the area
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PART TWO
Basic Analysis
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▪ Land Use Analysis
Existing land use Proposed land

Damp site of construction and
domestic wastes as well as sorting
use
High Density Mixed
place for plastic bottles
Residence R-3
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▪ Street Network
- The Area is very near
To the 2 major roads;
- The project area is

accessed in
3 directions
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▪ Accessibility/Connectivity
The project area is very near

to international organization
head offices like WB, ECA, AU
and very close to Bole
International Airport.
The traffic flow with in the
vicinity of the project area
during pick hour is in
acceptable condition.
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▪ Market Analysis
Land Zoning
o 2 to 3 Zone
o High density mixed
residence purposes
using 40/60 ratio (40%
for residential and 60%
for business and
commercial purposes)
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▪ Market Analysis
✓ Renown Hotels: different kinds of high standard hotel and
Availability of land mark areas restaurants like Skylight hotel, Jupiter international hotel, Ghion
✓ Transportation Hub: Bole International Airport is located hotel, Intercontinental hotel, Radisson Blue hotel, Friendship
within a 2.5 km radios International hotel, Kaleb hotel, Trinity hotel, etc. are located
✓ Entertainment Centers: National theater, Alem cinema, within 5km radius of the project area.
Edna Mall, Selam City mall, Birhane Africa mall, Getu ✓ IT related business: different kinds of information technology
commercial and Friend international Business centers as well related businesses offices like ethiojobs.net (info Mind Solutions
as other game zones and astatically sound public parks are PLC), RIDE ZIRIDE, and telecom excellence Academy (TExA),
located within 5km radius of the project area.
✓ International Organizations: different kinds international
✓ Museums and Monuments: Addis Ababa Museum,
organizations head office like World bank (WB) and International
Permanent Exhibition of the Ethiopian Tourism Commission,
Organization for Migration (IOM), Africa Union (AU) and United
the statue of the Lion of Judah.
Nation Economic Commission for Africa (ECA)
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▪ Market Analysis
Land Market Price
✓ Lease price - ETB 35,000.00/M2 (2016
AACA)
✓ Current land price – ETB 40,000.00/M2
Land Selling price in ETB
Area M2
Minimum (000) Maximum (000) Average (000)
350 13,000.00 15,000.00 14,000.00
Price/M2 37,142.86 42,857.14 40,000.00
Therefore: IPDC’s Land Value = ETB129,682,000.00 to 148,208,000.00
EIPP-JICA
▪ Market Analysis
Floor Area - Rental & Selling
Price
Floor Area Purpose
No. Area/M2 Price/ M2 Total PriceM2
Function Rent Sell
1 Studio √ 40 175.00 7,000.00/Month
2 1 bed room √ 60 283.33 17,000.00/Month
3 2 bed rooms √ 115 36,390.00 4,184,850.00
4 3 bed rooms √ 220 36,390.00 8,005,800.00
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PART THREE
Normative and regulatory Framework of PPP
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▪ Introduction
PPP is a good model for implementing public projects, combining

strengths of the Government sector and the private sector, it may
not be a standard solution to all Government projects. The public
institutions should exercise caution and review the feasibility and
risk when considering a PPP arrangement;
EIPP-JICA
▪ Definition
o The classical definition of PPP describes it as a government
service or private business venture which is funded and
operated through a partnership of government and one or
more private sector companies. (Hodge & Greve, 2011).
o Recently, Ethiopia promulgate PPP law. The law defined PPP as: ‘a
long-term agreement between a Contracting Authority and a Private
Party under which a Private Party undertakes to perform a Public
Service Activity that would otherwise be carried out by the
Contracting Authority.’ (Art. 2/12 of Proc. No. 1076/2017)
▪ Types or Models of PPP
There are varieties of PPP models.The most known are:

o Concession
o Joint Venture
o Build-Own-Operate (BOO),
o Build-Operate-Transfer (BOOT),
o Build-Transfer-Operate (BTO),
o Design-Build-Finance-Operate (DBFO),
o Design-Construct-Manage-Transfer (DCMT), and
o Design-Build-Operate-Transfer (DBOT).
EIPP-JICA
▪ Potential Contributions of the Two Parties
Public contribution Private contribution

▪ Leasable land
▪ Finance (partially or fully cover the land
▪ Credit for construction development & construction cost)
▪ Investment incentives ▪ Utilities provision
▪ Utility supply ▪ Management

▪ Investment promotion & marketing
▪ Sound regulation (license, permits,
▪ Maintenance
etc.)
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▪ Evaluation Criteria for PPP Models
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▪ FUNDAMENTAL PPP PRINCIPLES
 Principle of Partnership-shall be taken by the  Principle of Direction: IPDC must lay down
IPDC with the consent of the Procurement clear objectives and principles identify
department and relevant departments. projects, set realistic targets and the
 Principle of Competition:-shall ensure fair means of achieving them in the interest
competition among candidates of the corporation.
 Principle of Procedural autonomy: Unless  Principle of economic viability: IPDC shall
otherwise provided by law, the parties to a ensure that the PPP will be established only
public-private partnership may freely arrange when it is proved to be economically the
the contractual relationship; inclusion of most efficient method and one that offers
incentives, ADR the best „value for money
 Principle of cooperation:-IPDC shall assist the  Principle of Social Objectivity: the benefits of
public-private partnership contractor in securing public interest goals such as social equity,
the necessary material and other rights and the inclusiveness, accessibility, transparency and
various permits which the contractor alone accountability or services the benefits of
cannot obtain, in compliance with regulations public interest goals
and the public-private partnership contract.
EIPP-JICA
▪ FUNDAMENTAL PPP PRINCIPLES
 Principle of Adherence to Law: In the procedure of

establishment and operation of a PPP, both contracting
parties may only employ those measures to achieve the
objective provided by law or by a regulation
 Principle of balance: a balance share of rights,
obligations and legal benefits between parties
 Principle of transparency: all the proceedings and
decision making process must be transparent
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▪ PPP Legal Framework in Ethiopia
 Despite the fact that the public partnership proclamation no

1076/2018 promulgated lately some institutions already launched
the joint venture scheme or modalities resemble to PPP. in the
proclamation participation of private sector and privately financed
infrastructural projects are well recognized.
 proclamation no 1076/2018 define PPP as along term agreement
between contracting authority(government institution) and a
private party under which a private party undertakes to perform a
public service activity and receives a benefit on behalf of a
contracting party.
EIPP-JICA
▪ PPP Legal Framework in Ethiopia
Governing Legal Documents
Public partnership  Civil Code
proclamation No. 1076/2018  Commercial Code

 Investment Proclamations
Objectives of the Proclamation No 1076/2018  Terms and Conditions of the Agreement
✓ To create a favorable framework for promoting and
 Internal Procurement Manual
facilitating the implementation of privately financed
projects to support Ethiopian economic growth.
✓ To enhance transparency, fairness , value for Scope of application of PPP proc. (article 4)
money, efficiency and long term sustainability. ✓ The proclamation apply to public private
✓ To improve quality of public service activity and partnership projects of public bodies and public
✓ To maintain macroeconomic stability by reducing enterprises.
growth in public debt. ✓ to perform a public service activity
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▪ Proposed Modalities using Applicable Legal Documents
For Infrastructure Projects For Non-Infrastructure Projects

 Civil Code
Public partnership
 Commercial Code
proclamation No. 1076/2018
 Investment Proclamations
 Terms and Conditions of the Agreement
This Proclamation is best suited For
 Internal Procurement Manual
different types of infrastructure such as:
For non-infrastructure projects the above
road, power, waste management, water mentioned relevant laws are applicable to
govern Loan service contract, BOT, JV,
etc. Design-Build-Finance-Operate (DBFO) etc.
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▪ PPP Practice in Ethiopia
Sector Name of Business or Project Modality Partners
Hospitality Hilton Hotel Service Contract Government of Ethiopia/GE/ & Hotel Worldwide
Hospitality Ethiopian Skylight Hotel Loan Based Service Ethiopian Airlines & Chines company
Contract
Industry Matador Addis Tire Joint Venture Matador Addis & Slovakia Private Co.
Industry Ambo Mineral Water Joint Venture SABMiller : South African brewery(51%) , Tewodros Ashenafi (16%), & GE (in
2016 Ambo International Holding PLC bought the reaming share)
Business Addis Ababa Exhibition and Market Management Contract Chamber of Commerce – Addis
Development Enterprise
Ababa & Addis Ababa City Government
Service Provision Lehulu: Unified billing of water, BOOT Ministry of Communication and Information Technology & Kifiya Financial
electricity, telephone services on pilot Technology
basis
Agriculture Africa Juice Tibila SC. / Upper Awash Joint Venture MoA, Africa JUICE, ICCO & Farmer’s Associations and Cooperatives
project/
Housing Housing Construction Service Construct MoUDC & Private Developers
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▪ Case Study
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▪ Case Study
Legahar Housing Village project Total Area: 36 hectares

Land use: Hotels, recreation
centers including cinema,
residential apartments,
commercial unites and
parking facilities
Cost: 50 billion ETB
Project partners: Eagle Real
Estate with Addis Ababa
City Administration
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PART FOUR
Cost and Funding to Develop the Project Area
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▪ Capital Cost Estimations
Assumptions ▪ Scenario 1: ETB 20,000.00 per M2 for
construction cost. Based on this
✓ Of the total project area 75% will be develop assumption the total construction cost will
be ETB 1.28billon or USD 35.1 million.
✓ The building height of the project area will be G+20 ▪ Scenario 2: ETB 40,000.00 per M2 for
construction cost. Based on this
✓ The building will have two basements assumption the total construction cost will
be ETB 2.56billon or USD 70.2 million.
✓ Of the developable area 60% will allot to business and the remaining ▪ Scenario 3: the average or ETB
40% left to residential 30,000.00 per M2 for construction cost.
Based on this assumption the total
✓ 1 USD = 36.39 ETB construction cost will be ETB 1.92 billon
or USD 52.7 million
Accordingly, the total developable area is 2,778.9 M2, of this
1,667.34 M2 will use for business activities and the remaining
1,11.56 M2 will use for residential purpose
EIPP-JICA
▪ Capital Cost Estimations
Lowest construction Cost Largest construction cost Average construction cost
Project Area Area M2 ETB 20,000.00 USD 549.60 ETB 40,000.00 USD 1,099.20 ETB 30,000.00 USD 824.40
Total Area 3,705.20
Developing
2,778.90
Area
Residential
25,565.88 511,317,600.00 14,051,046.99 1,022,635,200.00 28,102,093.98 766,976,400.00 21,076,570.49
Floor Area
Business
38,348.82 766,976,400.00 21,076,570.49 1,533,952,800.00 42,153,140.97 1,150,464,600.00 31,614,855.73
floor Area
Total Project Cost 1,278,294,000.00 35,127,617.48 2,556,588,000.00 70,255,234.95 1,917,441,000.00 52,691,426.22
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▪ FUNDING
Source of Funds Advantage Disadvantage

- It will be sustainable; - The budget will not sufficient to complete the
Government budget - No pay back period or interest rate building on time with good quality;
- Sufficient fund will be available; - The involvement on decision making will be high;
Private developer - No pay back period or interest rate, because it is - They will share ownership for a period of time
part of the project
Development partners - No pay back period or interest rate, - Difficult to get sufficient fund;
- High interest rate

- Short amortization period
Financial institutions - Sufficient fund will be available;
- Possibility to loss the area due to unable to pay
loan
EIPP-JICA
Recommendations
▪ To make the site more attractive leveling work should be carried out by removing the existing soil dumped
on the site;
▪ To secure the land IPDC should construct the fence and start construction prior to the elapsed of the lease
agreement, which is expected to be commenced within nine months, so it is advised to start the
construction work as quick as possible;
▪ In order to maximize IPDC’s benefit, optimize space use, and identify a strong bargaining power, detail
feasibility study must be conducted;
▪ To make the development area compatible, environmentally sound and which can astatically value for the
surrounding area, a prior environmental impact assessment must be undertaken.
EIPP-JICA
THANK YOU
Industrial Parks Development Corporation
JICA-EIPP
EXECUTIVE SUMMARY
The industrial development in third world countries entails employees equipped with knowledge
and skill. Excellence in the knowledge and skill profile of the workforce is necessary for the
industrial development of a nation. Short and medium-term training provide a crucial opportunity
to expand the knowledge and skill base of employees and organization. Continuous training and
upskilling of the workforce can inspire creativity, improve employee performance and ensure
adherence to standards.
IPDC is a learning organization that strives to improve the effectiveness and efficiency of
employees and satisfy the customer. To this end, IPDC wants to establish an excellence center
in Bole Lemi Industrial Park. The intended Excellence center is designed to provide short-term
(one to two weeks) and medium-term (three to four weeks) training for IPDC staff, IP tenants and
others.
The training will mainly cover: IP Development, Operation & Management, Corporate Finance, IP
Leadership and Others.
The center of excellence is planned to have a full-fledged facility which includes: administrative
units, lecture rooms, dormitory, cafeteria, library, practical training units, laboratory, conference
hall and a dedicated area for safety-related trainings. The physical development of the excellence
center will be in two phases. In the first phase, the existing administration compound (1.5ha) will
be renovated to make it compatible for the initial stage of 50 trainees at a time. In the second
phase, the Center will develop the additional 3.3ha area to accommodate 350 to 400 trainees at
a time.
For the realization of intended project finance is very important element. The project promoter
and implementers will follow 30/70 strategy i.e. developers will cover 30% of the total cost from
its own budget and the remaining 70% will be covered from national and/or international financial
institutions or other development partners. In addition to the benefits that IPDC gets by expanding
the knowledge and skill base of employees the financial benefit of the excellence center is
projected to be very high. According to the projected cost, the IRR is greater than 18% which
shows the viability of the project.
Contents
EXECUTIVE SUMMARY ....................................................................................................................... i
List o Figure.............................................................................................................................................. iv
List of Table ............................................................................................................................................... v
List of Map ................................................................................................................................................ vi
Acronyms ................................................................................................................................................. vii
PART I: BACKGROUND ....................................................................................................................... 1
1.1 The Promoter ..................................................................................................... 1
1.2 The Business Plan Objective ................................................................................. 2
1.3 IPDC Values and Culture ....................................................................................... 2
1.4 Organizational Structure ........................................................................................ 2
PART II: Service Description, Rational, Location and Market Analysis................................. 4
2.1 Service Description ................................................................................................ 4
2.2 Rational of Developing The Center of Excellence .................................................. 4
2.3 Location of the Project Area ................................................................................... 6
2.4 Market Analysis ...................................................................................................... 6
2.4.1 Training Center Supply Analysis ...................................................................... 6
2.4.2 Demand Analysis ............................................................................................. 8
2.5 Service Fee Structure .......................................................................................... 12
2.6 Service Capacity and Programme ....................................................................... 14
2.6.1 Service Capacity ............................................................................................ 14
2.6.2 Training Programme ...................................................................................... 14
2.7 Service Process ................................................................................................... 15
2.7.1 Admission ...................................................................................................... 15
2.7.2 Thematic Areas of the Training ...................................................................... 15

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2.7.3 Certification .................................................................................................... 16
2.8 Marketing Strategy & Competition ....................................................................... 16
PART III: Technical Study ................................................................................................................... 17
3.1 Infrastructure and service..................................................................................... 17
3.2 Development Concept.......................................................................................... 17
3.2.1 The Center of Excellence Physical Development .......................................... 17
3..2.2 Materials and Inputs .................................................................................... 19
3.2.3 Utilities ........................................................................................................... 20
3.2.4 Machinery and Equipment ............................................................................. 20
3.2.5 Land, Building and Civil Work ........................................................................ 21
3.3 Human Capital and Governance .......................................................................... 25
3.3.1 Human Capital and Training Requirement ..................................................... 25
3.3.2 Governance and Management Arrangement ................................................. 26
3.4 Scheduling ........................................................................................................... 29
3.5. Financial plan ...................................................................................................... 31
Part IV: Business Plan ......................................................................................................................... 32
4.1 General Construction Cost ................................................................................... 32
4.2 Source of Revenue for IPDC................................................................................ 34
4.3 Project Viability .................................................................................................... 34
4.3.1 Financial Viability ........................................................................................... 34
4.3.2 Sensitivity Analysis ........................................................................................ 36
4.3.3 Benefits .......................................................................................................... 36
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List o Figure
Figure 1: IPDC’s Organogram ............................................................................................................. 3
Figure 2: Problem and Solution Tree Analysis ............................................................................... 5
Figure 3: IP Human Capital Trend of the Past Five Years ....................................................... 12
Figure 4. Phase-One Proposed Function ...................................................................................... 18
Figure 5. Proposed Building and Function for the Phase Two ................................................ 19
Figure 6: Phase One Organogram of the Center of Excellence ............................................. 27
Figure 7: Phase Two Organogram of the Center of Excellence ............................................. 28
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List of Table
Table 1. Training Centers in Ethiopia ...................................................................................................... 7
Table 2. List of Existing Industrial Parks in Ethiopia ............................................................................. 9
Table 3. Training Center Fee Structure ................................................................................................ 13
Table 4. Expected Number of trainees ................................................................................................. 14
Table 5. Thematic Areas of Training ..................................................................................................... 15
Table 6. Proposed Function for the Existing Building ......................................................................... 18
Table 7. Proposed Materials and Inputs for Standardized Training ................................................. 20
Table 8. Required Utilities ....................................................................................................................... 20
Table 9. Estimated Cost for Machinery and Equipment ..................................................................... 21
Table 10. Estimated Renovation cost for Phase-one ......................................................................... 22
Table 11. Estimated Construction Cost for Phase-Two ..................................................................... 23
Table 12. Staff Required and Monthly Salary ...................................................................................... 25
Table 13: Development Phase Plan of the Center of Excellence ..................................................... 30
Table 14: Estimated Total Project Cost ................................................................................................ 33
Table 15: Cash Flow and IRR ................................................................................................................ 35
Table 16: IRR for IPDC’s Center of ExcellenceProject in Different Scenarios ............................... 36
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List of Map
Map. 1.Proposed Center of Excellence .................................................................................................. 6
Map. 2. Location of Training Centers in Ethiopia .................................................................................. 8
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Acronyms
IPDC Industrial Park Development Corporation
EIC Ethiopian Investment Commission
BD Board of Director
CEO Chief Excutive Officer
IP Industrial Park
WW II World War II
CCECC China Civil Engineering Construction Corporation
CCCC China Communications Construction Company Ltd
PLC Private Limited Company
IFRS International Financial Reporting Standards
ECA Ethiopian Customs Authority
CCRDA Consortium of Christian Relief and development Associations
ERA- AMTTTC Ethiopian Road Authority Alemgena Machine Based Technology

Training and Testing
BLIP-I Bole Lemi Industrial Park - I
IPS Industrial Promotion Service
CE Center of Excellence
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PART I: BACKGROUND
1.1 The Promoter: Industry Park Development Corporation/IPDC
The Industrial Park Development Corporation /IPDC/ is a public enterprise, which

established for the realization of the national vision to reach middle-income country and
make a leading manufacturing hub in Africa by 2025. IPDC was established in 2014 by
virtue of Council of Ministers Regulation No. 326/2014. The corporation has a mandate
to administer the overall process of the industrial parks with the objective of regulating the
designation, development and operation of Industrial Park; contributing towards the
development of the country's technological and industrial infrastructure; encouraging
private sector participation manufacturing industries and related investments; enhancing
the competitiveness of the country's economic development; and creating ample job
opportunities, and achieve sustainable economic development.
In order to materialize, its establishment purpose of becoming an engine of rapid

industrialization that nurtures manufacturing industries; to accelerate economic
transformation; promote and attract both domestic and foreign investors ; and establish
and regulate the eco-industrial zone, the Corporation has sound organizational structure
and well experienced and skilled human capital.
Apart from this, the Corporation has been providing different services in collaboration with
the Ethiopian Investment Commission and Ethiopian Revenue and Customs Authority
and other relevant institutions using a one-stop-shop approach for investors creating a
conducive investment environment.
So far IPDC has been performing different activities such as: activate both pre and post-
investment servicing, avails serviced industrial land, pre-built sheds equipped with all-
encompassing utilities and infrastructural facilities that fit international standards, with no
compromise on workers’ security and environmental safety.
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A. Vision
To be an innovative and leading eco-industrial parks developer and

operator in Africa by 2025.
B. Mission
“To boost industrial parks development through the highest standards

of professionalism; to drive industrialization, promote exports, create
employment opportunities thereby the country’s development goal will
achieve the middle-income status.”
1.2 The Business Plan Objective
The major objective of this business plan is to assess the viability of the project related
to:
a) Human capital development; and

b) Revenue generation for IPDC
1.3 IPDC Values and Culture
 Highest level of integrity and professionalism;

 Learning organization;
 Concern to the environment;
 Effective and efficiency
 Customer satisfaction.
1.4 Organizational Structure
Taking the 2018 regulation that stipulates the powers and duties of executive organs, the
corporation is supervised by Ethiopian Investment Commission/EIC/ and the EIC is
accountable to the Prime Minister. This indicates that IPDC is one of the vital public
enterprises.
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Institutionally, the corporation is governed by the Board of Directors/BD/ under this there is
Chief Executive Officer /CEO/. Under the CEO there are three deputy CEOs: Corporate Services,
IP Development and Operation and Management. Under each Deputy CEOs, there are
directorates and currently, the Corporation has more than 30 staff at the main office, which is
equipped with the basic IP related development, operation and management, knowledge and
skills. The detail organogram of IPDC is presented below.
Board of Directors
CEO Internal Audit
Corporate
Communication Services
Legal Services
Corporate Planning &

MIS Directorate
Deputy CEO Corporate Deputy CEO IP Deputy CEO Operation &

Service Development IP Management
HRM Directorate Master Plan & Land Bank IP Promotion Directorate

Management Directorate
Finance Directorate Aftercare & IP

Infrastructure Development
Directorate
Procurement & Property
Administration Directorate
IP Branch Offices
Environmental Protection &
Social Safeguard Directorate
Design, Contract & Project

Energy Supply Directorate

Figure 1: IPDC’s Organogram
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PART II: Service Description, Rational, Location and Market

Analysis
This business proposal is designed to develop and implement basic social services, which
are vital to the nation’s industrial development, providing on average the highest public
returns to investment, and the critical underpinning for later eco-industrial development
and economic growth. IPDC has a plan to develop and implement a center of excellence
at Bole Lemi Smart Industrial City. The detail service description and application of the
center of excellence is presented below.
2.1 Service Description
The purpose of this project is to establish a center of excellence at Bole Lemi Industrial
Park. The center will serve as a hub for human capital development. The intended center
of Excellence is designed to provide short-term (one to two weeks) and medium-term
(three to four weeks) training for IPDC staff, IP tenants and the others. The training will
be focused on both theory and skill development on areas such as: eco-industrial parks
planning, development, operation, management, corporate finance.
2.2 Rational of Developing The Center of Excellence
The rationale behind the establishment of the Centre of Excellence in Bole Lemi Industrial
Park is to fill the prevailing knowledge and skill gaps of IPDC workers in eco-industrial
development, operation and management through high-quality training. Furthermore,
currently, there are also IPs developed by regional states and private investors, these will
be used to provide training to employed and unemployed persons, to meet the increasing
demand for higher-skilled labour for eco-industrial oriented IPs development, operation
and management as well as for their industries.
The charts below present first the problem tree analysis and then the theory of change
behind this Center of Excellence.
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Figure 2: Problem and Solution Tree Analysis
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2.3 Location of the Project Area
The training center will be established inside Bole Lemi Industrial Park. Currently, the
area is serving as a Custom office, Clinic, Cafeteria, Bank and administration offices.
Since IPDC has built new administration building that provides a one-stop service, the
current administration area is proposed to serve as the new center of excellence.
Map. 1.Proposed Center of Excellence
2.4 Market Analysis

2.4.1 Training Center Supply Analysis
In Ethiopian modern industry emerged during the 1920s with the advent of the Ethio-
Djibouti railway transport system. However, industrialization process was disrupted with
the Italian invasion (1935 – 1941). After the cease of WW II, Ethiopia had been designed
and implemented a five years national strategic development plan by giving special
emphasis on the agricultural sector. During those times (started in the late 1950s and
early 1960s) the private investors were engaged in the industrial sector. The development
plan was launched in different times since 1957. The major objectives of the then time
five years strategic plans were focused on infrastructure, human capital formation
(education), resource mobilization, agro-processing, mining, power generation,
agricultural production. During these times industrial sectors were overseen by
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government policies and strategic plans. Due to this, there were no special training
centers or center of excellence dedicated to industry-related training.
Currently, the government of Ethiopia gives priority to the industrial sector, specifically
labor-intensive textile and manufacturing sub-sectors. The industrial sector is expected
to absorb a large number of unemployed youth, accelerate the national economy,
increase foreign direct investment, bring technology transfer and modernization. To play
a decisive role in the development of industry in Ethiopia, the government design a new
strategy ‘Developing Industrial Parks’ in different parts of the country. So far, there are
around 11 industrial parks that are operational and there are also additional parks under
construction.
In order to develop these industrial parks and administer the existing parks, it requires
skilled human capital. However, it is seldom to identify the special center of excellence or
higher institution that provides training in the area of industrial park development,
operation, management, corporate finance, risk management, etc. using an eco-industrial
park oriented approach.
The existing higher institutions or special training centers are providing formal education
for technical and vocational students in textile, garment and leather related areas. (See
Table 1 and Map 2)
Table 1. Training Centers in Ethiopia

Name of the Institution Location
Textile Garment & Leather Technology Selam Children Village
Ethiopian Institute of Textile & Fashion Technology Bahir Dar University
Garment Engineering Development Wolkite University
Axum Textile Engineering Development Axum University
Hawasa Textile Engineering Hawasa University
Mekelle Garment College Center of excellence Mekelle
Garment Engineering Dire Dawa University
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Ethiopian Leather Industry Development Institute Addis Ababa
Federal Techical & Vocational Education & Training Addis Ababa

Institute
Next Fashion Design Collage Addis Ababa
The Ethiopian Textile Industrial Development Institute Addis Ababa
The Mekelle Garment College Addis Ababa
Ethiopian Textile Industry Development Institute Addis Ababa/Kaliti
Map. 2. Location of Training Centers in Ethiopia
2.4.2 Demand Analysis
2.4.2.1 Factors that drive for the Development of IP Center of Excellence
There are a number of factors that trigger the development of a center of excellence in
the stream of eco-industrial parks development. First, government political commitment:
8|Page
the government of Ethiopia is currently given special priority for industrialization through
directly engaging in the development of industrial parks in different parts of the country.
Second, the prevailing impressive economic growth that envisaged in the country raised
the interest of international investors in the country's economy. Third, the geopolitical
location of the country creates a low cost of doing business and access to the rest of the
world. The level of industrial park development demands skill human capital that meets
the international standards in the area of: regulating and implementing word class
infrastructure and fiscal as well as regulatory incentives; export incentives through
bonded logistics approach; maintaining stable and consistent IP operating environment.
Last but not least, the need for dynamic, competent and contemporary knowledge and
skill for the ever-changing industrial parks development, operation and management.
2.4.2.2 Industrial Parks Development Trained
In Ethiopia, Industrial Parks development is a very recent phenomena. The first industrial
park was started construction in 2009 and starts operation in 2012 with the help of a World
Bank loan. In order to regulate and administer the new phenomena Industrial Parks Development
Corporation was established in 2014.
There are also other IPs developed by the Regional States and Private developers.
Currently, the total number of IPs reached greater than 25. (Table 2)
Table 2. List of Existing Industrial Parks in Ethiopia

Possession IP Name Area /ha/ Region City Specialization Status
Bole Lemi
Addis Addis
Industrial Park 172 Garment Operational
Ababa Ababa
-I
Hawassa 400ha (140
SNNP Hawassa Garment Operational
Industrial Park in phase 1)
Mekele 1000 (75 in
Tigray Mekele Garment Operational
Federal Industrial Park phase 1)
Government Kombolcha 700 (75 in
Amhara Kombolcha Garment Operational
/IPDC/ Industrial Park phase 1)
Jimma 1000 (75 in
Oromia Jimma Garment Operational
Industrial Park phase 1)
Assembling,
Adama 2000 (365 in food
Oromia Adama Operational
Industrial Park phase 1) processing &
Garment
9|Page

Bole Lemi
Addis Addis Under
Industrial Park 181 Garment
Abeba Abeba construction
- II
Pharmaceutica
Kilinto Addis Addis Under
279 l, Medical
Industrial Park Abeba Abeba construction
equipment
Assembling,
Dire Dawa 4187 (150 in food Under
Dire dawa Dire Dawa
industrial Park phase 1) processing & construction
Garment
Bahir Dar 1000 (150 in Under
Amhara Bahir Dar Garment
Industrial Park phase 1) construction
Construction
Arerti Industrial products, Planning
150 Amhara Arerti
Park home stage
appliance
Garment
Debre Birhan 1000 (100 in Debre Under
Amhara apparel & agro
Industrial Park phase 1) Birhan construction
processing
Aysha 1000 (100 in Planning
Somali Aysha Live stock
Industrial Park phase 1) stage
Assosa 1000 (100 in Benshangu Planning
Assosa Pulp paper
Industrial Park phase 1) l/Gumuz stage
Semera 2000 (75 in Free trade Planning
Afar Semera
Industrial park phase 1) export stage
Mojo Leather Planning
290 Oromia Mojo Leather
City stage
Bure
Integrated Agro- Under
260.35 Amhara Bure
Agro Industrial processing construction
Park
Bulbula
Integrated Agro- Planning
263.09 Oromia Bulbula
Agro Industrial processing stage
Regional Park
Government Yirgalem
214.86 SNNP Yirgalem
Park
Baeker
258.62 Tigray
Park
Private Eastern
500 Oromia Dukem Various Operational
Investors Industrial Zone
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Huajian Light Addis Addis Shoes & Partly
138
Industry City Abeba Abeba Garment operational
Modjo George Under
Shoe Industrial 50 Oromia Modjo Leather Constructio
Park n
Planning
CCECC 380 Dire Dawa Dire Dawa Various
stage
Partly
CCCC 100 Amhara Arerti Various
operational
DBL Industrial Textile &
78.05 Tigray Mekelle Operational
PLC Garment
Velocity
Apparetz Textile &
Companies Garment
PLC
2.4.2.3 Demand Projection
As Table.2. indicates there are 27 industrial parks (IPs); of which 16 are administered by
the Federal Government, four under regional states and the remaining seven IPs under
private developments. The number of IPs which will develop by the Federal government
will reach 30 by the year 2030. Likewise, the regional states and private developers will
develop additional parks. This indicates that there is a high demand for skilled and
knowledgeable professionals in the area of eco-industrial parks development, operation
and management for these IPs.
It is expected that the demand for trained IP professionals continues to increase for the
coming ten years. The basic reasons for the demand to increase are:
- The country’s industrialization policy and strategy that requires specialization and
specialized skills;
- The competitiveness of the IPs labour market;
- The prevailing high economic growth of the country;
- The trend of IPs development in Ethiopia
Accordingly, a projection for the coming ten years is computed using the existing IP
human capital development trends for the past five years.
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Employee
700
600
500
400
Employee
300
200
100
0
2007 2008 2009 2010 2011
Figure 3: IP Human Capital Trend of the Past Five Years
2.5 Service Fee Structure
Although it is difficult to come up with a comprehensive list of fees for informal education
of short and middle term training, an attempt is made to identify the different institutions
or organizations training facility service charged fees. As table 3 indicates the average
service fee for training only is Birr 271.67The, while for training and accommodation is
Birr 503.33. The average training and accommodation fee for a person per day is Birr
358.54.
For the purpose of this project, the total training fee for both accommodation and
training is Birr 1000.00 a day per person.
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Table 3. Training Center Fee Structure
Institute/Training Department Fee/day

No. Training Type Duration Fee Remarks
Center /Chair (in ETB)
ArcGIS 30 days 3,000.00

100.00 Only training
Addis Ababa
1 IFRS 60h or 20 days 4,500.00
University School of 225.00 Only training
Commerce Project
50h or 15 days 2,500.00
Management 166.67 Only training
With
Civil Service Custom Transit
2 ECA 30 days 11,800.00 accommodatio
University Operation
393.33 n
Office Machine 12 days 4,880.00
406.67 Only training
Computer Refurbishment Training
3 Advanced
Center
Computer 10 days 4,600.00
mentenance 460.00 Only training
With
Humanitarian
4 CCRDA 1day 800 accommodatio
related
800.00 n
With
Road
5 ERA-AMTTTC 30 9,500.00 accommodatio
Survaying
316.67 n
Average
358.54
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2.6 Service Capacity and Programme

2.6.1 Service Capacity
The market study revealed that industrial parks are increasing from time to time. Such
kind of parks demands knowledgeable and skilled professionals. In order to equipped IP
professionals continues on jobes training in the area of eco-industrial parks development,
operation and management is very crucial. However, there is no special training center
that provides eco-industrial development, operation and management-related training.
Therefore, this center of Excellence initially starts with a capacity of 50 trainees for one
cohort. When the Center of Excellence reaches its fullest capacity it accommodates 350
to 400 trainees on one cohort.
2.6.2 Training Programme
The entended project does not face any challenge of getting trainees; because, the
existing IPs need skilled human capital, which will acquire through on jobs short term and
medium-term training. The Center will start providing service with a capacity of 50 trainees
at a time for the first four years. Then after, with the accomplishment of Phase-II, the
Center will receive 50%, 70% of the ideal (average) 375 trainees on fifth and sixth years
respectively. Starting from the seven-year onwards, full training service provision shall be
attained, with an occupancy rate of 90%, by the Center of Excellence.
Table 4. Expected Number of trainees

Types of Number of trainees per annum with corresponding occupancy rate
Training Duration 1st 2nd 3rd 4th 5th (50%) 6th (70%) 7th (90%)
Short term 360 360 360 360 2250 3150 4050
medium term 120 120 120 120 750 1050 1350
Yearly total
trainees 480 480 480 480 3000 4200 5400
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2.7 Service Process

2.7.1 Admission
The Center of Excellence accepts trainees form IPs, IPDC head office, other IPs
developed by regional governments and private developers as well as related industrial
corporates.
A person who attends the training at the Center of Excellence, of which she/he does not
permanently reside is considered as foreign national trainees. The Center of Excellence
also accepts foreign national trainees with a prior bilateral agreement or those who meets
the admission requirements set by the Center.
All students will get basic accommodations, training materials, library and lab services at
a reasonable price.
2.7.2 Thematic Areas of the Training
The training service is given at both short term and medium term bases. The former will
take one to two weeks duration, while the latter takes three to four weeks duration. The
Center of Excellence training program mainly covers the following eco-industrial related
thematic areas.
Table 5. Thematic Areas of Training

Operation & Corporate
Development IP Leadership Other
Management Finance
IP/LP Corporate
Master Plan & Organizational Investment Atration/ IP
Administration Administratio
IP/LP Design leadership marketing
or Management n
Risk IP Law (labour,
Integrated Transformation
management IP Finance contract, corporate
Infrastructure al Leadership
(Fire & Safty responsibility etc.)
Environment
(EMS/ISO-1400,
Project Asset Financial Risk Contemporary
Environmental health
Management Management Management leadership
&sefty, Solid Waste
Management)
Contract
Administration
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2.7.3 Certification
The Center of Excellence awards credentials for those who properly complete the training.
The Center of Excellence will work in collaboration with internationally well known similar
training centers for accreditation.
2.8 Marketing Strategy & Competition
i) Marketing Strategy
The proposed Center of Excellence will become a new type of training center. To
make the Center nationally, regionally even internationally well known, the project
promoter will employe the following marketing strategy:
- Developing livable and aesthetically high-quality physical compound;
- Creating autonomous strong organizational structure;
- Invite well-known qualified trainers;
- To become international acceptance of the certification, work with a
well-known center of excellence;
- Working in collaboration with experienced international training
centers or institutions like Kunshan for experience sharing;
- Advertising the services
ii) Competition
To become a competent and desirable Center of Excellence among all, the project
owner must:
- design an independent and strong organizational structure;
- ensure high-quality training in the long run;
- must sustain and adapt to current technological and educational
advance;
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PART III: Technical Study

The project promoter has a plan to establish this center of Excellence inside Bole Lemi
Smart Industrial City specifically at Bole Lemi Industrial Park – I. The Center will establish
at the current Administration Compound, which has been mainly serving as: Custom
office, Admin, bank, and cafeteria. And IPDC has a plan to expand the area to become a
comprehensive center of excellence with a total area of 2ha. The existing availability of
physical infrastructure and the development concept of the Center are presented below.
3.1 Infrastructure and service
As stated above the Center of Excellence is planned to establish at BLIP-I. Since the area
is already developed and provides service as an administration office, the basic
infrastructure and utilities like road, water, power telecommunication, sewerage, etc. are
available.
3.2 Development Concept

3.2.1 The Center of Excellence Physical Development
The center of excellence is planned to have administrative units, lecture rooms, dormitory,
cafeteria, library, practical training unites, technical laboratory unites, conference hall and
a dedicated area for fire extinguish and safety training as well as multi-purpose
playgrounds. The Center of Excellence will develop into two-phase.
Phase One: this is the initial phase that IPDC will use the existing admin compound for
the entended Center of Excellence through renovating the buildings and the compound
become compatible for training facilities. The total area of this site is 1.5ha, out of this
0.35ha or 23% is built-up area.
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Table 6. Proposed Function for the Existing Building

Current Function of the Built-Up
No. Proposed Function
Building Area/M2
1 Cafiteria 253.00 Cafiteria
2 Cafiteria & Office 253.00 Academic Office
3 EIC Office & Logstic 555.39 Students Dormitory
4 Office 555.39 Students Dormitory
5 Exhibition Hall 504.00 Multipurpose hall
6 IPDC One Stope Service/OSS/ 555.39 Students Class Roms & Laboratory
7 Custom office 555.39 Library & Teachers Dormitory
8 Bank 252.00 Guest House
Total 3,483.56
Figure 4. Phase-One Proposed Function
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Phase two: at this stage, the Center is expected to provide comprehensive service at its
fullest capacity. The Center will develop an additional area of 3.3ha. As a result, the total
area of the Center will expand from 1.56ha to 4.8ha, and it will accommodate 350 to 400
trainees at a time. The proposed major building functions are indicated on figure 5.
Workshop
Hall
Fire Safety training

center
Figure 5. Proposed Building and Function for the Phase Two
3..2.2 Materials and Inputs
The relevant materials and inputs for the provision of standard training are listed on
Table.7. The estimated cost of these relevant materials is 8,725,000.00, of which Birr
6,835,000.00 is required in foreign currency while the center reaches its full capacity.
19 | P a g e
Table 7. Proposed Materials and Inputs for Standardized Training
Unit of Cost /ETB/ Cost /USD/

Materials/Items
Measure Fc LC TC
Curriculum
development Packge 1,485,000.00 1,350,000.00 2,835,000.00 88,884.29
Educational Lump-
Materials Sum 1,350,000.00 1,350,000.00 42,325.85
Vichecles (1-mid
bus & 2-van Packge 4,000,000.00 4,000,000.00 125,409.93
Lump-
Stationery Sum 270,000.00 270,000.00 8,465.17
Cleaning Lump-
materials Sum 135,000.00 135,000.00 4,232.59
Lump-
Miscellaneous Sum 135,000.00 135,000.00 4,232.59
Total 6,835,000.00 1,890.000.00 8,725,000.00 273,550.42
3.2.3 Utilities
The major utilities required by the center are electricity and water. The estimated annual
requirement at full capacity and the corresponding cost is given in Table.8.
Table 8. Required Utilities

Unit
Utilities UOM Quantity Cost/ETB/ Cost /USD/
price
KW/h
Electricity 40000 0.4736 227,328.00 7,127.30
M3
Water 1872 3.25 73,008.00 2,288.98
Grand Total 300,336.00 9,416.28
3.2.4 Machinery and Equipment
The estimated cost of machinery, equipment and other facilities for the full realization of
the Center is Birr 9,302,300. (See Table 9)
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Table 9. Estimated Cost for Machinery and Equipment

Machinery &
UOM Quantity FC LC TC Cost (USD)
Equipment
Broadband
internet line
(Supply & Unit 1,059,800.00 1,059,800.00 33,227.36
Network
Installation)
Desk top
computers
networked Set 200 5,000,000.00 5,000,000.00 156,762.42
(Supply &
Installation)
Multipurpose
copier,
Pcs 2 500,000.00 500,000.00 15,676.24
Scaner &
printer
Projector Pcs 10 2,000,000.00 2,000,000.00 62,704.97
Satellite TV-
set (Supply & Set 5 67,500.00 67,500.00 2,116.29
Installation)
Cafeteria
Set 1 135,000.00 135,000.00 4,232.59
facility
Miscellaneous Lump-
540,000.00 540,000.00 16,930.34
items sum
Total 8,559,800.00 742,500.00 9,302,300.00 291,650.21
3.2.5 Land, Building and Civil Work
The envisaged center of Excellence requires a total area of 4.8ha or 48,000 M2 that will
be developed in two phases. In the first phase the existing administration plot, which has
a total area of 1.5ha or 15000M2 will renovate to serve as a Center of Excellence. In the
first phase, the Center of Excellence has designed to accommodate 50 trainees in one
cohort. The indoor built-up area of the Center that encompasses classrooms, library,
dormitories, administration office, guesthouses, lounge, etc. is 3,483.56M2. The
remaining 11,516.44M2 area is the outdoor built-up area which includes a parking lot,
walkways, garden, guard room, etc.
The Center will expand up to 4.8ha with a capacity of holding 350 to 400 trainees at a
time. When the Center provides its fullest function, the total indoor built-up area will reach
21 | P a g e
21,672.56M2. Of this 3,000 M2 built-up area is dedicated for Emergency and Fire Fighting
training. The estimated construction costs for the two phases presented below.
Phase One
As stated above the existing administration compound is subject to renovation to meet

the minimum requirement for serving as Center of Excellence. The estimated renovation
cost is Birr 11,441,888.12 or USD 373,673.68.
Table 10. Estimated Renovation cost for Phase-one

Development
Function Cost/ETB/ Cost/USD/
Category
Dormitory, library, classrooms, offices,
Renovation
meeting halls, guest house, cafeteria,
Cost 7,838,010.00 245,741.08
playground, workshop
Sub-Total A 7,838,010.00 245,741.08

Miscellaneous Expense & Contingency
Miscellaneous Expense (10% of sub-total A) 783,801.00 24,574.11
Contingency Expense (10% of Sub-Total A +

Miscellaneous Exp.) 783,801.000 24,574.11
Sub-Total B 1,567,602.00 49,148.22

Tax and Admin Cost
Tax (15% of Sub-Total A + B) 1,410,841.80 44,233.39
Admin cost (5% of Sub-Total A + B) 470,280.60 14,744.46
Sub-Total C 1,881,122.40 58,977.86
Grand Total 11,286,734.40 353,867.15
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Phase Two
In the second phase, the total area of the Center of Excellency will reach 4.8ha. Of this
3.3 is developable during phase two. The expanded development cost for this newly
expanding (3.54ha) area is Birr 518,697,545.60 or USD 16,262,456.20.
Table 11. Estimated Construction Cost for Phase-Two

Unit
Type Unit Quantity Cost Cost (ETB) Cost (USD)
(ETB)
Direct Construction Cost
Grading
Earthwork m2 24,742.00 1,000.00 24,742,000 775,723.15
work
Subtotal 24,742,000 775,723.15
10 m ROW m 726 7,560 5,488,560 172,079.99

Road Street
set 726 17,500 12,705,000 398,333.30
Lighting
Parking m2 518.00 1,900 984,200 30,857.11
Lot m 2
369.00 1,900 701,100 21,981.23
Subtotal 19,878,860.00 623,251.63
Drainage
Drainage m 1,254.00 3,500 4,389,000.00 137,606.05
pipeline
Subtotal 4,389,000.00 137,606.05
Distribution
m 2,202
pipeline
DN80 m 726 120 87,120.00 2731.43
Water Supply DN100 m 726 145 105,270.00 3300.48
DN150 m 726 175 127,050.00 3983.33
DN200 m 726 215 156,090.00 4893.81
DN250 m 726 250 181,500.00 5690.48
DN300 m 726 300 217,800.00 6828.57
Elevated
unit 0 6,240,000 - 0.00
tank
Pumping
set 0 21,093,631 - 0.00
system
Subtotal 874,830.00 27,428.09
Sewerage Sewer Line m 3,166
DN100 m 3910 145 566,950.00 17,775.29
DN200 m 2440 215 524,600.00 16,447.51
DN300 m 1000 300 300,000.00 9,405.75
DN400 m 2900 320 928,000.00 29,095.10
DN600 m 1500 540 810,000.00 25,395.51
23 | P a g e
Pumping
set 1 21,093,631 21,093,631.00 661,337.72
system
man holes unit 8 5,025 40,200.00 1,260.37
Subtotal 24,263,381.00 760,717.25
Compact
substation unit 16.00 1,831,280 49,444,554.60 1,813,281.30
for LV
Power Supply
Feeder
cable km 8,505.00 1,120 9,525,600.00 349,332.55
3x120/70
Subtotal 58,970,154.60 1,848,860.79
Telecom.
Telecommunication m 5,266.00 120 631,920.00 19,812.26
Line
Subtotal 631,920.00 19,812.26
Landscape Park m2 3,723.00 800 2,978,400.00 93,380.24
Subtotal 2,978,400.00 93380.23665
Class
m2 4,998 21,000.00 104,958,000.00 3,290,693.96
Rooms
Admin,
Office & m2 2,776 21,000.00 58,296,000.00
Lab
Building Auditorium
& m2 2,442 21,000.00 51,282,000.00 1,607,818.06
Workshop
Apartment m2 3,330 21,000.00 69,930,000.00 2,192,479.17
Fire birged m2 1,112 21,000.00 23,352,000.00 732,143.19
Covered
walk way & m2 1,866 21,000.00 39,186,000.00 1,228,578.42
parking
Guest
m2 1,665 21,000.00 34,965,000.00 1,096,239.58
House
Subtotal 18,189 381,969,000.00 11,975,676.74
Grand Total Construction

Cost
518,697,545.60 16,262,456.20
Urban land in Addis Ababa is governed by the lease proc. No. 272/2002. There are two
ways of possessing urban land: auction or negotiation. According to the recent lease
auction price for a mixed-use plot is approximately 13,000 ETB per M2. As stated above
the area is serving for education it has a lease period of 99 years and the lease payment
period of 40 to 50 years. Since the envisaged area is located in BLIP – I and under the
possession of IPDC there is no land lease acquisition cost.
24 | P a g e
3.3 Human Capital and Governance

3.3.1 Human Capital and Training Requirement
Human Capital
The total number of academic and non-academic staff required for the envisioned Center
of Excellence is 30 in number. Table 12 depicts the relevant staff with the corresponding
monthly or annual salary including fringe benefits. Accordingly, the total estimated labour
cost of the Center is Birr 1,575,600.00 per annum.
Table 12. Staff Required and Monthly Salary

Required Salary
No. Description
No. Monthly Annual
1 Director 1 12,000.00 144,000.00
2 Senior Secretary 1 3,000.00 36,000.00
3 Deputy Director 2 20,000.00 240,000.00
4 Training Coordinator 1 9,500.00 114,000.00
5 Research & Practicum Head 1 9,000.00 108,000.00
6 Human Resource & Finance Head 1 9,500.00 114,000.00
7 General Service & Facility Manager 1 8,000.00 96,000.00
8 Documentation and attendant 2 9,000.00 108,000.00
9 House keeping supervisor 1 4,500.00 54,000.00
10 Lab assistant 4 20,000.00 240,000.00
11 Librarian 2 9,000.00 108,000.00
12 Gardener 4 6,000.00 72,000.00
13 Driver 2 5,000.00 60,000.00
14 Casher 1 2,000.00 24,000.00
15 Janitor 6 4,800.00 57,600.00
Total 22 131,300.00 1,575,600.00
.
25 | P a g e
Training Requirement
Lab assistants need to get local tailor-made training. The estimated cost for such kinds
of training is Birr 60,000.00.
3.3.2 Governance and Management Arrangement
For the realization of this Center of Excellence, it will pass three stages: Inception,
Establishment and Operation and Management.
i. Inception: This is the initial stage in which IPDC understand the Center of
Excellence objective(s); examining case studies like Kunshan, Ethiopian
Airlines, Ethiopian Road Authority, and Computer Refurbishment Training
Center; appropriate business model selection, implementation and partner
selection and other related activities are performed by IPDC.
ii. Establishment: at this stage, IPDC will finalize the physical and social
infrastructures; obtain all the necessary licenses to establish the Center; as well
as making the Center ready to provide training.
iii. Operation & Management: after the establishment of the Center, operation
and management activities will be conducted by an independent organ. At this
stage, all the training provision service and the Center of Excellence expansion
works will be conducted by this independent organ.
Creating an independent organizational structure makes the Center autonomous in IPs

related academic matters as well as to work in partnership with experienced international
institutions like the Kunhshan’s.
Establishing an IP training center is one of social infrastructure and it is a new area in

Ethiopia, working with well experienced international institutions or centers using PPP
approach is advisable. The best suited PPP model for the realization of IP Center of
Excellency is Built Operate Transfer (BOT).
26 | P a g e
IPDC has already established a bilateral relationship with the Kunshan, taking this an
opportunity, It can make a long-term agreement with the Kunshan for the development,
establishment, operation and management of the Center of Excellence.
As stated in the previous parts the center has two phases. During phase one the Center
will be supervised by IPDC’s CEO and deputy CEOs. Because it needs a direct followup
from the IPDC.
Figure 6: Phase One Organogram of the Center of Excellence
Once it is established and gets its own organizational structure, the Center will be
supervised by the Advisory Board. The Advisory Board members consist of IPDC’s CEO,
deputy CEOs and other related organs. In both phases the Center of Excellence
administered by Director and under this there are two deputy directors that govern the
academic and other administrative matters.
In order to establish, operate and manage the Center of Excellence IPDC gives the
mandate to the well-experienced enterprise i.e. IPS to work with the Kunshan.
27 | P a g e
Figure 7: Phase Two Organogram of the Center of Excellence
28 | P a g e
3.4 Scheduling
To strategically manage the proper realization of the Center of Excellence, phasing plan
has been prepared. Accordingly, the development schedule plan of Center indicates that
all projects will finalized in 2023. In the current fiscal year (2019/2020), IPDC will finalize
the renovation work, furnished the Center with the relevant materials as well as starts
training provision service. In the year 2020 IPDC will excute inception and establishment
stags. Then after the Center of Excellence construct new buildings and infrastructure in
its reserved expantion area (3.3ha).
29 | P a g e
Table 13: Development Phase Plan of the Center of Excellence

2019 2020 2021 2022 2023 2024 2025
Phase Activities Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct-
Mar June Sep Dec Mar June Sep Dec Mar June Sep Dec Mar June Sep Dec Mar June Sep Dec Mar June Sep Dec Mar June Sep Dec
Understanding its objectives, Conducting

Inception Feasibility study, identifaying appropriat
business model etc
Finalization of renovation work, obtain all

Establishment the necessary licenses, making the Center
ready to provide training
Development Developing the expantion area of 3.3ha
Legend
Inception
Establishment
Development
Operation & Management
30 | P a g e
3.5. Financial plan
For the realization of the intended project, finance is a very important element. As IPDC
used two phases of development the amount and types of funds vary depending on the
nature of development.
The project promoter and implementers will follow 30/70 strategy i.e. developers should
cover 30 presents of the total cost from its own budget and the remaining 70 will be
covered from national and/or international financial institutions (IMF, WB, ADB, National
Development Banks, etc.) or other development partners like Kunshan.
31 | P a g e
Part IV: Business Plan

4.1 General Construction Cost
Basic Assumption:
- G+3 building will be constructed for the Second Phase Center of
Excellence
- 1 USD = 31954 ETB
Apart from this, the team computes construction costs from two vantage points: the first
phase and the second phase. To calculate the construction cost the team used the
following assumptions:
First phase Second Phase

The built-up area will be 50% of the total
No additional building is needed
expansion area (3.3ha)
Cost will use only for renovation Construction cost will be ETB 21,000.00 per M2
Renovation Cost will be 2250.00 per

M2
The over all cost for the entended project is 735,233,390 ETB or 23,051,390 USD.
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Table 14: Estimated Total Project Cost

Amount
Description
ETB (000) USD (000)
A. Direct Construction Cost Function
Center of
1 Renovation Cost Excellence - 7,838.01 245.74
Phase I
Center of
2 Development Cost (Expantion) Excellence - 518,697.55 16,262.46
Phase II
Sub Total A 526,535.56 16,508.00

Engineering Cost (Planning, Design and
B
Construction Supervision)
6 % of Development cost 31,121.85 975.75
Sub Total B 557,657.41 17,483.94
C Materials & Inputs

8,725.00 273.55
D Machinery & Equipment
9,302.30 291.65
E Utilities
300.34 9.42
F Salary
Employment Salary (Annual) 1,575.60 49.40
Sub Total C 19,903.24 624.02
G Contingency
Construction Cost (15% of Sub total A & B) 81,965.82 2,569.83
Sub Total D 81,965.82 2,569.83
H Tax and Administration Cost
Tax (15% of Sub-total A + B + C ) 94,260.69 2,955.31
Administration Cost (2% of Sub-total A + B + C) 12,568.09 394.04
Sub Total E 106,828.78 3,349.35
Grand Total F 735,233.39 23,051.39
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4.2 Source of Revenue for IPDC
The major source of revenue for IPDC’s Center of Excellence is the service charge fees
from the learning and development area in a form of facilitating and coordinating short-
term and medium-term training for IPDC staff and Industrial parks stakeholders.
The other source of revenue proposed by the team is renting the Center halls for different
kinds of meetings, conference, etc.
4.3 Project Viability
4.3.1 Financial Viability

Assumptions
# Short term trainees 60% of the total trainees
# Medium-term trainees 40% of the total trainees
Accommodation fee per day (ETB) 600.00
Training fee per day (ETB) 400.00
Total training fee (ETB) 1000.00
Maximum # of short term training per year 24.33 Ideal 20
Maximum # of Medium tearm trainig per year 12.17 Ideal 10
Expected total number of trainees in Phase - I

50 Ideal 40
(at a time)
Expected total number of trainees in Phase -
350-400 Ideal 375
II (at a time)
4.3.1.1 Cash flow and Internal rate of Return/IRR/
 Internal Rate of Return
The internal rate of return (IRR) is the annualized effective compounded return rate that
can be earned on the invested capital, i.e., the yield on the investment. Put another way,
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the internal rate of return for an investment is the discount rate that makes the net present
value of the investment's income stream total to zero. It is an indicator of the efficiency or
quality of an investment. The project 10 years FIRR is 18.03%. (See the Table below)
Table 15: Cash Flow and IRR

Costs
Years Operation & Revenue Net Cash Flow
Cost Total
Maintenance Cost
2020 9917.81 167.54 10,085.35 601.97 (9,483.38)
2021 9851.87 162.62 10,014.49 601.97 (9,412.53)
2022 92.16 0.00 92.16 3,668.24 3,576.08
2023 92.16 0.00 92.16 4,232.59 4,140.43
2024 92.16 0.00 92.16 4,938.02 4,845.86
2025 92.16 0.00 92.16 5,361.27 5,269.11
2026 92.16 0.00 92.16 5,643.45 5,551.29
2027 92.16 0.00 92.16 5,643.45 5,551.29
2028 92.16 0.00 92.16 5,643.45 5,551.29
2029 92.16 0.00 92.16 5,643.45 5,551.29
2030 92.16 0.00 92.16 5,643.45 5,551.29
Financial Internal Rate of Return (FIRR) = 18.03%
4.3.1.2 Net Present Value
Net present value (NPV) is defined as the total present (discounted) value of a time series
of cash flows. NPV aggregates cash flows that occur during different periods of time
during the life of a project into a common measuring unit i.e. present value. It is a standard
method for using the time value of money to appraise long-term projects. NPV is an
indicator of how much value an investment or project adds to the capital invested. In
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principle, a project is accepted if the NPV is non-negative. The net present value of the
project for ten years will be USD 26,388,849.00.
4.3.2 Sensitivity Analysis
The sensitivity analysis of BLSIC has been examined by computing four possible
scenarios. These scenarios based on training fees, number of training per year, training
starting day, development cost and number of trainees. In all of these scenarios, IRR is
greater than 10 percent, except the frequency of training provision declined by 10 percent.
(See Table 16 and Annex I) Therefore, the IPDC’s Center of Excellency project is viable.
Table 16: IRR for IPDC’s Center of ExcellenceProject in Different Scenarios

Scenario Description IRR
I If the training fee price decreased by 10 percent 15.31
II If the yearly number of training decreased by 10 percent 12.74
III If the Center's training provision service schedule delayed by one year 17.21
IV If the development cost increased by 10 percent 15.70
V If the number of trainees decreased by 10 percent 15.35
4.3.3 Benefits
A. Socio‐Economic
The project can create direct employment opportunities for more than 30 persons. It also
creates indirect job opportunities for researchers and industry middlemen etc.
The project will generate Birr 94,260,690 in terms of tax revenue. This kind of construction
development will have a foreign exchange saving effect to the country by substituting
some construction materials.
The project will also create backward linkage with the construction sector and also
generates income for the Government in terms of the payroll tax.
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B. Environmental
The realization of this project will create eco-industrial parks development a well as
making a pleasant environment by constructing a standard building with greenery. Due
to this, the Center becomes attractive for both trainees and all stakeholders.
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Annex –A: Aensitivity Analysis
Scenario – I: If the training fee price decreased by 10 percent
Costs (USD 000)

Revenue Net Cash
Years Operation &
Cost Total (USD 000) Flow
Maintenance Cost
2020 9917.81 167.54 10,085.35 541.77 (9,543.58)
2021 9851.87 162.62 10,014.49 541.77 (9,472.72)
2022 92.16 0.00 92.16 3,301.42 3,209.26
2023 92.16 0.00 92.16 3,809.33 3,717.17
2024 92.16 0.00 92.16 4,444.21 4,352.05
2025 92.16 0.00 92.16 4,825.15 4,732.99
2026 92.16 0.00 92.16 5,079.10 4,986.94
2027 92.16 0.00 92.16 5,079.10 4,986.94
2028 92.16 0.00 92.16 5,079.10 4,986.94
2029 92.16 0.00 92.16 5,079.10 4,986.94
2030 92.16 0.00 92.16 5,079.10 4,986.94
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Scenario – II: If the yearly number of training decreased by 10 percent
Costs (USD 000)

Revenue
Years Operation & Net Cash Flow
Cost Total (USD 000)
Maintenance Cost
2020 9917.81 167.54 10,085.35 487.59 (9,597.76)
2021 9851.87 162.62 10,014.49 487.59 (9,526.90)
2022 92.16 0.00 92.16 2,971.27 2,879.12
2023 92.16 0.00 92.16 3,428.39 3,336.23
2024 92.16 0.00 92.16 3,999.79 3,907.63
2025 92.16 0.00 92.16 4,342.63 4,250.47
2026 92.16 0.00 92.16 4,571.19 4,479.03
2027 92.16 0.00 92.16 4,571.19 4,479.03
2028 92.16 0.00 92.16 4,571.19 4,479.03
2029 92.16 0.00 92.16 4,571.19 4,479.03
2030 92.16 0.00 92.16 4,571.19 4,479.03
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Scenario – III: If the Cener’s training provision service schedule delayed by one year
Costs (USD 000)

Revenue
Maintenance Cost
2020 9917.81 167.54 10,085.35 - (10,085.35)
2021 9851.87 162.62 10,014.49 601.97 (9,412.53)
2022 92.16 0.00 92.16 3,668.24 3,576.08
2023 92.16 0.00 92.16 4,232.59 4,140.43
2024 92.16 0.00 92.16 4,938.02 4,845.86
2025 92.16 0.00 92.16 5,361.27 5,269.11
2026 92.16 0.00 92.16 5,643.45 5,551.29
2027 92.16 0.00 92.16 5,643.45 5,551.29
2028 92.16 0.00 92.16 5,643.45 5,551.29
2029 92.16 0.00 92.16 5,643.45 5,551.29
2030 92.16 0.00 92.16 5,643.45 5,551.29
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Scenario – IV: If the development cost increased by 10 percent
Costs (USD 000)

Revenue
Maintenance Cost
2020 10881.16 184.29 11,065.46 601.97 (10,463.49)
2021 10786.96 178.89 10,965.85 601.97 (10,363.88)
2022 92.16 0.00 92.16 3,668.24 3,576.08
2023 92.16 0.00 92.16 4,232.59 4,140.43
2024 92.16 0.00 92.16 4,938.02 4,845.86
2025 92.16 0.00 92.16 5,361.27 5,269.11
2026 92.16 0.00 92.16 5,643.45 5,551.29
2027 92.16 0.00 92.16 5,643.45 5,551.29
2028 92.16 0.00 92.16 5,643.45 5,551.29
2029 92.16 0.00 92.16 5,643.45 5,551.29
2030 92.16 0.00 92.16 5,643.45 5,551.29
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Scenario – IV: If the number of trainees decreased by 10 percent
Costs (USD 000)

Revenue
Maintenance Cost
2020 9917.81 167.54 10,085.35 541.77 (9,543.58)
2021 9851.87 162.62 10,014.49 541.77 (9,472.72)
2022 92.16 0.00 92.16 3,306.31 3,214.15
2023 92.16 0.00 92.16 3,814.97 3,722.81
2024 92.16 0.00 92.16 4,450.80 4,358.64
2025 92.16 0.00 92.16 4,832.30 4,740.14
2026 92.16 0.00 92.16 5,086.63 4,994.47
2027 92.16 0.00 92.16 5,086.63 4,994.47
2028 92.16 0.00 92.16 5,086.63 4,994.47
2029 92.16 0.00 92.16 5,086.63 4,994.47
2030 92.16 0.00 92.16 5,086.63 4,994.47
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Road-Map to Set-up Center of Excellence
A Technical Document
EIPP-JICA
March, 2021
Table of Contents
List of Figures ................................................................................................................................ iii
List of Tables ................................................................................................................................. iv
Acronyms ........................................................................................................................................ v
Part I: An Overview...................................................................................................................... 6
1.1 Background .......................................................................................................................... 6
1.2 Purpose ................................................................................................................................. 7
1.3 Objective .............................................................................................................................. 7
Part II: Definition and Conceptual Model on CoE .................................................................... 8
2.1 Definition and Concept of CoE .......................................................................................... 8
2.2 Categories of Center............................................................................................................ 8
2.3 Why Ethiopia Needs CoE? ............................................................................................... 12
2.4 What IPDC will do for CoE? ........................................................................................... 15
Part III: The Establishment of CoE for IPDC ......................................................................... 17
3.1 Rational for the Establishment of CoE ........................................................................... 17
3.2 Ground to Determine for the Establishment of CoE ..................................................... 17
3.3 Potential Training Program ............................................................................................. 20
Part IV: Roadmap to Establish CoE for IPDC ........................................................................ 21
4.1 Proposed Centers............................................................................................................... 21
4.2 Development Design and Architecture Considerations ................................................. 23
4.2.1 Proposed Space Requirement ....................................................................................... 23
4.2.2 Proposed Architectural Design Considerations ............................................................ 34
Part V: Conclusion and Recommendations.............................................................................. 44
5.1 Conclusion .......................................................................................................................... 44
5.2 Recommendations ............................................................................................................. 44
References ..................................................................................................................................... 45
Annex ............................................................................................................................................. b
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Ethiopian Investment Promotion Project-Japan International Cop ration Agency
List of Figures
Figure 1. The different types of Centers ....................................................................................................... 9
Figure 2 Industrial Parks Distribution in Ethiopia ...................................................................................... 15
Figure 3. Number of Trainings & trainees given to IPDC Staffs (2014-2018)........................................... 18
Figure 4. A Roadmap for CoE Establishment Process ............................................................................... 22
Figure 5. Technologically Advanced Learning Spaces............................................................................... 34
Figure 6. Technologically Advanced Learining Space (Picture Adopted) ................................................. 34
Figure 7. Auditorium spaces (Pictures Adopted) ........................................................................................ 35
Figure 8. Conference Rooms (Pictures Adopted) ....................................................................................... 36
Figure 9. Seminar Rooms (Pictures Adopted) ............................................................................................ 36
Figure 10. Audio-Visual rooms (Pictures Adopted) ................................................................................... 37
Figure 11. Computer Training Rooms (Pictures Adopted) ......................................................................... 37
Figure 12. Library spaces (Pictures Adopted) ............................................................................................ 38
Figure 13. Common Space Areas (Pictures Adopted) ................................................................................ 39
Figure 14. Trainer Staff Area (Pictures Adopted) ....................................................................................... 40
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List of Tables
Table 1. List of Existing Industrial Parks in Ethiopia ................................................................................. 13
Table 2. IPDC’s Total Budget (USD) for Training given to its Staffs (2014-2018)................................... 19
Table 3 Proposed Centers and their corresponding specialization.............................................................. 21
Table 4. Bole Lemi Center of Excellence Space Requirement ' ................................................................. 24
Table 5. ICT Park Center of Excellence Space Requirement. .................................................................... 27
Table 6. Pharmaceutical Center of Excellence Area requirement .............................................................. 31
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Acronyms
CoC Center of Competence
CoE Center of Excellence
CoEx Center of Expertise
CoP Community of Practice
ERCA Ethiopian Revenue and Customs Authority
GDP Grose Domestic Product
IPS Industrial Promotion Service
NBE National Bank of Ethiopia
SP Strategic Plan
STC Specialist Technical Center
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Part I: An Overview
1.1 Background
The Industrial Park Development Corporation /IPDC/ is established with the intention of
realizating the national vision of achiving sectoral transformation and reach the middle-income
country through becoming a leading manufacturing hub in Africa by 2025. IPDC was established
in 2014 by virtue of Council of Ministers Regulation No. 326/2014. The corporation has a mandate
to administer the overall process of the industrial parks with the objective of regulating the
designation, development and operation of Industrial Park; contributing towards the development
of the country's technological and industrial infrastructure; encouraging private sector participation
manufacturing industries and related investments; enhancing the competitiveness of the country's
economic development; and creating ample job opportunities, and achieve sustainable economic
development.
In order to materialize its establishment purpose of becoming an engine of rapid industrialization

that nurtures manufacturing industries; to accelerate economic transformation; promote and attract
both domestic and foreign investors; and establish and regulate the eco-industrial zone, the
Corporation has sound organizational structure and well experienced and skilled human capital.
Apart from this, the Corporation has been providing different services in collaboration with the
Ethiopian Investment Commission (EIC) and Ethiopian Revenue and Customs Authority (ERCA)
and other relevant institutions using a one-stop-shop approach for investors creating a conducive
investment environment.
So far, IPDC has been performing different activities such as: activate both pre and post-
investment servicing, avails serviced industrial land, pre-built sheds equipped with all-
encompassing utilities and infrastructural facilities that fit international standards, with no
compromise on workers’ security and environmental safety.
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1.2 Purpose
The purpose of this document is to guide on how, where, for whom and when to establish Center
of Excellence (CoE).
1.3 Objective
The major objective of this road map is to lead IPDC on the development process of CoE.
Specifically, the road map helps IPDC:
- To clearly indicate why the Corporation needs CoE;

- To define and refine objectives and goal for the CoE;
- To least out the necessary conditions that will assist the completion of objectives and
goals the enshrined in stated above (this will include physical and curriculum); and
- To recommend governance and financial options that will sustain CoE in the long term.
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Part II: Definition and Conceptual Model on CoE

2.1 Definition and Concept of CoE
Center of Excellence also called many times as “knowledge center” can be described as
organizational environments that strive for and succeed in, developing high standards of conduct
in a field of research, innovation, or learning. A Center of Excellence (CoE) makes for an
organization possible utilizing its knowledge to contribute to cost cutting and service provision
improvement. It also helps to simplify working so fewer person also could do it and reduce the
fragmentation of it to enhance productivity of companies while using less resources. Most often
CoE supplement expenses in favor of utilizing knowledge and experiences for reducing total cost
(Hogan, 2011)
Nowadays there are a lot of centers that have a similar title to CoE like Center of Competence
(CoC), Center of Expertise (CoEx) and Special Technical Center (STC). These centers could be
categorized by two axes according to focusing on the present or the future and the knowledge is
explicit or tacit. (Bryan, 2011)
2.2 Categories of Center
There are different ways of using ‘excellency’ to signify a sense of being different with the
objective to support on the improvement of organizational performance. In actual terms or in
practice ‘excellence’ refers to a wide range of terms, which has different meanings for different
organizations in different contexts. There are four types of ‘excellence’: Center of Competence
(CoC), Center of Expertise (CoEx), Center of Excellence (CoE) and Specialist Technical Center
(STC). These four basic categories of excellence are demonstrated in the figure below in relation
to their learning towards future versus present and explicit versus tacit knowledge.
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Tacit
Center of Special
Competence Technical
(CoC) Center (TC)
Present
Future
Center of Center of
Experties Excellence
(CoEx) (CoE)
Explicit
Figure 1. The different types of Centers
Source: A adopted from Bryan, 2011
A. Center of Competency: it is an independent body that is not owned by a particular

development group, the corporate architecture board, or the operations team. Instead, a
COC is supported and staffed by all organizations that have a stake in the success of new
technology. It is managed entity with real priorities and deliverables, not a "think tank" that
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comes up with new ideas; although a certain amount of research and development might
need to be done to make a new technology successful in an organization.
A center of competency develops common solutions and acquires new skills that are then
spread throughout the enterprise to increase the likelihood of success of technology
adoption.
In CoC the main expectation of employees is following the regulations and solving
problems as quickly as possible. So that these employees concentrate on the present and
use mainly explicit knowledge. In favor of developing human resource capacity building
is motivated to consult with the experts of CoE if they meet new or old problems. It is also
advocated to give feedback about their work to utilize it lately for the sake of organization.
Sharing of problems and experiences and creating new knowledge is mainly ad-hoc.
Routine procedures explain only the work processes and do not answer the “why”. Human
resource has the competence to carry out the work and can work on different fields but they
are not specialists and subcontractors may be part of the workforce.
The COC develops common solutions and acquires new skills that are then spread
throughout the enterprise. This approach increases the likelihood of success of technology
adoption. The key point is that a COC is not about supporting a single development
project; it is about the successful deployment of new technology at the enterprise level.
B. Special Technical Center (STC): here employees are expected to absorb tacit knowledge
of the field and using the field documentation to codify this to explicit knowledge for the
future. Problems are formally recorded and there is mainly explicit knowledge sharing.
There are structured researches on the existent work fields. Employees who work here
could think more abstractly and could work with a huge amount of explicit data. The
delivered services of the technical center are drawn on by other organizational units
or external partners. Processes and procedures are refreshing according to industrial
practices and expectations. Employees focus on the future and often work as a project.
C. Center of Expertise (CoEx): employees could deal with more complex and unique
problems. Problems and experiences are usually shared within the center. Employees are
motivated to be creative and knowledge creation as it is tacit knowledge. Employees also
follow regulations but could see the big picture as well and solve more complex problems.
They have to possess better interpersonal skills in the sake of professional support within
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the organization but because of customer service as well. A team could be physical or only
virtual. Teams consist of experts who need special training. A center of expertise has a
clear product and service focus. Knowledge of center utilizes by experts that could be
also external partners. Procedures explain work processes and systems with specialized
details. Such kinds of Centers are characterized by an open organizational culture that
focuses on the present.
D. Center of Excellence (CoE): employees have extensive capabilities, important
professional experiences that make them possible to deal with assignments as practical as
on abstract ways. These centers play important role in identifying decisive problems and
preparing avoidance of them in the future. Creating new knowledge total freedom is
essential for centers of excellence. Problems and experiences are collected from all units
of organization. Employees share their knowledge within center of excellence but with
employees of CoC and CoEx as well. Tacit knowledge is articulated in the whole
organization. There are successful knowledge management systems where processes and
procedures are changed according to uncover new knowledge. Intra-organizational
communication is very often among business units and departments. Employees could be
recognized whether a problem-solving needs to codify in regulations and prescriptions or
it is enough if disseminate it at the next meeting or training. The workforce could adjust to
new systems easily because it consists of high-skilled specialists. Experts create physical
or virtual teams that are managed by a coordinator. Organizational culture motivates
teamwork and the emphasis is on innovation, creativity and future improvement. In Center
of Excellence utilized structures, systems and work methods to foster intra-
organizational communication and the sharing of results in problem-solving. They
also contribute to creating unique and local problem-solving to create explicit and tacit
knowledge and help in disseminating them in the organization. Through the process of
sharing problem-solving solutions employees could learn from each other and can improve
themselves and the organization. Wenger (Wenger, 1998) described it as a professional
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community (community of practice – CoP). Center of excellence could operate as a

community of practice.
Therefore, a CoE should define in terms of its generic form and the way it relates to the rest of the
organization with the following specific components;…..
2.3 Why Ethiopia Needs CoE?
The Ethiopian Economy had exhibited an average of 9% economic growth in 2018/19 fiscal year,
this had shown 2% growth from the previous year. (NBE, 2019) This real GDP was attributed to
12.6% growth in industrial output, 11% increase in service sector and 3.3 % expansion in
Agriculture. The nominal GDP per capita of Ethiopia increased to $985, depicting 11.6%
improvement over the previous year. The robust and sustained economic growth recorded over the
last 15 years has led to improvements in income inequality and poverty reduction. Accordingly,
per capita income has continuously increased and reached USD 1000 in 2000/21. Poverty has
declined to 22 percent in 2018/19 from 38.7 percent in 2004/05. Investment to GDP ratio has
increased to 35.2 percent while that of domestic savings stood at 22.3 percent. (NBE, 2019)
This remarkable economic growth has been obtained due to the government's political
commitment to improve the lives of citizens resulted in eradicating poverty using improved
exploitation of its natural resources as well as strong bilateral economic ties with other countries
and development partners.
Industry is one of the pivotal economic activities for socio-economic transformation. The industry
sector plays an indispensable role in job creation opportunity, bringing competitive advantage, and
generating dynamism in the economy. Usually, industrialization significantly increased production
and productivity that results in economic sectoral transformation and altering the social
composition.
The strategic plan introduced a comprehensive industrial parks development approach.

Accordingly, the government has been engaged in the development of mega Industrial Parks
projects. The rate and scale of industrial park development have an affirmative effect on the
creation of employment opportunities, foreign direct investment attraction, economic growth,
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technology transfer and urbanization. The Industrial Parks Development Corporation/IPDC/ is

mandated to develop and administer industrial parks by the virtue of regulation No. 326/2014.
Currently, there are 30 industrial parks owned by private and government enterprises. Of these
majority of the industries are specialized in the textile and garment sector.
Table 1. List of Existing Industrial Parks in Ethiopia
Land
Acquired Land
clear
NO. Name of IP in A form of Region Specialization Status
form
Plan
dispute
1 Bole Lemi IP – I 172 172 Addis Textile &

Operational
Ababa Garment
2 Bole Lemi IP – II 181 181 Addis Textile & Semi-
Ababa Garment operational
3 Hawassa IP 300 300 Textile &
SNNP Operational
Garment
4 Mekele IP 1000 238 Textile &
Tigray Operational
Garment
5 Kombolcha IP 700 75 Textile &
Amhara Operational
Garment
6 Adama 2000 365 Assembling, food
Oromia processing & Operational
Garment
7 Dire Dawa IP 4186 388 Assembling, food
Dire Dawa processing & Operational
Garment
8 Kilinto IP 279 279 Pharmaceutical,
Addis
Medical Operational
Ababa
equipment
9 Jimma IP 1000 150 Oromia Garment Operational
10 Bahir Dar IP 2000 150 Amhara Garment Operational
11 Debre Birhan IP 1100 100 Garment apparel
Amhara Operational
& agro-processing
12 Arerti IP 804 150 Construction
Amhara products, home Planning stage
appliance
13 Aysha IP 1000 100 Somali Live stock Planning stage
14 Asosa IP 1000 100 Benshangul/
Pulp paper Planning stage
Gumuz
15 Semera IP 2000 200 Afar Free trade export Planning stage
16 Bishoftu IP 189 189 Oromia
17 ICT Park 200 200 Addis
ICT Operational
Ababa
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Land
Acquired Land
clear
NO. Name of IP in A form of Region Specialization Status
form
Plan
dispute
18 Addis Industry 9 9 Addis

Garment Operational
Village Ababa
19 Mojo Leather 290 290
Oromia Leather Planning stage
Industry
Sub-Total 18,410 3,636
1 Bure Integrated
Under
Agro Industrial 260.35 Amhara Agro-processing
construction
Park
2 Bulbula
Integrated Agro 263.09 Oromia Agro-processing Planning stage
Industrial Park
3 Yirgalem
Under
Integrated Agro 215.86 SNNP Agro-processing
construction
Industrial Park
4 Baeker Integrated
Under
Agro Industrial 258.62 Tigray Agro-processing
construction
Park
Sub-Total 997.92
1 Eastern Industrial 500

Oromia Various Operational
Zone
2 Huajian Light 138 Partly
AA Shoes & Garment
Industry City operational
3 Modjo George 50
Under
Shoe Industrial Oromia Leather
Construction
Park
4 CCECC 380 Dire Dawa Various Planning stage
5 100 Partly
CCCC Amhara Various
operational
6 DBL Industrial 78.05 Textile &
Tigray Operational
PLC Garment
7 Velocity 176.5
Textile &
Apparetz Tigray Operational
Garment
Companies PLC
Sub-Total 1422.55
Source: IPDC’s 2020 annual report and EIC, 2020
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Figure 2 Industrial Parks Distribution in Ethiopia
Industrial Park (IP) usually are facing huge challenges regarding urban integration, accessibility,
housing for workers, pollution (water, soil, air, solid waste), flooding. Therefore, to operate and
manage IPs in proper manner, apart from sound normative and regulatory frameworks,
knowledgeable and skilled human capital are very crucial for IPs.
2.4 What IPDC will do for CoE?
As a unique public enterprise which is mandated in developing, operating and managing industrial
parks in Ethiopia, the Industrial Parks Development Corporation (IPDC) should have its own an
excellence center to fill the prevailing knowledge and skill gaps in the sector. To this end IPDC is
planning to establish capacity building, problem-solving and knowledge sharing center,
technically called ‘Center of Excellence’. The Primary objective of the CoE is to serve as a source
of expertise, training and research.
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The CoE should designed as an integral part of IPDC’s strategy to accelerate the industrialization
process in Ethiopia. In the repealed five years strategic document (2020-2025), IPDC has plan to
establish two CoE in Addis Ababa and one in Hawassa. These CoE has different in their scope and
specializations. The two CoEs that will be established in Addis Ababa at Bole Lemi Industrial
Parks and ICT Park. The Bole Lemi and the Hawassa IPs CoE will design to specialized in IPs
development, operation and management as well as textile and garment manufacturing related
trainings. While the ICT Park CoE will specialized in IT related trainings.
The new Industrial Park Corporation Strategic Plan and Roadmap (2021-2030) implicitly indicates
the need for establishing CoE through stating IPDC’s institutional capacity building specifically
human capital development and low productivity on the tenants’ side due to low performed
workforce and limitation in finding qualified workers (IPDC, 2021).
The IPDC’s draft Strategic Plan and Roadmap recognized, Industrial Promotion Service (IPS) as
an integral part of IPDC and states the role of IPS as consultant, research and capacity building.
The team also discussed with the IPS responsible officials on the establishment of CoE, and we
reached consensus on: the significant of CoE for IPDC, the CoE should have two parts: i.e. soft
skill (knowledge development) and technical or vocational parks and IPS should take the lead the
CoE. Based on these facts the team prepared this roadmap that indicates the development phase of
CoE.
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Part III: The Establishment of CoE for IPDC

3.1 Rational for the Establishment of CoE
There are a number of driving factors to establish CoE, the following are the major ones:
▪ High Rate of IPs Development: since 2012 the Federal Government developed IPs and
their total number reached 12 functional Parks. IPDC has a plan to reach the number of
IPs to 37 by the year 2030. Apart from this private developers and Regional Governments
also developed IPs. The growing number of IPs development, operation and management
needs skilled human capital;
▪ IPDC’s the Existing Skill Gap: the draft IPDC Strategic Plan and Roadmap (2012-2030)
identified that the Corporation needs ‘institutional capacity building’ mainly in the areas
of: business plan assessment, land banking and capital expenditure planning, project
management, contract management (including JV), financial planning and IT systems.
▪ Investor’s Demand of Skilled Man Power: the draft IPDC Strategic Plan and Roadmap
(2012-2030) also identified that there are two major problems related to the existing labour
market. The first one is low productive compared to other industrializing emerging
countries, such as Myanmar, Vietnam, Cambodia and Tanzania. The other one is limited
labour availability.
3.2 Ground to Determine for the Establishment of CoE
There are different determinants, which guides the team to propose potential training program site
for CoE.
a) IPDC’s establishment: IPDC’s establishment Regulation No. 326/2014 provides the

mandate to administer the overall process of the industrial parks with the objective of
regulating the designation, development and operation of Industrial Park; to encourage
private sector participation manufacturing industries and related investments; to enhance
the competitiveness of the country's economic development; and to create ample job
opportunities, and achieve sustainable economic development.
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b) The draft IPDC Strategic Plan and Roadmap (2012-2030): this document indicates the need
for internal or institutional capacity building to become competent IPs developer and to
become sustainable in the business.
c) The IPS Strategic Plan (SP): the SP aspire IPS become one of competent consultant,
research and training service provider in the region. For the realization of its intended SP,
currently, IPS has been renovating the existing building and plan to construct new building.
However, the SP of IPS is mainly focused on the provision of soft skill training and the
hard skill or vocational related training are overseen in the SP.
d) Past IPDC’s Staff Development and Training Experiences: IPDC’s past five fiscal years
performance report and CJC report indicate that different kinds of training were provided
to the staff. The number of training types, frequency and intensity increased from year to
year.
300
250
200
150
100
50
0
2014 2015 2015 2017 2018 2019
# of training # of trainees
Figure 3. Number of Trainings & trainees given to IPDC Staffs (2014-2018)
Source; IPDC 2020.
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The type of training given to the IPDC staff within the past five years significantly various and
many. However, the prominent trainings were:
✓ Customer handling/treatment ✓ Project management in the IP;

✓ IP promotion & execution; ✓ IP design review experience sharing
✓ Site allocation, master plan preparation, (china);
feasibility study & monitoring; ✓ IP development experience sharing
✓ IP operation & management; (china);
✓ Principles and Operation of zero liquid ✓ Construction project management
discharge based common effluent treatment software;
plant; ✓ Result based management
✓ Special Economic Zone Development for ✓ Firefighting training
Developing Countries;
These trainings had been provided using development partners budget like WB, Toni Blaire
foundation, USAID, The Chinees Economy and Commercial Counseling coordination etc. and
IPDC budget sources.
Table 2. IPDC’s Total Budget (USD) for Training given to its Staffs (2014-2018)
EFY 2009 2010 2011 2012 Total %

CJC 9,762.29 28,166.01 23,798.63 6,256.43 67,983.36 29.11
Gov. Budget 104,816.21 57,501.59 2,010.51 1,236.98 165,565.30 70.89
Total 114,578.51 85,667.60 25,809.14 7,493.41
Grand Total (USD) 233,548.66
Source; IPDC’s Finance Directorate, 2020.
For the past four years IPDC spent a total of USD 233,548.66 for staff development. Of these
USD 67,983.11 or 29.11%was covered by CJC. (See Table 3)
e) Existing skill gap: both IPDC strategic document, annual reports, ICT park draft strategic
plan and Digital Ethiopia 2025 disclosed lack of skilled manpower in the manufacturing
and ICT sector. Particularly, since industrial parks development, operation and
management is a new phenomenon there is a knowledge and skill gape in the area.
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3.3 Potential Training Program

The draft SP and Roadmap of IPDC printouts potential training programs as: business plan
assessment, land banking and capital expenditure planning, project management, contract
management (including JV), financial planning and IT systems as well as workers skill and work
ethics development for investors or tenants. Accordingly, the team proposed the following training
program from three vantage points:
a) IPDC’s Staff development on: IPs development, operation and management
✓ IP planning, design & development

✓ IP operation & management
✓ Ip policy regulation
✓ IP investment marketing & facilitation
✓ IP risk management
✓ IP performance evaluation
b) ICT enablers for the industrialization process
✓ Mobile application development training ✓ Programming
✓ Web front end development ✓ Cloud computing
✓ Web back-end development ✓ Network and Information security
✓ Devops development ✓ Artificial intelligence
✓ UI and UX design ✓ BPO training
c) Skilled and ethical leabour preparation for IPs

✓ Vocational trainings in relation to textile, garment and apparel production
✓ Vocational trainings on machine maintenance
✓ Work ethics specifically on the 5s approach: sort, set in order, shine, standardize
and sustain to achieve low costs, better quality, improved safety, increased
productivity and higher employment satisfaction
✓ Training on industrial safty and security like fire fighting
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Part IV: Roadmap to Establish CoE for IPDC

4.1 Proposed Centers
This roadmap is proposed tanking mainly the draft 10 years SP and Roadmap of IPDC and IPS
plan. The IPS plan gives special attention on consultancy, research and training service provision.
The types of trainings are mainly targeted top and medium level managers. In order to have a
comprehensive CoE, which addresses all the quests of IPDC and other stake holders, the team
propose the following training centers.
Table 3 Proposed Centers and their corresponding specialization
No. Location Types of Center Specialization

1 Bole Lemi STC Machine maintenance, industrial safety and security,
IP CoE PIs development, operation and management
2 ICT Park STC IT related trainings
3 IPS CoE Consultancy, research and training
4 Other To be set … Based on the demands of IPDC it will be set in the future
All in all the Center establishment process has four stages.
Stage 1 - Mapping: map the existing assets and capabilities of the Corporation;
Stage 2 - Built: at this state IPDC expect to identify and prepare budget, expertise and space and
then develop the center.
Stage 3 – Run: here IPDC is works on promotion and enhancement of the programs
Stage 4 - Scape up: to become competent in the area IPDC should assess capabilities and capture
learning share and reuse it.
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Figure 4. A Roadmap for CoE Establishment Process
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4.2 Development Design and Architecture Considerations
4.2.1 Proposed Space Requirement
The proposed space requirements computes taking in to account different architectural standards
and the current COVID-19 pandemic. As stated above this document addresses the different types
of Centers, which proposed to establish in the IPDC owned IPs, by taking the types of
specialization in the sector. In this sub section we proposed the required spaces that accommodate
maximum number of trainees at a time for three sites.
a) Bole Lemi IP
• Proposed Total Area – 3.9ha

• Proposed maximum number of trainees – 400 at a time
• Type of training – IPs development, operation and management; industry safety and
security skill development; workers ethical and technical skills development
b) ICT Park

• Type of training – IT related skills
c) Kilinto IP

• Type of training – Pharmaceutical and medical materials related production skills
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Table 4. Bole Lemi Center of Excellence Space Requirement '
Administrative, Classrooms,
Staff Office
Type Usage technical and seminar
(m2)
secretaries rooms, etc.
Science, 4.5m2/Student 0.45m2/Student 2.4m2/Student
Teaching Area Engineering &
electronics 1800 180 960
2,940.00
Additional areas
Laboratories, workshops, 3.95m2/course
for specialized 1580
preparation, storage student
accommodation:
Additional space in
Specialized
association with lecture
Accommodation
theatres for
Facilities
audio-visual facilities: allow
for TV studio
accommodation and
ancillaries 450m2 450
Balance areas 40% 812 2,842.00

1 reader space for 6 students
books: 3.8 m run of
Libraries Basic Provision shelving/student 1.25m2/student 167
administrative and support
facilities
For central
administration,
including Senate
Administration
House,
conference room,
committee rooms up to 3000 students 450m2 450
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For maintenance
depot, including
central stores and
workshops,
but excluding
furniture stores up to 3000 students 0.25m2/student 100
Balance area 50% 275 991.67

Restaurants and Dining areas (based on 60%
cafeterias usage) 0.2m2/student 80
Kitchens, etc. 0.17m2/student 68
balance area for catering
spaces 25% 37 185.00
Communal and
social areas students 0.7m2/student 280
Academic, senior 0.19m2/student 76
administrative and research
staff (excluding
medical schools)
non-academic staff 0.16m2/student 64
Large hall or space for use in
Amenity conjunction with social
space 450m2 450
between 3000 and 6000
students
Balance area for communal
spaces 30% 261 1,131.00
Sports facilities
Indoor sports Up to 3000 students 0.47m2/student 188
Outdoor sports
Grass pitches,
playing fields Up to 3000 students 28m2/student 11200
Pavilion and
groundman's
store Up to 3000 students 0.18m2/student 72
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Health services
Simple
consultancy suite
for doctor and
nurse treatment Up to 3000 students 0.03m2/student 12 11,472.00
Dormitory
Medium-rise
buildings with
no lifts 23.81m2/Student 9524
8.4–
Study bedrooms 13m2/Student 5200
Residential Ablutions 1.21m2/Student 484
Accommodation Storage 0.54m2/Student 216
Allocations of
space Amenities 1.0m2/Student 400
Utilities 0.5m2/Student 200
Communal space 0.65m2/Student 260
Balance area for circulation 25% 4071 20,355.00 39,916.67
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Table 5. ICT Park Center of Excellence Space Requirement.
Administrative, Classrooms,
Type Usage Staff Office (m2) technical and seminar
secretaries rooms, etc.
Science, 2.4m2/Student
Teaching Area Engineering & 4.5m2/Student 0.45m2/Student
electronics 675 67.5 360
1,102.50
Additional areas
Engineering and
for specialized
electronics
accommodation: 4.9m2/course
student 735
Tutorial rooms:
1.85m2/space 277.5
Informal seating
Teaching at tables or 2.5m2/course

375
Specialized desks student
Accommodation
Facilities Teaching with
demonstration 3.0m2/course
450
facilitiies & students student
seated at large tables
Additional space in
association with
lecture theatres for
450m2 450
audio-visual
facilities: allow for
TV studio
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accommodation and
ancillaries

1 reader space for 6
students
books: 3.8 m run of
Libraries Basic Provision shelving/student 1.25m2/student 62.5
administrative and
support facilities
For central
administration,
including Senate
House, conference
room, committee
rooms up to 3000 students 450m2 450
Administration
For maintenance
depot, including
central stores and
workshops,
but excluding

Restaurants and Dining areas (based
Amenity cafeterias on 60% usage) 0.2m2/student 30
Kitchens, etc. 0.17m2/student 25.5
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balance area for

catering spaces 25% 13.875 69.38
Communal and
Academic, senior 0.19m2/student 28.5
administrative and
research staff
(excluding
medical schools)
Large hall or space
for use in conjunction
with social space 450m2 450
between 3000 and
6000 students
Balance area for

communal spaces 30% 182.25 789.75
Sports facilities
Indoor sports Upto 3000 students 0.47m2/student 70.5
Outdoor sports
Grass pitches,
playing fields Upto 3000 students 28m2/student 4200
Pavilion and
groundman's
store Upto 3000 students 0.18m2/student 27
Health services
Simple
consultancy suite
for doctor and
nurse treatment Upto 3000 students 0.03m2/student 4.5 4,302.00
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Dormitory
Medium-rise
buildings with no
lifts 23.81m2/Student 3571.5
Study bedrooms 8.4–13m2/Student 1950
Residential Ablutions 1.21m2/Student 181.5
Allocations of Amenities 1.0m2/Student 150
space Utilities 0.5m2/Student 75
Communal space 0.65m2/Student 97.5
Balance area for
circulation 25% 1526.625 7,633.13 17,071.75
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Table 6. Pharmaceutical Center of Excellence Area requirement
Administrative,
Staff Office Classrooms,
Type Usage technical and
(m2) seminar rooms, etc.
secretaries
Science, 6.15m2/Student 0.45m2/Student 2.4m2/Student
Teaching Area Engineering &
electronics 675 67.5 960
1,702.50
Additional areas for
specialized Laboratories 5m2/course
accommodation: student 750
Tutorial rooms: Informal
1.85m2/space 277.5
seating
2.5m2/course
Teaching at tables or desks 375
student
Specialized Teaching with
Accommodation demonstration facilities & 3.0m2/course
450
Facilities students seated at large student
tables
Additional space in
association with lecture
theatres for
audio-visual facilities: 450m2 450
allow for TV studio
accommodation and
ancillaries
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1 reader space for 6

students
books: 3.8 m run of
Libraries Basic Provision 1.25m2/student 62.5
shelving/student
administrative and support
facilities
For central
administration,
including Senate
House, conference
room, committee
rooms up to 3000 students 450m2 450
Administration
For maintenance
depot, including
central stores and
workshops,
but excluding

Restaurants and Dining areas (based on 60%
cafeterias usage) 0.2m2/student 30
Kitchens, etc. 0.17m2/student 25.5
balance area for catering
spaces 25% 13.875 69.38
Amenity Communal and
Academic, senior 0.19m2/student 28.5
administrative and research
staff (excluding
medical schools)
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Large hall or space for use

in conjunction with social
space 450m2 450
between 3000 and 6000
students
Balance area for communal

spaces 30% 182.25 789.75
Sports facilities
Indoor sports Up to 3000 students 0.47m2/student 70.5
Outdoor sports
Grass pitches,
playing fields Up to 3000 students 28m2/student 4200
Pavilion and
groundman's store Up to 3000 students 0.18m2/student 27
Health services
Simple
consultancy suite
for doctor and
nurse treatment Up to 3000 students 0.03m2/student 4.5 4,302.00
Dormitory
Medium-rise
buildings with no
lifts 23.81m2/Student 3571.5
8.4–
Study bedrooms 13m2/Student 1950
Residential Ablutions 1.21m2/Student 181.5
Allocations of
space Amenities 1.0m2/Student 150
Utilities 0.5m2/Student 75
Communal space 0.65m2/Student 97.5
Balance area for
circulation 25% 1526.625 7,633.13 17,686.75
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4.2.2 Proposed Architectural Design Considerations
A professional's need for education and training does not end upon completion of his or her formal
schooling years. Today, more than ever, on job trainings to maintain and enhance one's skills,
especially in response to changes in technology is important.
I. Building Characters
The center of excellence must have flexible and technologically-advanced learning environments
that are safe, healthy, comfortable, aesthetically-pleasing, and accessible.
• It must be able to accommodate the specific space and equipment needs of the training
program and curriculum.
• Support spaces geared toward the needs of the trainees
Figure 6.
5. Technologically Advanced Learning Spaces
Space (Picture Adopted)
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Types of Spaces
The center of excellence is expected to incorporate a number of space types to meet the needs of
the trainees, trainers, and staff. The basic programs may include:
Classrooms
• Auditoriums: Large-size rooms designed for lecture-style instruction and training.

o Auditorium may be equipped with partitions to create smaller training venues.
o To facilitate circulation and ease of access, locate auditoriums on the first floor of
the building near major parking facilities.
Figure 7. Auditorium spaces (Pictures Adopted)

• Conference Rooms: Multiple purpose medium-size instruction rooms.
o Depending on the seating configuration, the rooms may accommodate lecture-style
instruction or encourage interaction in the form of roundtable discussions and
teleconferences.
o Often two or three conference rooms can be combined to form a larger conference
room by opening movable partitions that slide or fold into pockets in the walls.
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Figure 8. Conference Rooms (Pictures Adopted)
• Seminar Rooms: Multiple-purpose, small-size instruction rooms, usually used to

accommodate a small number of people within close proximity.
Figure 9. Seminar Rooms (Pictures Adopted)
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• Audio/Visual-Equipped Rooms: Rooms equipped for audio/visual and Internet-based

instruction.
Figure 10. Audio-Visual rooms (Pictures Adopted)
• Computer Training Rooms: Rooms equipped with computer workstations and Internet
access for each student.
Figure 11. Computer Training Rooms (Pictures Adopted)
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II. User Support Spaces
• Trainee Storage Spaces: Lockers, closets for trainees to temporarily store their possessions.
• Library or quiet reading room with study cubicles.
Figure 12. Library spaces (Pictures Adopted)
• Business centers: Space equipped with computers with Internet access, retail shops, Book
store and fax machines for trainees to quickly connect with their organizations.
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• Information Desk: Central location for building directory, schedules, and general
information
• Common Space: Informal, multi-purpose recreation and social gathering space, Cafeteria
etc.
Figure 13. Common Space Areas (Pictures Adopted)
• Health Facilities: On-site health care facility with a private office for a health care provider
• Restrooms
•
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III. Administrative Support Spaces
• Administrative Offices: May be private or semi-private acoustically and/or visually.

• Trainer Offices: May be shared space and equipment, including computers, phones, fax
machines, desks, libraries, and supplies.
Figure 14. Trainer Staff Area (Pictures Adopted)
IV. Operation and Maintenance Spaces
• General Storage: For items such as stationery, equipment, and instructional materials.
• Food Preparation Area or Kitchen
• Computer/Information Technology (IT) store.
• Maintenance room
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V. Important Design Considerations
Flexibility
Flexibility within the building's design is critical to the success of a robust training program. The
following strategies can be used to meet the challenge of designing a training facility around
evolving teaching styles and emerging technologies:
• Cluster instructional areas around central, shared support and resource spaces.
o Shared resource spaces may include informal gathering spaces, shared seminar
rooms, computer kiosks, and trainer offices.
• Use an appropriate combination of stand-alone movable partitions, movable modular
furnishings, and large double doors between classrooms and shared spaces.
• Create classrooms of various sizes.
o Equip larger rooms with movable partitions to accommodate a wide variety of
group learning sizes.
• Arrange spaces in keeping with the educational and programmatic goals of the center.
• When connecting semi-private or enclosed spaces to more open areas, ensure moderate
visual openness and acoustical privacy.
Connectivity
Given that technology is driving a variety of changes in the organizational and architectural forms
of training facilities, the following issues should be included, into the center of excellence:
• Distance learning using telecommunication technologies should be considered.

• the new training facilities needs to have a distributed, robust, and flexible IT infrastructure,
which would allow technological access in all the spaces.
• During the planning stage, identify all necessary technological systems and provide
adequate equipment rooms
• Allow for computer and Internet connectivity at desks, as appropriate.
• Consider and accommodate for wireless technologies, as appropriate.
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Indoor Environmental Quality

The following strategies support good indoor environmental quality that can positively influence
task performance and attention spans:
• Quality Acoustics:
o Trainees should be able to hear their instructors clearly, and vice versa.
o Ensure appropriate acoustics in classrooms and support spaces through a
combination of space planning, sound absorption, and sound transmission
reduction techniques.
o Consider sound amplification and/or speaker systems for auditoriums and other
appropriate spaces. Provide accommodations for hearing impaired trainees.
• Appropriate Lighting:
o A high quality, energy-efficient lighting system that utilizes both natural and
electric sources as well as lighting controls is ideal.
o Ensure the lighting design is appropriate for the task at hand.
o Design appropriate exterior lighting for facilities that will be used at night.
• Daylighting:
o Use daylighting to enhance the visual environment of classrooms as well as support
spaces.
o Coordinate the daylighting scheme with the design of interior
lighting and controls for energy efficiency
o Specify energy-efficient windows.
o Install proper sun control and shading devices to reduce glare
• Environmentally Preferable Products:
o Consider selecting renewable materials.
• Good Sightlines:
o Ensure adequate and appropriate sightlines in auditoriums, conference rooms, and
seminar rooms.
o Consider sloped floors, which promote good sightlines and are more accessible than
tiered floors.
• Comfort and Aesthetics:
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o Make a learning environment more conducive with colors.

• Thermal Comfort and Ventilation:
o Ensure fresh air intake and adequate airflow rates.
Signage
Signage and other way finding measures help promote a welcoming and efficient training
environment, especially for trainees new to the training facility.
• Signage should include posted directories for easy navigation, schedules of activities, and
clear designation of classrooms and support spaces.
• Consider the use of colors or other visual markers to facilitate way finding.
• Ensure signage is available for persons with disabilities.
Security and Occupant Safety

• Implement ICT based security measures
• Consider using increased signage
Operations and Maintenance

Consider the following recommendations in developing an operations and maintenance plan:
• Design a proactive facility management program to anticipate facility problems, rather than
reacting to problems when they occur.
• Ensure that program schedules and maintenance schedules are cohesive and compatible.
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Part V: Conclusion and Recommendations

5.1 Conclusion
The concept of ‘excellence’ is well established in many fields of activity, and the term is used
frequently to refer to very good or outstanding performance. Excellence may be equated with the
reputation and standing of institutions. There are numerous definitions suiting different purposes
and different areas of quality assurance and stakeholders’ involvement. This document,
systematically categorized the different types of trainings in to four as: CoC, STC, CoEx and CoE.
As a source of knowledge and skill development platform establishing a center is very vital for
IPDC. This document enshrined the major driving factors for the establishment of CoE, such as
the existing trends and planned IPs developments, the prevailing skill gaps and investors skilled
labour force demand. Apart for this the document critically analysis IPDC’s mandate in
establishing CoE by examining relevant documents such as IPDC’s establishment regulation, the
draft SP and Roadmap (2021-2030), past trends of IPDC’s staff development and the prevailing
labour market skill gap. Accordingly, the document proposed on how to establish centers using
industrial specialization approaches as: Textile, garment and apparel, IT and other specialized IPs.
5.2 Recommendations
For the realization of the roadmap the team proposed the following recommendations.
▪ Based on the draft SP and Roadmap IPDC, should follow industrial park-based
specialization or CoE like Bole lemi IP, ICT Park, Kilinto IP etc.;
▪ For the Bole Lemi CoE, establishment and development, it is advisable to use the study
conducted by EIPP-JICA team in titled ‘Center of Excellence for Eco-Industrial
Development Business Plan’ (January, 2020);
▪ IPS should take the lead in conducting prefeasibility and feasibility as well as business plan
development for the proposed CoE;
▪ IPDC should work with well known academic institutions for accreditation, and
▪ To provide skill based trainings for laborers prior need assessment study should be conduct
using the attached questioner.
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References
IPDC. (2021). Industrial Park Development Corporation: Strategic Plan and Roadmap (2021-2030) (Draft).
Addis Ababa : IPDC.
NBE. (2019). The National Annual Economic Report. Addis Ababa: National Bank Of Ethiopia.
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Annex
Need Assessment
This questioner is prepared to assess the need of company owners on provision of trainings for their
employees in the newly establishing Center of Excellence. Thank you for taking your time to provide
genuine information on behalf of your company.
I. General Information
1.1 Company Name
1.2 Ownership Types Sole PLC SC Other (Please Specify)
1.3 Origin of ownership Local FDI Both
1.4 Year of Establishment
1.5 Type of Business Export oriented Import substituted Both
1.4 Production Type
1.5 Number of Employees
II. Training Experience

2.1 Does your company provide training for your employees? Yes No
2.2 If your answer for question 2.1 is Yes, for what type of workers you provide trainings?
Newly recruited employees Permanent staffs Both
2.2 If your answer for question 2.1 is Yes please underlined category of workers and state the types and
durations of trainings.
Category of workers Types of trainings Duration

Top level managers
Middle level managers
Line managers
Laborers
Other
2.3 Where did you provide these trainings? ………………

III. Expenditure for Training
3.1 Did you face challenges (difficulties) in getting training venue or trainers? If yes, please describe it
………………………………………………………………………………………………
3.4 If IPDC established a center of excellence in Bole Lemi Industrial Park, does your company willing to
use the CoE? Yes No
3.5 If your answer for question 3.4 is Yes, what kinds of service you need? (Please put ‘√’ sign)
Category of services Always Most often Often Not at all
Basic training
On job trainings
Spatial types of train
Trainer of trainings
Accommodation
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Venue
3.6 What was your company budgeting experience for the past years for the following services?
Services 2017GC 2018GC 2019GC 2020GC

Basic training
On job trainings
Spatial types of train
Trainer of trainings
Accommodation
Venue
Other
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EIPP-JICA
Local Companies:
Challenges and Supporting Framework
For The Industrial Parks
Prepared by:
EIPP-JICA
November, 2021
Addis Ababa, Ethiopia
Contents
List of Table................................................................................................................................................ iii
List of Figure............................................................................................................................................... iv
Acknowledgement........................................................................................................................................ v
Executive Summary....................................................................................................................................vi
Acronyms...................................................................................................................................................viii
Part One: Introduction................................................................................................................................1
1.1 Background.......................................................................................................................................... 1
1.2 Objective.............................................................................................................................................. 1
1.3 Scope and Limitation of the Study.......................................................................................................2
1.4 Methodology........................................................................................................................................ 2
1.5 Structure of the Report.........................................................................................................................3
Part Two: Overview of Local Companies in the Industrial Park........................................................... 4
2.1 The Notion of Local Company and Industrial Park.............................................................................4

2.1.1 Local Companies.......................................................................................................................... 4
2.1.2 Industrial Park...............................................................................................................................5
2.2 Local Companies Accession Criteria and Entry Procedures to IPs..................................................... 5
2.3 General Description of the Surveyed LCs in IPs................................................................................. 6
2.3.1 Local Companies Location and Working Premises......................................................................7
2.3.2 Local Companies Specialization.................................................................................................10
Part Three: Challenges of Local Companies in Industrial Parks......................................................... 13
3.1 LCs Challenges.................................................................................................................................. 13

3.1.1 Raw Material Procurement......................................................................................................... 13
3.1.2 Human Resources....................................................................................................................... 14
3.1.3 Sales and Marketing....................................................................................................................15
3.1.4 Logistics and Transportation...................................................................................................... 16
3.1.5 Customs...................................................................................................................................... 17
3.1.6 Infrastructure and Utilities.......................................................................................................... 19
3.1.7 Finance........................................................................................................................................20
3.1.8 Other Challenges.........................................................................................................................21
3.2 Categorization of LCs Challenges Based on Institutional Responsibilities.......................................22
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3.3 LCs Request....................................................................................................................................... 23
3.4 LCs Response in Addressing Challenges......................................................................................... 24
Part Four: Proposed Approaches to Alleviate Local Companies Challenges...................................... 26
4.1 Finance...............................................................................................................................................26
4.2 Market................................................................................................................................................ 27
4.3 Infrastructure......................................................................................................................................27
4.4 Logistics and Custom Services.......................................................................................................... 28
Part Five: Conclusion and the Way Forward......................................................................................... 33
5.1 Conclusion......................................................................................................................................... 33
5.2 Way Forwards....................................................................................................................................33
References...................................................................................................................................................35
Annex.......................................................................................................................................................... 36
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List of Table
Table 1: Summary of the Research Design....................................................................................................3
Table 2: Summary Table of LC’s Year of Establishment, Specialization, and Number of Employees......12
Table 3: Summary Table of Major Challenges of LCs in Each IP.............................................................. 22
Table 4: Summary of Proposed Solution..................................................................................................... 30
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List of Figure
Figure 1: Location of IPs............................................................................................................................... 2
Figure 2: Adama IP........................................................................................................................................7
Figure 3: Addis Industrial Village Site Plan.................................................................................................. 8
Figure 4: Dire Dawa IP.................................................................................................................................. 9
Figure 5: Hawassa IP..................................................................................................................................... 9
Figure 6: Kilinto IP...................................................................................................................................... 10
Figure 7: Raw Material Procurement Related Challenges Faced by IPs..................................................... 14
Figure 8: Supply of Manpower related challenges faced by LCs................................................................15
Figure 9: Sales and marketing related challenges faced by LCs................................................................. 16
Figure 10: Logistics and transport Related Challenge Faced by LCs..........................................................17
Figure 11: Customs Related Challenge Faced by LCs................................................................................ 18
Figure 12: IP Infrastructure/Utility Related Challenge Faced by LCs........................................................ 20
Figure 13: Finance Related Challenge Faced by LCs..................................................................................21
Figure 14: Types of Supports Requested by LCs........................................................................................ 24
Figure 15: Local Companies Response for Challenges............................................................................... 25
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Acknowledgement
This document was prepared by the Ethiopian Investment Promotion Program, financed by Japan
International Cooperation Agency (JICA-EIPP).
The JICA-EIPP team would like to express heartfelt gratitude to Mr. Shiferaw Solomon, Deputy CEO of
the Industrial Parks Development Corporation (IPDC), for his insightful comments and the provision of
supplementary materials that aided in the improvement of the study document.
The Team would also like to pass its’ deepest appreciation to the representative of local companies (LCs)
for their substantial support in providing valuable information, which was relevant for the study.
Finally, the team would like to thank IPDC’s operation and management experts for providing their
review and comments, which has provided tremendous input in enhancing the study document.
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Executive Summary
Ethiopia has been implementing Industrial Park (IP) development as the means to achieve sectoral
transformation since 2009. The number of industrial parks (IPs) has increased significantly. To regulate
IPs, the Government of Ethiopia designed and has been implementing regulatory and institutional
frameworks. One of the institutions that are in charge of developing, operating, and managing IPs is
Industrial Parks Development Corporation (IPDC). So far, IPDC has developed 13 IPs, where more than
110 tenant companies (TCs) are operational. Of these TCs, 29.82% are local companies (LCs). Due to
the fact that there are a number of LCs in industrial parks and that there are expected to be more LCs,
IPDC was urged to conduct this study to identify major operational challenges faced by local companies,
and to propose applicable supporting frameworks for the betterment of LCs’ performance.
The study identified some challenges such as: (a) financial constraints which are manifested when getting
a loan and foreign currency from financial institutions; (b) insufficient custom services that seriously
affect the ease of doing business (e.g. unclear procedure and workflow, lengthy inspection process, and
workers knowledge and skills gaps); (c) logistics/transportation-related problems such as dependence on
one state-owned logistics company, high shipping cost, shortage of truck and containers and security
problems on major economic corridors; (d) marketing-related problems, including the absence of
business-to-business linkages and supply chain interaction among IPs, and; (e) absence of basic
infrastructure, particularly electricity and water in some IPs (Adama and Kilinto), and power and water
outage caused by heavy-duty trucks which destroyed the overhead electric lines in Addis Industrial
Village. The study also found out that 58.33% of the surveyed LCs are unable to overcome logistics and
customs-related challenges; 41.67% of them find it difficult to solve procurement, marketing and
financial challenges; and non-fulfillment of an incentive on knowledge and technology transfer
particularly observed in Kilinto IP. Lastly, the study recognized areas of supports required by LCs:
91.67% of surveyed LCs need support for market linkage, technical supports and special incentives, and
75% of them require financial support.
To overcome the above identified challenges, the study proposed how IPDC takes an initiative and works
in collaboration with relevant stakeholders. Some short-term and long-term solutions to alleviate each
issue are suggested in the section of the way forward. While most issues raised by tenants require
collaboration, effort, and willingness of multiple governmental and non-governmental intuitions, this
study firmly believes that IPDC should take an initiative and the role of the front-runner in facilitating
every aspect of the partnership within the mandates of the respective institutions, rules and regulations,
and political framework under the Government of Ethiopia. IPDC should seriously consider the process
vi | P a g e
to find solutions for the raised issues; failing to doing so could hamper the overall effort in addressing the
problems. IPDC needs to work with financial institutions (e.g., commercial banks), Ethiopian Customs
Commission (ECC), Ethiopian Shipping and Logistics Service Enterprise (ESLSE) to alleviate the various
issues faced by local companies. The advantages to be gained in pursuing this approach will far outweigh
the traditional ways to solve problems. Finally, the study recommends reviewing the existing pro-FDI
regulatory frameworks that pay little attention to the issue of LCs and/or local markets.
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Acronyms
AfDB African Development Bank
AGOA African Growth and Opportunity Act
COMESA Common Market for Eastern and Southern Africa
DBE Development Bank of Ethiopia
ECC Ethiopian Customs Commission
ERA Ethiopian Railway Authority
ESLSE The Ethiopian Shipping and Logistics Service Enterprise
EPZ Export Processing Zone
ETB Ethiopian Birr
EX Export
FDI Foreign Direct Investment
GHR Green House Gas
HIP Hawassa Industrial Park
IB Investment Board
IBRD The International Bank for Reconstruction and Development
ICT Information Communication and Technology
IP Industrial Parks
IPDC Industrial Parks Development Corporation
IS Import Substitution
KII key informant interview
LC Local Companies
MoF Ministry of Finance
MoFA Ministry of Foreign Affair
MoT Ministry of Transport
PLC Private Limited Company
PPP Public Private Partnership
SEZ Special Economic Zone
TC Tenant Companies
WB The World Bank
viii | P a g e
Part One: Introduction
1.1 Background
Ethiopia is strategically located in the Horn of Africa with proximity to the Middle East, European and
Asian markets. The geographical landmass of Ethiopia is around 1.1 million square kilometers with
inhabitants of more than 117.9 million people1. This makes Ethiopia the 13th most populous country in the
world and the second-most populous in Africa next to Nigeria.
Ethiopia has been implementing an ambitious development program of industrial parks (IP) since 2009.
So far 13 industrial parks have been developed and are operational. To achieve the Ethiopian’s
government needs for developing these parks, the Industrial Parks Development Corporation (IPDC) was
established in 2014, as a public enterprise to become an engine of rapid industrialization that nurtures
manufacturing industries, accelerates economic transformation, promotes and attracts both domestic and
foreign investors (Council of Ministers, 2014).
In line with the above mandate, IPDC has been striving to provide a favorable working environment and
quality services to tenant companies. It has been providing both pre-and post-investment service, availing
security services, and serviced industrial land and pre-built factory sheds equipped with all-encompassing
utilities and infrastructural facilities that meet international standards.
In these 13 industrial parks, there are 114 tenant companies or investors, which have created job
opportunities for more than 83,000 people mainly for women and have generated USD 735 million in
revenue for the country2. So far, IPDC in collaboration with EIC and other governmental organs has been
striving to provide world-class infrastructure, One Stop Service (OSS), and 24/7 security service. IPDC
also provides standard residential buildings for investors and workers. From the total 114 tenant
companies, 34 or 29.82% of them are local companies. Studies indicate that, unlike foreign investors,
domestic investors usually face challenges on marketing, procurement, foreign currency shortage, etc.
This assessment focuses on the challenges of existing local companies in IPs, and possible supporting
frameworks for these companies.
1.2 Objective
The major objective of this study is to assess fundamental challenges of local companies in IPs and to
recommend supporting frameworks for the betterment of LCs’ performance.
The following are specific objectives of this study:
 To identify challenges that local companies have been facing in IPs;

 To devise feasible framework that can address identified challenges;
 To adopt successful IP’s trends on addressing issues faced by local companies; and
 To make recommendations based on the findings of this study.
1
Population of Ethiopia, available at https://www.unfpa.org/data/world-population/ET; accessed on May 6, 2021.
2
IPDC, available at https://www.ipdc.gov.et/; accessed on September 18, 2021
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1.3 Scope and Limitation of the Study
The existing policies and regulatory frameworks on industrial parks mainly address Foreign Direct
Investment (FDI) to the country. As a result, the current normative and institutional frameworks are in
favor of foreign companies. Consequently, this approach impeded the system from addressing issues
faced by local companies in industrial parks. Therefore, the scope of this study focuses on challenges of
local companies that set up their bases in industrial parks owned and administered by IPDC.
1.4 Methodology
Among several known research methodologies, descriptive and explanatory approaches were selected as
tools for the assessment process of this document. To describe existing challenges and explain their root
causes, the study employed Key Informant Interview (KII), field observation, and document review as
research methods.
Currently, there are 114 Tenant Companies (TC) that are located inside 133 IPs, which are under IPDC’s
management. Of the 13 IPs, seven (7) have LCs and the existing number of LCs are 33, which accounts
for 29.82% of the total TCs. The study covered 12 LCs operating in five industrial parks, namely Adama,
Addis Industrial Village, Dire Dawa, Hawassa, and Kilinto. In the case of Kilinto IP, samples were taken
from LCs that started operation and willing to cooperate in providing information during the time of data
collection. On the other hand, from Addis Industrial village, all LCs that rented sheds from IPDC were
taken as samples.
Figure 1: Location of IPs

Source: EIPP team, 2021 Available at https://www.ipdc.gov.et/; Accessed in 07/05/2021
3
This figure considered Bole Lemi I and Bole Lemi II as one IP and it includes the recently operational Semera IP
2|Page
The study utilized both primary and secondary data. Primary data was collected through face-to-face
interviews and discussions with concerned stakeholders based on the structured and semi-structured
interview questions. The secondary data was gathered from reports, documents, etc.
Table 1: Summary of the Research Design

Methodology Method Data source Data collection techniques
KII
Descriptive and Primary Interview guides questions
Field Observation
Explanatory
Document Review Secondary Objective checklists
1.5 Structure of the Report
The above introductory part is structured to provide brief background information about the objective,
scope, and methodology of the study. Subsequently, the overall structure of the document is presented in
the following manner.
Part Two provides a general description of LCs, such as their location and working premises, and areas of
specialization.
Part Three analyzes challenges faced by LCs in their day-to-day business practices. It further examines
the major causes of the identified challenges and the ability of LCs to overcome on their own.
Part Four presents proposed approaches to alleviate the identified LCs’ challenges, and this chapter
indicates the demand for special support for LCs as well.
Finally, Part Five concludes the research findings and shows the way forward on how to overcome
challenges faced by LCs that are operational in IPDC-administered IPs.
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Part Two: Overview of Local Companies in the Industrial Park
2.1 The Notion of Local Company and Industrial Park
2.1.1 Local Companies
The Ethiopian government has enacted more than four investment proclamations and regulations, as well
as several related laws since 1991. They have been developed to address gaps and ambiguities that had
been identified when implementing the laws. These laws define ‘domestic investor’ differently depending
on the government’s interest varies over time. For instance, the Proclamation No. 280 defines a domestic
investor as ‘an Ethiopian or a foreign national permanently residing in Ethiopia, who has invested, and
includes the Government, public enterprises as well as a foreign national, Ethiopian by birth and desiring
to be considered as a domestic investor’4. This definition encompasses Ethiopian nationals, foreign
nationals who permanently reside in Ethiopia, or foreign nationals, who acquired Ethiopian nationality by
birth.
Consequently, in 2012 a new investment law was promulgated that repealed Proclamation No. 280/2002.
The 2012 investment law defined domestic investor as ‘an Ethiopian national or a foreign national
treated as a domestic investor as per the relevant law, and includes the government, public enterprises as
well as cooperative societies established as per the relevant law’5. This definition adds cooperative
societies to be considered as domestic investors.
After a political reform had been taken place in Ethiopia, the investment law was also revised. The
revised investment law6 redefines domestic investors using an exhaustive listing approach. It mentions all
types of domestic investors i.e., Ethiopian nationals, foreign nationals to be treated as domestic investors,
government, public enterprises, cooperative societies that are enshrined in the repealed Investment
Proclamation. In addition, it has expanded to include foreign nationals or foreign enterprises accorded a
domestic investor status previously.7 Unlike the repealed Investment Proclamation, the new Proclamation
gives legal recognition to foreigners and their descendants that have lived and invested in Ethiopia for
generations.8 Besides, the new Proclamation considered juridical persons (business organizations) that
suffice the criteria considered as domestic investors.9
The 2012 and 2020 Investment Proclamations are tacit in considering a foreign national, Ethiopian by
birth as domestic investors. However, there are still exceptional laws that are considered as domestic
investors. For example, the Banking Business Proclamation No. 1159/2019 and Directives No.
MIF/30/2020 that regulates ‘Manner of Equity Investment’ considered foreign nationals of Ethiopian
origin as domestic investors by cross-referring Art. 2 (1) of Proc. No. 270/2002.
4
Proc. No 280/2002 (as amended). Re-Enactment of the Investment Proclamation, Federal Negarit Gazeta, 8th
Year No. 27, Addis Ababa, 2nd July, 2002, Art. 2(5)
5
Proc. No. 769/2012. Investment Proclamation, Federal Negarit Gazeta, 18th Year No. 63, Addis Ababa, 17th
September, 2012, Art. 2(5)
6
Proc. No. 1180/2020. Investment Proclamation, Federal Negarit Gazeta, 26th Year No. 28, Addis Ababa, 2nd day
of April, 2020, Art. 2(5)
7
Art. 2 (5) of Proc. No. 769/2012 verses Art. 2 (5) of Proc. No. 1180/2020
8
Art. 2 (5 h & i) of Proc. No. 1180/2020
9
Art. 2 (5a, f, g & h) of Proc. No. 1180/2020
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This study considered domestic investors as a local company and the study used Article 2 (5, b) of
Proclamation 1180/2020 on definition for a local company, which stated ‘an Enterprise incorporated in
Ethiopia and wholly-owned by Ethiopian National. Accordingly, only those companies that are wholly
owned by Ethiopian nationals and have work premises in IPs are considered as local companies.
2.1.2 Industrial Park
UNIDO (2020) gives a common definition of Industrial Park (IP) that ‘a tract of land developed and
subdivided into plots according to a comprehensive plan with the provision of roads, transportation, and
public utilities, sometimes also with common facilities, for use by a group of manufacturers’ (UNIDO,
2019) . The phrase ‘industrial park’ encompasses a wide variety of related concepts such as free-trade
zones, export processing zones, special economic zones, high-tech zones, free ports, enterprise zones, etc.
(Zeng, 16th July 2019).
The Ethiopian legal system also defines IP using a broad and comprehensive definition as:
‘area with distinct boundary … to develop comprehensive, integrated, multiple or selected
functions of industries, based on a planned fulfillment of infrastructure and various services
such as road, electric power and water, one-stop-shop and have special incentive schemes,
with a broad view to achieving planned and systematic, development of industries,
mitigation of impacts of pollution on the environment and human being and development of
urban centers, and includes special economic zones, technology parks, export processing
zones, agro-processing zone, free trade zones and the like …’10.
Industrial Parks (IPs) have played a vital role in boosting the national economy. IPs are usually
established to catalyze to trigger industrial activities and to attract foreign direct investment (FDI), mainly
in the manufacturing sector, to increase exports and generate employment. One of the fundamental
benefits of IPs is their ability to overcome land and infrastructure constraints through availing basic
infrastructures and land (developed land and rental factory sheds) to investors. To make IPs competent
and sustainable, location is a critical determinant factor. Some studies indicate that the primary factor for
the success of IPs relies on its strategic location that links IPs with the wider trade getaways, source of
labor, and social infrastructure.
This study employed a comprehensive definition of IP, which encompasses a broad range of special
zone concepts. By doing this, the document has incorporated lessons from other countries, which have
profound experience in addressing similar problems.
2.2 Local Companies Accession Criteria and Entry Procedures to IPs
According to studies, successful economic zone programs employ an anchor investor strategy. Typically,
the government aims to attract high-profile investors at the start of the zone program. These anchor
investors serve as a signal to other potential investors and frequently bring a network of suppliers and
partners with them. In many cases, specific incentives are offered to entice these anchors. Although it is
up to anchor investors to focus on attracting well-known foreign companies for economic zone
development, local companies can also play important roles such as being a catalyst to foreign investors
who may be hesitant to invest and unwilling to take the risk of being the first to invest. Honduras and El
Proc. No. 886/2015. Industrial Park Proclamation, Federal Negarit Gazeta, 22st Year No. 39, Addis Ababa, 9th
10
April, 2015, Art. 2(5)
5|Page
Salvador are good examples in this regard. Both countries used domestic entrepreneurs in the garment
sector to invest in the development of industrial zones, using their factories as anchor tenants. This was a
signal to foreign investors regarding the potential of the market and helped catalyze FDI into the SEZ
program.
In Ethiopia, there is a directive issued by the Ethiopian Investment Commission (EIC) that regulates the
accession and entry process of competent local companies to work as manufacturers in IPs11. The
technical selection criteria for LCs to work in IPs are enshrined under Article 5 of the directive (EIC,
2019). Article 5 (1) states basic principles of selection criteria for LCs to enter into IPs as park sector
category, source of finance and financial capacity, past financial history and sustainability, profit
projection, production capacity and type, backward linkage or market linkage with raw material suppliers,
job creation, and others (EIC, 2019). Based on these listed basic principles, EIC gives priority to the
following LC applicants:
a) Experienced LCs in investment areas, which have priority by the government
b) Export capacity
c) LCs supplying foreign investors in industrial parks or large domestic producers
d) Investors with senior expertise in selected manufacturing areas
e) Investors with the potential to connect with foreign suppliers or customers
f) Joint ventures to export or to supply foreign investors
g) Investors with innovative and creative business ideas
This indicates that the EIC's accession criteria and entry process for LCs into IPs are extremely stringent
and rely on the identification of local anchor companies. Except for Addis Industrial Village, this
contributes to the long-term viability of IPs in Ethiopia. After meeting the basic requirements outlined in
the directives, all surveyed IPs may be admitted to the IPs.
2.3 General Description of the Surveyed LCs in IPs
The ten years’ IPDC Strategic Plan and Roadmap (2021-2030) (IPDC, 2021) and IPDC’s official
website12 state that there are 13 operational IPs. From the total operational IPs, seven (7) of them have
LCs: i.e., Adama, Addis Industrial Village, Dire Dawa, Hawassa, ICT Park, Kilinto, and Mekelle.
This study covers five (5) IPs that provide working premises for LCs; i.e., Adama, Addis Industrial
Village, Dire Dawa, Hawassa, and Kilinto. A brief description of surveyed IP’s location and area of
specialization is presented in this section.
11
የ ኢ ት ዮ ጵ ያ ኢ ን ቨ ስ ት መን ት ኮ ሚሽ ን (ሚያ ዚ 1 ቀ ን 2011) የ ሀ ገ ር ውስ ጥ ባ ለ ሃ ብ ቶ ች
በ ኢ ን ዱ ስ ት ሪ ፓ ር ኮ ች ውስ ጥ በ አ ምራ ች የ ኢ ን ዱ ስ ት ሪ ፓ ር ክ ድ ር ጅ ት ነ ት የ ሚገ ቡ በ ት ን
የ ምል መላ መስ ፈ ር ት ለ ማዘ ጋ ጀ ት የ ወ ጣ የ አ ፈ ፃ ፀ ም መመሪ ያ ቁ . 000 (The Ethiopian Investment
Commission (9th April, 2019) Domestic Investors Selection Criteria for the Accession Procedures to Enter into the
Industrial Parks as an Enterprise,implementation directive No. 000)
12
IPDC, available at https://www.ipdc.gov.et/; accessed on September 18, 2021
6|Page
2.3.1 Local Companies Location and Working Premises
A) Adama IP: It is located in Adama

city, Oromia Regional State, at a
distance of 74 km from Addis
Ababa.
This IP is close to Adama railway

station on the Ethio-Djibouti
railway line and Mojo dry port.
The total area of the IP is 120ha.
It has started operations in
October 2018, with 19 factory
sheds.
Figure 2: Adama IP (source: https://www.ipdc.gov.et/)
B) Addis Industrial Village: is located in Addis Ababa City Administration, Akaki Kality Sub-city
specifically in Saris around Kadisko area. The Village is strategically located in the industrial zone of the
Addis Ababa Masterplan and it has two major access roads that run from Bole International Airport to
Maseltegna and Meskel Square to Maseltegna. The total area of the Village is 88 ha which encompasses
ten (10) sheds owned by the government and nine (9) factory buildings constructed by investors. The
owners of nine (9) factory buildings were granted access to the land through a lease agreement from the
Ministry of Industry (MoI).
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Figure 3: Addis Industrial Village Site Plan; Source : IPDC, 2021
8|Page
C) Dire Dawa IP: It is located in Dire
Dawa city at a distance of 445 km
from Addis Ababa.
This IP has access to both

international airport and Ethio-
Djibouti railway.
It covers an area of 150 ha.
It has started operations at the end of

2019, with 15 factory sheds rented
for tenants.
Figure 4: Dire Dawa IP (source: https://www.ipdc.gov.et/)
D) Hawassa IP: It is located in Hawassa

city, Sidama Regional State, at a
distance of 275 km from Addis Ababa.
This IP covers an area of 140 ha and has

access to a domestic airport.
It has started operations in 2016, with
52 factory sheds.
Figure 5: Hawassa IP (source: https://www.ipdc.gov.et/)
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E) Kilinto IP: It is located in Addis Ababa,
Akaki Kality sub-city.
This IP is in vicinity to Bole

International Airport and Indode fright
railway station on the Ethio-Djibouti
railway line.
The IP covers an area of 279ha.
Unlike the other surveyed IPs, Kilinto IP
provides serviced land for investors.
.
Figure 6: Kilinto IP (source: https://www.ipdc.gov.et/)
2.3.2 Local Companies Specialization
A) Adama IP: It specializes in machinery, apparel and garment. Adama IP was initially intended to focus
on 100% exportable products; however, it has evolved into a multi-sectoral industrial park. There is
currently only one local company working in the packaging sector. This LC was founded in 2016 and
signed a two-year agreement with IPDC.
B) Addis Industrial Village: It was established with the intention of clustering local exporters. Currently,
the Village accommodates 21 tenant companies. Among these, 18 local companies are engaged in
garment, leather, and polybag manufacturing. These LCs produce mainly for export and local market
purposes. Out of these 18 LCs, only five (5) have factory sheds renting from IPDC. The remaining 13
LCs have their buildings that serve as working premises. This study targets the above five LCs that rent
factory sheds from IPDC.
B) Dire Dawa IP: It specializes in garments, apparel, and textile. This IP is planned to be engaged in
100% exportable products; however, over time companies have been engaged in the local market. In this
IP, only one (1) LC called Han Plastic Packaging is operational, creating employment opportunities for
180 people.
C) Hawassa IP: It specializes in apparel, textile, and garment. The IP is engaged in 100% exportable
products. Like other IPs, Hawassa IP has local tenants, which are involved in the garment and apparel
sector. In this IP, there are two (2) LCs currently operational, namely JAS Holdings Garment Solution
PLC, and NASA Garment PLC. These companies employ 140 and 1,050 people respectively.
D) Kilinto IP: It specializes in pharmaceuticals and is mainly engaged in import substitution (IS). There
are six (6) local companies and half of them (3) are surveyed: i.e. The New Millennium PLC, Lewi
10 | P a g e
Pharmaceutical PLC, and Dagim Derege Pharmaceutical PLC. These pharmaceutical companies have
created job opportunities for between 100 to 400 workers, and they have a plan to double in their future
expansion programs.
Table 2 below summarizes general information of each IP, such as year of establishment, type of industry,
number of employees, and purpose of manufacturing (export or import substitution).
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Table 2: Summary Table of LC’s Year of Establishment, Specialization, and Number of Employees
Year of Number of Employees Purpose
Name of IPs Local Company Specialization
Establishment Current Plan EX/IS/LM
Adama Eagle Pack Industries Plc. 2016 Packaging NA NA EX/IS
Dre Industries PLC 2001 Garment 290 NA EX/LM
Hibir Crystal Trading PLC 2019 Garment NA NA LM
Addis Industrial Poly bag
Tamra Technology Packaging 2012 30 NA IS/LM
Village manufacturing
Yunus Garment 2011 Garment 300 NA EX
Zelalem Habte Shoes factory NA Leather NA NA EX/IS
Dire Dawa Han Plastic packaging 2020 Packaging 180 290 EX/IS
JAS holdings garment solution plc. 2017 Garment 140 NA EX/IS
Hawassa
NASA garment plc. 2020 Garment 1,050 NA EX
The New millennium Plc. 2019 Pharmaceutical 100 300 IS/EX
Kilinto Lewi Pharmaceutical Plc. 2001 Pharmaceutical 400 600 IS/EX
Dagim Derege Pharmaceutical Plc. 2016 Pharmaceutical NA NA IS/EX
Source: Field Survey by EIPP team, 2021
Note: EX- Export, IS- Import substitution, LM- Local Market, and; NA- Not Available
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Part Three: Challenges of Local Companies in Industrial Parks
The success of IPs should be measured by using objective criteria to evaluate their intended objectives. In
this regard, UNIDO (2019) established a reference framework to measure performance along with Key
Performance Indicators (KPIs). These KPIs are designed in line with the Inclusive and Sustainable
Industrial Development (ISID) principles to measure an entire industrial park, an individual facility, or
various processes at the park. The KPIs have three (3) broader categories i.e., economic, social, and
environmental performance indicators (UNIDO, 2019) . The descriptive analysis approach lays its
theoretical foundation on New Growth or Endogenous Growth, which focuses on dynamic aspects of
growth and industrial outcomes, and also encompasses microeconomic issues such as labor, innovation,
and production (Farole, Special Economic Zones in Africa: Comparing Performance and Learning from
Global Experience , 2011) . Farole, T. (2011) in his book points out the most important criteria in
addressing investment climate issues that matter most to investors in IPs: cost and quality of utilities,
access to transport infrastructure, business regulatory environment, custom, and level of corporate taxes.
Given the above, this study adapted KPIs and Farole (2011) investment climate criteria as a foundation
for the research, and it analyzes LCs’ challenges based on the following seven (7) thematic areas, i.e.: (1)
raw material procurement; (2) human resources; (3) sales and marketing; (4) logistics/transportation; (5)
customs; (6) infrastructure and utilities, and (7) financial aspect.
Based on the seven thematic areas mentioned above, the study examines a level of challenges faced by
LCs in IPDC-administered IPs. It also assesses capacity of local companies to address existing issues.
3.1 LCs Challenges
3.1.1 Raw Material Procurement
Every manufacturer is looking for the best way to make the raw material procurement process as simple
and quick as possible. According to the research done by Rawkery, there are five best methods for
obtaining raw materials in a hassle-free manner13: (1) proper demand forecasting for raw materials, (2)
accurate estimation on quantity of raw materials to be procured and expected delivery time of imported
goods, etc., (3) contracting with distributors, (4) implementing the approved sourcing action, and (5)
updating the bill of materials on a regular basis. Taking these factors into account, the study determined
whether or not LCs face any problems with raw material procurement. After conducting the survey to the
LCs, the study found that raw material procurement is a very serious issue for 42% of companies and a
moderately serious issue for 17% of companies (see Figure 7).
13
Row material procurement, available at https://medium.com/@rawkerysocial/top-5-raw-material-
procurement-strategy-a053ce9699ab; accessed on September 18, 2021
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Figure 7: Raw Material Procurement Related Challenges faced by IPs
According to the interviews with local companies in industrial parks, a majority of industrial-based inputs
or raw materials for Ethiopian manufacturers are imported, making the problem more severe when
compared to countries that can procure domestically or are located close to the logistic gateway (e.g. port).
Furthermore, the restriction on foreign currency makes this issue critical for the continuity of production
processes for LCs in the manufacturing sector. A higher percentage of the surveyed companies affirmed
that the bureaucracy associated with importing raw materials or essential products for the production
process is lengthy and highly inefficient. Although there are well-known issues that contribute to this
particular problem, e.g.: lack of foreign currency and availability of materials, other small bureaucratic
processes in banks, insurances and ESLSE stretches the process into an unnecessary amount of time,
which makes it costly for the manufacturers involved.
3.1.2 Human Resources
Human resources is a broad term that includes both those who work for a company and the department in
charge of managing all aspects of the company. Human resource management is a term that is frequently
used to describe the management and capacity development of employees in a business. This study
focused on recruiting and staffing issues, as well as trainings for staff relevant to the industry.
According to some studies, the availability of capable human resources in the manufacturing industry is a
major issue in the country. Obtaining a competent and skilled workforce from the market has been
difficult in all IPDC industrial parks across the country. Quite often, companies have approached this
problem by hiring people as trainees/interns first, with a possibility of promoting them to proper staff
once they complete the training/internship program and are qualified for the position. However, due to the
high turnover effect, this process has taken its toll on these companies. This particular aspect was labeled
as a serious problem by a relatively small percentage of companies (17%). Consequently, much of the
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cause for these issues can attribute to low salary scale across the garment and apparel industry, which
makes it a complicated process to be solved by a sole entity.
Figure 8: Supply of Manpower Related Challenges faced by LCs
3.1.3 Sales and Marketing
A company can use sales and marketing to collect, store, and use various types of data in the sales flow.
This information includes the initial sales initiative, future follow-up, and additional sales. Marketing is
also used by companies to find and build relationships with potential customers, so that initial interactions
can lead to sales relationships. The recommended business process flow for marketing is as shown below:
Analyze Marketplace Develop Marketing Plan Conduct Campaign
Studies indicate that, in most countries the IP authority has primary responsibility for marketing,
promotion, and often aftercare services for investors as well (Farole, T. (2011) and Zeng, D (2019)). To
take up the above responsibilities, a national Investment Promotion Authority (IPA) is usually established.
However, the recommended approach for marketing and promotion is more cooperative approach to
engage local business associations, chamber of commerce, IP operators, and IP enterprises; this goes
beyond IPA’s efforts only. In the case of Ghana, the government used a cooperative approached by
establishing a board which consists of Ghana Free Trade Zone Board, Ghana Investment Promotion
Center and other main stakeholders in trade facilitation (ports, airports, and customs), in order to achieve
the intended objective to make Ghana a regional export hub.
The results of a survey of 10 LCs', marketing-related challenges are presented in this subsection. LCs in
Kilinto IP are excluded from this analysis, because they had not yet begun production at the time of the
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survey. Marketing rated as an extremely serious issue by 42% of the LCs, and a moderate issue by 25%
(See Figure 9).
LCs described a marketing issue by comparing between procurement of raw materials and selling prices
for finished goods in the international market. Imported raw materials are typically expensive, whereas
the selling price of finished goods is extremely low. This trade imbalance has a negative impact on the
ability of LCs, particularly those involved in export-oriented IPs, to become market competent and
sustainable.
One marketing issue regarding business-to-business linkage was raised by LCs which produce import
substitution goods. Typically, these LCs are formed with the intention to establish a market within IPs.
However, TCs, particularly those who are wholly owned by a foreign national, are unwilling to buy or
order products from LCs. This is not due to a preference for quality or price; rather, they prefer to
purchase from their respective national markets or business connections.
Figure 9: Sales and Marketing Related Challenges faced by LCs
3.1.4 Logistics and Transportation
The terms of logistics and transportation are frequently used interchangeably. It is well understood that
logistics encompasses a much broader range of activities that manages product movement throughout the
supply chain. Transportation, on the other hand, means the actual movement of goods by the most
convenient mode of transport. Packaging, carton or container labeling, order management, inspection,
transportation management, customs clearance, warehousing, and distribution activities are among the
most well-known logistics activities.
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Logistics, as a complete process, entails a number of steps, ensuring that all the steps from transporting
goods with trucks and ships to processing documents, etc. should be conducted in an efficient manner,
and that all related personnel and companies work in unison so that shipments are delivered on time.
As shown in Figure 10, 33% and 25% of the respondents indicate that logistics and transport issue is a
serious and moderate problem respectively. Although LCs have some mixed responses towards the
specific issues, they all agree that a lengthy procedure and bureaucracy hamper the shipping process. The
interview results indicate that long waiting time and back-and-forth procedure caused by the institution
involved (ESLSE) accounts for the majority of the issue. In addition, high shipping costs, shortage of
trucks and containers, shipping delays on imported items, and security problems on the railway and road
transportation between IPs and the port of Djibouti were also raised by LCs.
Figure 10: Logistics and Transport Related Challenge faced by LCs
3.1.5 Customs
Custom is one of the soft infrastructures in industrial parks, and it is a critical source of competitive
advantage for a successful management of IPs. The investment climate in intellectual property and
customs clearance is related to outcomes of IP program as measured by exports, investment, and
employment. From a customs clearance standpoint, investors benefit significantly from operating in IPs
through bonded warehouse schemes. Empirical evidence suggests that most IP programs have been fairly
effective in establishing an environment conducive to efficient onsite customs clearance. It is well known
that the institutional arrangement through which the park's customs service is delivered appears to be
critical to its success. This is primarily due to the fact that (a) the customs area is a potential source of
corruption, and (b) customs processes are frequently a source of inter-institutional conflict. Countries like
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Vietnam addresses these risks by establishing a dedicated customs sub-directorate for the IP program.
This tends to give a regulator with greater authority over customs processes in IPs.
Efficient onsite customs clearance is not guaranteed for TCs in IPs and it should be extended beyond the
park's gates. According to empirical evidence, there are frequently long delays in getting goods through
ports. This is a significant issue for many IP programs, and it undermines the good work done in the park
regarding onsite customs clearance.
This survey identified that custom is an extremely serious issue for 39% of the respondents. It is
manifested in complicated procedures for clearing imported items. This has proved to be immensely
difficult and unpleasant for the companies during their entire production process. Due to a bureaucratic
process of customs clearance, it takes time to crosscheck imported items with a procurement list, which
sometimes cause failing deadlines and eventually financial loss for customers since they have to pay for
overdue fee.
Similarly, the customs process for importing raw materials is lengthy and inefficient. While there is a new
digital system developed and used by the customs authority solely to address these issues, it appears to
take even longer than the manual process due to several bodies involved in the approval process, such as
banks, ministerial agencies, among others.
Figure 11: Customs Related Challenge faced by LCs
Although the global practice in IPs has made significant progress in establishing efficient onsite customs
processes over the last decade, several industrial parks in African continue to face challenges on customs
clearances. Though various models exist to provide the above service efficiently, a dedicated customs unit
and clear service agreements between IP related agencies and customs authorities would bring the most
significant improvements to the customs clearances.
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A good example is the China-Singapore Suzhou Industrial Park (SIP) (Farole, T. (2011)). It is one of
China’s most successful industrial parks jointly owned by the governments of Singapore and China.
Despite its generally advantageous location in China, this park is in landlocked area. So the most
important areas for government support in the development of this park were transportation, logistics, and
trade facilitation. The continued streamlining of customs procedures and port handling, which have been
adapted and upgraded over the years, was one of the most important contributions by the two
governments to the success of the zone. SIP is now operating as a dry-port and is allowed to handle
customs clearance of exports and imports directly. Enterprises within SIP are enjoying an efficient “green
lane” and independent customs supervision, which has been operating 24 hours a day, seven days a week
since 2003. An Integrated Free Trade Zone (IFTZ) was established in SIP in 2008 by integrating two
processing trade zones of bonded logistic center and customs checkpoint. The IFTZ serves as a platform
to promote the development of a Business Process Outsourcing (BPO) industry in SIP. Some
multinational corporations including Fairchild Semiconductor Inc., Samsung, and Chi Mei
Optoelectronics have already or are planning to establish their distribution centers in the IFTZ, so an
international logistics and distribution base is gradually taking shape.
3.1.6 Infrastructure and Utilities
The fundamental promise of IP programs is to provide a quality operating environment through

concentrating infrastructure investment in a defined area. The prospect of uninterrupted electricity and
water are key criteria when investors consider IP. Studies indicate that the investment climate in IPs,
specifically infrastructure is closely correlated with IP program outcomes as measured by exports,
investment, and employment. The African SEZs average across firms inside the zones report that 50%
less downtime resulting from electricity failures than exporters based outside the zones. Some African
zones like Lesotho and Kenya appear to offer fairly reliable infrastructure. Usually, infrastructure gaps
have been a major cause of concern for investors.
As in Figure 12, more than half of the respondents indicate that infrastructure is an extremely serious
issue in IPs. The main infrastructure issues faced by the surveyed local companies are primarily related to
electricity and water. Other issues like telecommunications and access roads are a relatively small portion
of the problem. The tenants explained that, while power outage itself have become less common in recent
years, the one caused by truck accidents on transmission cables have increased dramatically, due to low
hanging exposed cables surrounding the Addis Industrial Village. Furthermore, the reaction from the
appropriate power utility company to resolve the outage was a long and exhausting procedure; it usually
took a week or more to complete, forcing companies to use expensive generators to resume production for
several days in a row. Some companies so desperate to solve this problem decided to take up these
matters on their own, and devote their time and resources to access to the power. Furthermore, a
restriction on selling gasoline at gas stations for factory use makes it difficult for companies to use their
own generators during outages.
Similarly, water outages make it difficult for companies to provide for their employees, especially during
the unprecedented COVID-19: under this situation, companies had to spend a lot of money to buy water
from water tank trucks, making the process costly for the companies.
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In the Addis Industrial Village, Since the area is not gated, many vehicles which does not belong to the
companies enter it. Moreover, due to a lack of traffic signs to prohibit trucks parking on the street, which
makes tenant companies probles on the transportation within the park.
Figure 12: IP Infrastructure/Utility Related Challenge faced by LCs
In terms of external infrastructure, there was no response from the surveyed LCs that they recognize
challenges or issues.
3.1.7 Finance
One of the major challenges for LCs is to obtain financing. In general, TCs should start their businesses
with their own money, with the majority of the budget coming from shareholders or owners.
Figure 13 demonstrates that 46% of the respondents mentioned that finance is an extremely serious issue.
The interviewed LCs stated that they started the operation with the hope of getting a loan from the
Development Bank of Ethiopia (DBE). Another financial challenge is to obtain foreign currency from
financial institutions such as a bank to import various items required for production purposes. Financial
institutions such as banks are the primary providers of foreign currency, and the National Bank of
Ethiopia (NBE) is in charge of currency regulation. Currently in Ethiopia, there is a chronic shortage of
foreign currency in the market, and LCs often face difficulties in obtaining foreign currency from
financial institutions for purchasing raw materials.
Although they are all concerned about a foreign currency shortage, some of IPDC's local companies view
things differently. According to the interviews and field studies, companies that rely on imported raw
materials are in desperate need of foreign currency. Nonetheless, enterprises' access to working cash and
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loans from local commercial and governmental banks appears to vary greatly. A majority of well-known
companies tend to have long-standing relationships with these institutions and are less likely to be
troubled by it. Newer companies, on the other hand, expressed a desperate need for working cash and
bank loans. Despite ambitions to increase production, sales, and market demography, this issue is
hindering the overall progress of these new companies.
Figure 13: Finance Related Challenge faced by LCs
3.1.8 Other Challenges
The research attempts to cover most of the problems faced by LCs in IPDC-administered IPs. Despite the
fact that most of the planned questions attempted to cover all of the current issues, a few responses by the
companies were beyond the scope of questionnaire. For instance, Tamra Technology Packaging has
complained about an insufficient working space to conduct their activities. The company stated that it was
unable to scale up its production size to a higher level due to a shortage of space for workshop, raw
materials and finished products, and adequate room for other items during the manufacturing process.
Another significant challenge is a security issue. When LCs unload construction materials from trucks on
their leased land within the IP (especially in Kilinto IP), the neighborhood youths passed through the
fence and just started unloading construction materials without having a prior agreement with LC
representatives, then asked for their labor fee later. LCs have repeatedly attempted to report the problem
to the IP manager and security department, hoping to find a solution, to no avail. Currently, the problem
persists with no viable solution, to the point where local police officers, rather than maintaining peace and
security, advise companies to negotiate with local youth. This situation caused LCs for unexpected costs
and delay in their plans.
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Lastly, LCs in Kilinto IP raised the non-fulfilling incentive for knowledge and technology transfer. The
incentive issued by the Investment Board (IB) allows LCs to retain a cost-sharing grant on recruitment of
expatriate managers and special technicians in Year 1: 85%, Year 2: 75%, Year 3: 50%, Year 4: 25%14.
However, the Ministry of Finance and Economic Cooperation (MoFEC) does not provide such incentives
for LCs.
3.2 Categorization of LCs Challenges Based on Institutional Responsibilities
This sub-section discusses major challenges recognized in each IP. Those challenges are systematically
grouped into three categories; (1) company-related challenges; (2) IPDC-related challenges; and (3)
challenges caused by other institution(s).
Financial constraints were identified as one of the major challenges for LCs across all IPs. The main
financial gaps are a lack of foreign currency, financial access to working capital, and a complicated loan
process.
Custom-related services were confirmed as the second challenge in all surveyed IPs. The major issues
identified in this study are unclear procedure and workflow, a lengthy inspection process, and customs
officers' knowledge and skills gaps.
The third challenge is logistics/transportation. The main issues concerning logistics/transportation are
ESLSE's traditional business practices; breaches of obligation to deliver imported items to the destination
area, including IPs; high shipping costs; truck shortages; and security issues on the Ethio-Djibouti railway
and road along economic corridor. The railway fare is higher than that of the container truck which is
more flexible in terms of time and pick-up/drop-off point; it will take some time to use the railway
effectively until sufficient cargo volume is generated.
The fourth challenge is a marketing-related issue, which is recognized in all IPs except Adama IP. The
major issues mentioned were a lack of business-to-business linkage and supply chain interaction among
IPs.
Infrastructure is another critical component for IPs that have been identified as a challenge. The major
issues for Adama and Kilinto IPs in particular are electricity and water.
Table 3: Summary Table of Major Challenges of LCs in Each IP

Challenges
Name of IP
Companies related IPDC’s related Other
Infrastructure problem:
Foreign currency problem for
electricity and water
procurement
shortage
Adama Financial shortage Logistic and freight
Complex custom process
High rental amount
Poor coordination among the different
regulatory organ
14
Skills development and cost-sharing grant for domestic industrialists, available at
http://www.investethiopia.gov.et/index.php/investment-process/incentive-package.html
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Challenges
Name of IP
Companies related IPDC’s related Other
electricity interruption and Foreign currency problem for
Addis unavailability of water 3 procurement
Industrial Financial shortage days a week
Village Shortage of sufficient
working space Complex and lengthy custom process
Absence on B2B linkage
procurement
Dire Dawa Financial shortage
Absence of supply chain Logistic and freight
with different IPs Complex and lengthy custom process
procurement
Hawassa Financial shortage procurement
Absence of supply chain
Logistic and freight (high shipping cost,
with different IPs
truck shortage, and security problems)
Complex and lengthy custom process
Financial shortage unavailability of electricity Poor banking service
and water
Kilinto Supply chain procurement
problem: raw Logistic and freight
material vs finished Enforcement problem of “knowledge and
Security problem
products technology transfer related incentive
ruling”
3.3 LCs Request
The study identified different types of supports required by LCs. Figure 14 indicates that almost all
(91.67%) of respondents need market linkage, technical supports, and special incentives; and 75% of LCs
respondents require financial support.
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Figure 14: Types of Supports Requested by LCs
Note: SRPA - Shed Rental Price Adjustment
SRPP - Shed Rental Price Payment
3.4 LCs’ Response in Addressing Challenges
Among the various challenges that LCs face on a daily basis, more than half (58.33 %) of respondents say
that they are unable to overcome logistics/transportation issues. Subsequently, half of the respondents
stated that customs and IP infrastructure are difficult to resolve on their own. A sizable proportion of
respondents (41.67 % for each issue) also indicated that raw material procurement, marketing and sales,
and financial constraints are difficult to resolve on their own. On the contrary, all respondents stated that
they are able to overcome external infrastructure issues.
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Figure 15: Local Companies Response for Challenges
Other challenges identified in this study include knowledge and technology transfer and acquiring
adequate working space. In terms of incentives for knowledge and technology transfer, 41.67 % of
respondents indicated that they are unable to exercise their rights and benefits under this incentive.
Tamra Technology Packaging stated that without the goodwill of IPDC, it is impossible to resolve the
issue of insufficient working space.
Finally, all respondents agreed that some administrative changes in industrial parks bring about positive
results.
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Part Four: Proposed Approaches to Alleviate Local Companies
Challenges
Ethiopian IPs' development strategy aimed to attract FDI, create jobs, and transfer technology. This
makes current IPs serve as more pro-FDI instruments and leave business-related challenges for LCs
unaddressed. This study identified various challenges that LCs have faced, which are classified as finance,
market, infrastructure, logistics, and customs. The following section proposes solutions to such problems.
Many of the issues raised by this study require multilateral collaboration with relevant stakeholders and
other institutions. These challenges, although difficult, can be addressed effectively if specifically
dedicated platforms are provided. Obviously, IPDC should play an unambiguous role to become a
facilitator in whatever issues arise. This study firmly believes that IPDC need to adopt a new approach in
addressing issues mandated by law.
4.1 Finance
Although access to foreign currency has been a barrier in Ethiopia across all industries, manufacturing
companies, particularly those in IPs, have been hit the hardest. Obtaining foreign money and loans from
financial institutions are also key challenges for LCs, according to the study.
Despite the fact that common governmental bureaucracy gives mandate to certain institutions on specific
matters, leaving the above-mentioned issues to be resolved by multiple authorities in charge is sometimes
time-consuming. This study believes that, within the confines of the country's rules and regulations, IPDC
could take the initiative and serve as a facilitator to address issues as listed below.
Although this may require governmental policy change and intervention. Moreover, the following options
are proposed to IPDC:
Short term (6 up to 12 months)
 IPDC require to consider allowing local companies to pay in local currency for services
provided by IPDC.
 IPDC needs to provide financially-struggling companies with relief period on their rental shed or
land lease payments.
 IPDC require to engage with local companies to make considerable price adjustments on rental
and lease prices as part of indirect financial incentive mechanism.
Long term (up to 24 months)
 IPDC require to give priority to engaging with all governmental and private banks in providing
loans for local companies on time.
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 It is necessary for IPDC to ensure the availability of special incentive loans, such as lower
interest rates, longer grace and amortization periods than usual conventional loans.
 IPDC require to engage with the National Bank of Ethiopia (NBE) and other relevant
government agencies to improve the foreign currency procedure, whereby local companies can
procure and import from their USD accounts.
4.2 Market
Having a strong market share is critical for any type of manufacturers’ success. Over the years, Ethiopia
has built its fair share of manufacturing plants, both inside and outside industrial parks, but entry into the
international market has been difficult for these local firms for a long time. Although it is a problem for
all manufacturers, local companies in IPs have suffered the most. According to the study, one of the most
pressing issues confronting these local businesses is marketing. After examining various options, the
following are suggested:
 IPDC require to support LCs in terms of business-to-business linkage with other companies
within IPs. This includes Expos, symposiums, and other engagement activities.
 IPDC needs to help form local companies’ association for LCs under IPs, which can engage
regularly with IPDC to help address existing and upcoming problems.
 It is necessary that IPDC forms a task force or sub-committee which exclusively address local
companies’ problems and that can become the sole facilitator in inter-intuitional tasks with other
relevant ministry offices and organizations.
 IPDC require to engage and collaborate with the Ministry of Trade to leverage the ministry’s
position in a way that can benefit local companies in terms of the market in east Africa and
beyond.
 IPDC needs to support local companies through free trade agreements with regional organizations
(COMESA, AGOA, etc.) and countries so that they can market their products through Ethiopia’s
embassies around the world, in close collaboration with the Ministry of Foreign Affairs and other
relevant governmental institutions.
 IPDC require to find a way to raise the percentage of LCs’ products into local markets, by
appealing to the relevant authority to mitigate the export ratio and cooperating with the Ministry
of Trade to invite LCs to the expo.
4.3 Infrastructure
Ideally, IPs should have a sustainable investment in physical infrastructures such as electricity, water,
roads, telecom stations, housing, and ports (Farole, Special Economic Zones in Africa : Comparing
Performance and Learning from Global Experiance , 2011). IPs have high electricity demands that require
a large investment. These types of investments can be managed under a broad policy agenda and suitable
long-term financing framework. Studies identified that, although the degree is different, the provision of
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standard basic infrastructure is a constraint for all IPs (Zeng, 16th July 2019) . This study also identified
that there is an infrastructure problem, particularly electricity and water in Adama and Kilinto IPs. If such
problems are left unsolved, the reputation of the IPs will be damaged, and it will adversely affect the
attraction of new investment.
To overcome this problem, particularly for Adama and Kilinto IPs, it is proposed that IPDC address
electricity and water problems in a way that electricity and water services are provided for other IPs.
In addition to this, from the perspective of climate change countermeasures, it is recommended to apply
renewable energy for electricity and recycled water, introduce appropriate energy and water management,
and implement both energy and water efficiency projects at all IPs. Renewable energy solutions can be
implemented first on a small scale, onsite in IPs and factory’s roof-top as an individual/LC own solution,
without the need for costly improvements to the regional system such as the national grid. As an
international example, a World Bank project was implemented in Bangladesh to develop a roadmap for
low carbon growth and to design an optimal policy framework for Chittagong Export Processing Zone15.
 IPDC require to assign a task force or relevant person in each IPs who will solely oversee the
maintenance, facilitation and can serve as contact person with local governmental infrastructure
providers, i.e. Ethiopian electric, water authority, telecom, police, gas stations, and other relevant
local governmental institutions.
 It is necessary for IPDC to immediately resolve certain security problems faced by some local
tenants in collaboration with relevant security and governmental authorities.
 IPDC needs to ensure that the safety procedures and necessary infrastructures are in place, i.e.
fences, security cameras, security guards, etc.
 IPDC require to consider long-term subsidization of infrastructure facilities and utilities solely for
local companies under IPDC as an incentive.
 IPDC is also requested to consider developing environmental and efficiency-based incentive
policies designed to award local companies based on the Existing policies.
 IPDC require to engaged in providing environmentally friendly local alternative infrastructures
other than those provided by the government, i.e. bore hole water supply, solar-based electricity,
and local waste management system.
4.4 Logistics and Custom Services
One of the major objectives of IPs is to overcome both soft and hard components for doing business. The
former refers to trade logistics and bureaucratic public services, while the latter refers to physical
infrastructure. Slow customs procedures and transport systems often make an adverse impact on the cost
of production. This problem is also common in most African SEZs (AfDB, 2015).
15
https://pedl.cepr.org/content/iv-global-good-practices-sez-development-keys-success
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In all surveyed IPs, custom and logistics-related problems were identified as major challenges for LCs. To
overcome these challenges, the team proposes the following:
 IPDC require to negotiate with ESLSE to have a standby alternative logistic company that
provides logistic and freight services for LCs when ESLSE breaches its obligations.
 IPDC require to start engaging with local and international logistics and freight forwarding
companies to alleviate the congestion problem caused by using a sole service provider.
 IPDC require to lobby the federal and regional states to maintain the security of economic
corridors.
 One of the problems is high transportation costs, which were raised by LCs in IPs located far
from the Ethio-Djibouti railway line. To mitigate the problem, the following two options are
proposed:
a) IPDC require to start exploring the option to hire transport and logistics service-providing
companies in a long-term binding agreement with LCs so that the service providers
exclusively provide the service for LCs on demand. This option provides:
 A long-term agreement which guaranties a constant transportation price for LCs
throughout the contracting period, and
 Availability of transportation trucks throughout the contracting period.
b) IPDC require to engage with the Ministry of Transport (MoT) and the Ethiopian Railway
Authority (ERA) to provide a low-cost special pricing method that can incentivize local
companies residing in IPs by providing containers by bulk under IPDC’s coordination.
 The lengthy customs procedure is another problem raised by LCs; this is a part of OSS. To
provide effective and efficient customer services, IPDC and EIC require to upgrade the OSS
including custom clearance services. It is also possible to work with an experienced partner
through the PPP approach. Apart from this, the following measures should be addressed.
 IPDC require to prioritize to discuss with senior officials of ECC on deployment of IPDC
representatives in relevant ECC stations that can solely facilitate imported cargoes belonging to
companies in IPs.
 IPDC require to initiate and take responsibility to provide workshops and training for ECC and
another relevant agenesis about IPs, and how to solve problems faced by LCs that are operational
in IPs.
 IPDC require to take necessary measure to establish bonded logistic parks within industrial parks
in conformity to applicable laws.
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Table 4: Summary of Proposed Solution
Finance
S/N Sector Short term (6 up to 12) months Long term (up to 24 months) Responsible body
 Allow local companies to pay in local
currency
 Provide financially struggling
1 Shed rental companies with a relief period on IPDC
payments
 Consider price adjustment on shed
rent
 Provide financially struggling
companies with a relief period on the
2 Land lease lease payment agreement IPDC
 Consider lease price adjustment for
local companies
 Engage with financial
institutions to ensure the IPDC, NBE, CBE, and
Access to
3 acquirement of loans for local all non-governmental
finance
companies to provide them commercial banks.
with capital.
 Ensure special incentive loans
i.e., lower interest, longer
IPDC, NBE, CBE, and
amortization period, etc. by
all non-governmental
engaging in a special type of
commercial banks.
agreement with financial
institutions
Market
 Ensure business-to-business linkage  Engage and collaborate with
for local companies by providing relevant ministry institutions to
suitable environments. i.e., Expos, ensure market access in
Business IPDC, MOTI, MOFA,
4 symposiums, and others regional countries and beyond
linkage ECCSA
 Help create local companies’ for local companies.
associations that can engage directly  Engage with relevant
to oversee this and other issues by authorities to ensure access to
30 | P a g e
collaborating with IPDC market share.
 Form IPDC task force to be dedicated
solely to local companies which will
address issues in-house and in inter-
institutional cases.
Infrastructure
 Consider long-term
subsidization of infrastructure
 Assign a task force that will oversee
facilities and utilities as an
the maintenance and facilitate
incentive
provision of services requested by
LCs, and serve as a contact person  Develop environmental and
IPDC, EEU, Ethio-
with local governmental authorities efficiency-based incentives
Energy, water telecom, governmental
5 policies for local companies
and telecom  Address immediately security and and non-governmental
fence related issues  Provide environmentally institutions
friendly local alternative
 Ensure the implementation standard
infrastructures (e.g. bore hole
and safety procedures are in place and
water supply, solar panels, etc.)
up to date.
by collaborating with relevant
organizations.
Logistics and Custom Services
 Negotiate with ESLSE to have a
standby alterative logistic to be
provided in case of emergency
IPDC, MOTI, ECC,
 Engage with local and international
relevant governmental
6 logistic logistics and freight forwarders to
and non-governmental
provide an alternative
institutions
 Lobby federal and regional states to
maintain security on economic
corridor
 Explore an option to hire a transport
service company in a long-term
binding option that can provide
Transportations
steady price and availability
 Engage with relevant authorities to
ensure low-cost special pricing
31 | P a g e
methods on Ethiopian railway
services
 Upgrade make OSS facilities
fully functional to provide
customs services at the IPs
 Start engaging with relevant
Customs authorities to place IPDC EIC, ECC, IPDC
representative at customs office
to facilitate related issues
 Establish bonded logistic park
with in industrial parks
32 | P a g e
Part Five: Conclusion and the Way Forward
5.1 Conclusion
Government of Ethiopia employed an IP development strategy to achieve sectoral transformation through

industrialization. The government established IPDC as an authorized dedicated public company to
facilitate effective IP development and management. So far, IPDC has developed 13 operational IPs,
where 113 TCs are operational. The existing zone development strategy has been used to attract FDI,
create jobs, and transfer technology. This makes the IPs regulatory framework pro-foreign investors while
little or no attention was paid to LCs. This study assessed different operational challenges faced by LCs to
generate positive effects and outcomes from these local companies in industrial parks. The study
identified major operational challenges faced by LCs, such as marketing, finance, infrastructure, custom,
logistics, etc. To address such challenges, the study proposed different approaches. Some of them require
comprehensive and inter-governmental cooperation to address the issues, and IPDC require to take the
lead and work diligently with relevant stakeholders to provide long-term solutions for these companies.
The following section outlines the steps IPDC should take to move forward.
5.2 Way Forwards
Based on the analysis of interview surveys to local tenant companies in IPs, as well as the experience of
other countries, this study presents below the proposed way forward for IPDC.
 Firstly, IPDC require to take an approach to provide solutions to problems as they arise, since a
single issue left unaddressed will have a domino effect on overall production and export processes,
which eventually lead to a permanent halt of the overall business. As issues necessitate the
involvement of other governmental organizations and agencies, IPDC should raise awareness among
all stakeholders involved in urgent and critical needs during Ethiopia's industrialization processes.
 To achieve its goal, IPDC require to investigate legal avenues for bypassing lengthy bureaucratic
processes in other governmental organizations/agencies. Waiting for the normal process could be
costly for both IPDC and tenants, and could have a negative impact on Ethiopia's overall
industrialization goal in the future.
 IPDC require to focus on establishing direct communication with banks and other financial
institutions in order to discuss the creation of a financial platform through which existing and new
LCs in industrial parks can gain access to loans, investments, and other financial products that can
help them grow.
 Access to the market by export-oriented local tenants should be investigated in order to generate
positive results in the industry. Although it is not the responsibility of IPDC to address a lack of
33 | P a g e
market for individual companies in industrial parks, certain steps should be taken to ensure the
success of LCs within IPs. IPDC require to encourage collaboration with relevant governmental and
ministerial institutions to provide proper solutions for LCs.
 As the current trend in the manufacturing sector that relies on imported items to produce the final
products, IPDC require to consider a way to provide incentives for LCs on raw materials for
production, particularly support to procure materials domestically.
 Adopting a holistic approach to solving a problem at a time may seem logical, yet it can be costly. To
achieve the best results, IPDC should attempt to address all the problems listed above simultaneously.
 IPDC is also required to follow the trend of Climate Change Adaptation, which is becoming a must
condition for manufacturers in order to strengthen the industry's international competitiveness. The
current initial major issues are; (1) de-carbonization which is necessary to utilize renewable energy
in the manufacturing process, and; (2) human rights of the workers/employees which includes
minimum wage, working environment (factory), and provision of the sufficient living environment
(dormitory) in case of facing difficulties on commuting.
 Consider to set-up a logistic center or dry port within the IP to improve transportation and customs
problems, by engaging relevant government authorities and private firms who are keen on this issue.
 To mitigate on logistics, IPDC should take necessary actions to establish logistics park wit in
industrial parks.
 Finally, the issues and problems identified in the study can only be recognized by maintaining a close
connection to the tenants and developing a trusting relationship with them, in order to understand the
complex and broad issues confronting LCs in industrial parks. It is also clear that none of the issues
and problems mentioned above can be solved by a single department or individual. IPDC should
consider forming a task force or working group with relevant governmental agencies/organizations
so that problems can be addressed collectively and solutions to unknown future issues can be
provided.
34 | P a g e
References
AfDB. (2015). Special Economic Zones in Fragile Situations: A useful policy tool? African Development
Bank Group.
Council of Ministers. (2014, December 5). Industrial Parks Development Corporation Establishment
Council of Ministers Regulation No. 326/2014. Addis Ababa, Ethiopia: Birhan ena Selam.
EIC. (2019, April 9). Domestic Investors Selection Criteria for the Accession Procedures to
Enter into the Industrial Parks as an Enterprise, implementation directive No. 000. Addis
Ababa, Ethiopia: Ethiopian Investment Commission.
Farole, T. (2011). Special Economic Zones in Africa: Comparing Performance and Learning from Global
Experience. Washington DC: The International Bank for Reconstruction and Development
(IBRD)/ the World Bank (WB).
Farole, T. (2011). Special Economic Zones in Africa: Comparing Performance and Learning from Global
Experience. Washington: The International Bank for Reconstruction and Development / the
World Bank.
IPDC. (2021). Draft Industrial Parks Development Corporation: Strategic Plan and Roadmap (2021-
2030). Addis Ababa: IPDC.
UNIDO. (2019). International Guidelines for Industrial Parks. Viena: United Nations Industrial
Development Organization.
Zeng, D. Z. (16th July 2019). Special Economic Zone: Lessons from the Global Experience. PEDL
Synthesis Paper Series, 1-28.
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Annex
A. Case Study
In this part, the industrialization of Vietnam, which has been promoted based on the industrial parks, is
introduced, focusing on local enterprise growth.
1. Case study of an industrial park in Vietnam

1.1 History of industrial parks in Vietnam16
In Vietnam, the Doi Moi policy aimed at transitioning to a market economy was adopted in 1986, and the
Foreign Investment Law was enacted in 1987. As a result, a policy was set out to introduce foreign capital
and promote industrialization. However, due to the underdeveloped industrial infrastructure, the
development of industrial parks started as a facility to accept foreign-affiliated manufacturing industries.
The Vietnamese government has been promoting industrialization policies through Export Processing
Zone (EPZ), Economic Zone (EZ), and Hi-Tech Park, as well as Industrial Park (IP).
The first of these established was EPZ, which was launched in 1991 for the purpose of agglomeration of
companies specializing in the manufacture of export products. However, this did not work well to attract
companies, with the exception of some successful ones in Ho Chi Minh City. The reasons are the
underdeveloped infrastructure such as roads and electric power, poor location conditions, lack of funds
and know-how of developers, and lack of popularity from companies considering sales in Vietnam.
Therefore, in 1994, the decree related to the industrial park was promulgated, and the development of IP
began with relaxed restrictions such as export obligations. In 1995, the conversion from EPZ to IP was
approved to lift production export, and all EPZs were converted to IP except for some successful ones as
indicated above.
According to an interview by the JICA survey team with the Ministry of Planning and Investment (MPI)
of Vietnam in October 2016, there were 324 certified IPs in Vietnam, of which 220 IPs were operating.
At that time in Vietnam, 65% to 70% of foreign-affiliated investors were in industrial parks; the total
number of employees in IPs was about 2.7 million, and 50% of production in IPs was exported.
40% of IPs were located in Ho Chi Minh City and its surroundings in Southern Vietnam, and 30% were
located in Hanoi and its surroundings in Northern Vietnam. MPI has controlled the permission to
establish IPs to prevent an oversupply of industrial parks. As of October 2016, MPI monitored the
occupancy rates of IPs over the country and evaluated it was as low as about 50% due to oversupply. As a
result, MPI has suspended permission to establish new IPs in areas other than metropolitan areas where
occupancy rates and demand were high.
The EZ Law was enacted in 2003, and it has become possible to promote the development of EZ as an
industrial city including housing, schools, commercial facilities, etc. in addition to the manufacturing
industry, provided that the area is 10,000 ha or more. As of October 2016, 16 EZs was certified
nationwide, mainly in coastal areas and poor areas.
Significance of Japanese Industrial Parks in Vietnam for Japanese Companies Expanding into Vietnam (Japanese,
16
WASEDA University), Shigeru Nishiyama, 2013
36 | P a g e
HTP is located in Hanoi, Ho Chi Minh City and Da Nang. Hoa Lac Hi-Tech Park (HHTP) in Hanoi is
under the jurisdiction of the Ministry of Science and Technology (MOST), and HTPs in Ho Chi Minh
City and Da Nang are under the jurisdiction of local governments.
1.2 Organizations for Operation of Industrial Parks
(1) Industrial Park Administration
The first tier of Vietnam's local administration consists of five centrally controlled cities and 58 provinces,
and the administrative management of industrial parks has also been transferred from the central
government to first tier administrative agencies. As a result of the decentralization of industrial park
administration, each region has come to compete with each other to attract investment in the
manufacturing industry.
Under the umbrella of the People's Committee at a level of the centrally controlled city and the province,
the Industrial Zone Authority has been established to promote investment in industrial parks and to issue
investment permits. In addition to this, the Authority provides investment incentives based on the laws,
and regulates industrial park developers, operators, tenant companies, etc.
MPI as the central government also formulates investment policies at national level and uses them as
guidelines for the administration of industrial parks by provincial administrative agencies. Besides, as
mentioned above, efforts are being made to prevent oversupply of industrial parks by adjusting
development permits for new industrial parks while monitoring changes in the average occupancy rate of
industrial parks over the country.
Figure 1 illustrates the administrative framework for industrial parks management in Vietnam.
Central Government Ministry of Planning and Investment
 National level policy making

Decentralization  Control of IP development of management
at national level
Provincial Government Industrial Zone Authority

5 municipalities
 Investment promotion together with IP
58 Provinces developers
 Issuance of investment permits and
granting investment incentives based on
laws of the country
 Regulation of IP developer/operation and
enterprises
Source: EIPP
Figure 1: Administrative Framework of Industrial Park Management in Vietnam

(2) Industrial Park Developers
IP developers in Vietnam are divided into the following three categories.
37 | P a g e
 IP developer of foreign capital
 IP developer of a joint venture between a foreign company and a local company
 IP developer of a local company
Foreign-affiliated manufacturing industries tend to be operating in IPs developed by foreign companies.
There are mixture of foreign and local manufacturers in IPs developed by joint ventures between foreign
and local companies or experienced local companies. IPs developed by other local companies normally
accommodate local manufacturing industry.
Figure 2 illustrates the relationship between IP developers and IP tenants.
IP developed by foreign investors
Foreign-affiliated manufacturer
IP developed by joint venture
between foreign and domestic
investors Local manufacturer
IP developed by domestic investors
Source: EIPP Majority locators Minority locators
Figure 2: Relationship between IP Developers and IP Enterprises
1.3 Investment Incentives

(a) CIT Incentives for Enterprises in IP, EZ and HTP17
For a general manufacturing industry located in an Industrial Park (IP), investment incentives such as 2
years’ exemption from corporate income tax (CIT) and a 50% tax reduction for the next 4 years are
granted.
Companies located in the Economic Zone (EZ) or High-Tech Park (HTP) are entitled to a 4 years’
exemption from CIT, followed by a 50% tax reduction for 9 years and a higher investment incentive of 15
years with a preferential tax rate of 10%.
(b) Elimination of CIT incentives for EPE18
In Vietnam, an Export Processing Enterprise (EPE) refers to a company located in an Export Processing
Zone (EPZ) or that located in an IP and exports all products.
Previously, a preferential CIT rate of 10% for 15 years was applied to EPE. However, with the accession
to WTO in 2007, CIT incentives for EPE were abolished in January 1st, 2012 in order to close the gap
between domestic and foreign capitals.
17
Question corner: about tax incentive for CIT (Japanese), JETRO, 2018
18
Trade and Investment Q&A (Japanese): about incentives and custom clearance for EPE, JETRO, September 2017
38 | P a g e
Although CIT incentives are no longer effective, EPE can enjoy exemption of import duties and VAT for
imported goods to be utilized by EPE.
(c) CIT Incentive for Enterprises in the Encouragement Industries19
CIT incentives are applied to companies in the encouragement industries such as high-tech, research and
development, software development, production of new materials including composite materials,
lightweight building materials, and rare materials, and biotechnology development. The CIT rate, which
is usually 20%, is reduced to 10% for 15 years from the year the sales were recorded. At the same time,
CIT exemption will be applied for 4 years from the year when taxable income is recorded, and 50% tax
reduction will be applied in the subsequent 9 years.
In addition, the same CIT incentives as above will be applied to projects in the following six supporting
industries:
a. Textile and garment industry: manufacturing of fabric, sewing thread, accessories, auxiliary
materials, etc.;
b. Leather and footwear industry: manufacturing of leather for shoes, adhesives for shoes, decorative
auxiliary materials, etc.;
c. Electronics industry: manufacturing of electronic parts such as plastic parts, rubber products,
machinery / electronic parts, electronic parts made of glass products, telephone chargers, electric
wires / cables, LED bulbs, etc.;
d. Automobile assembling industry: manufacturing of engines and their parts, lamps, horns, meters
and other lighting and signal systems, brake systems, etc.;
e. Machine manufacturing industry: manufacturing of dies, jigs, parts and accessories of machine
tool / welding machine, industrial steel, etc.; and
f. Supporting industrial products for high-tech industries: manufacturing of various molds, electronic
parts for various equipment development, ultra-small electronic circuits, various high-quality resin
parts, etc.
Table 1 summarizes the current tax incentives in Vietnam.
Table 1: Tax Incentives in Vietnam

Encouragement
Type of tax industries such as Hi-
IP HTP & EZ EPE
incentives tech, Software, &
Supporting Ind.
Preferential CIT NA 10% for 15 yrs 10% for 15 yrs Abolished
Rate
Exemption and Exemption: 2 yrs Exemption: 4 yrs Exemption: 4 yrs NA
Reduction of CIT Reduction: 4 yrs Reduction: 9 yrs Reduction: 9 yrs
Import Duty and NA NA NA Exempted
VAT
19
Tax incentives for supporting industries in Vietnam (Japanese), JETRO, June 17, 2021
39 | P a g e
Encouragement
Type of tax industries such as Hi-
IP HTP & EZ EPE
incentives tech, Software, &
Supporting Ind.
No. of eligible IP: 324 HHP: 3, EZ: 16 - EPZ: 1
areas （in Oct. 2016） (in Oct. 2016) (in Oct. 2016)
Source: EIPP
1.4 Correcting the Difference in Incentives between Foreign and Domestic Investors
In Vietnam, both foreign-affiliated companies and domestic companies are currently applying for and
registering investment at the provincial Industrial Zone Authority, and there is no difference in investment
incentives between them. At the beginning of Doi Moi policy, the investment incentives of foreign-
affiliated companies and domestic companies were not the same. They were gradually unified through the
following revisions to investment laws:
 The Doi Moi policy was adopted in 1986, and after that the first Foreign Investment Law was
enacted in 1987;
 The Foreign Investment Law was amended in 1996, and then the Domestic Investment
Encouragement Law was enacted in 1998;
 In 2000, the revised Foreign Investment Law was promulgated, which amended and supplemented
the 1996 Foreign Investment Law;
 The 2005 Investment Law was enacted by unifying the 2000 revised Foreign Investment Law and the
1998 Domestic Investment Encouragement Law. As a result, investment incentives have been
granted to tenant companies in industrial parks, regardless of foreign-affiliated companies or
domestic companies. It has been nearly 20 years since the first foreign investment law was enacted in
1987;
 Since then, the investment law has been revised repeatedly. Similar to the 2005 Investment Law, the
2014 Investment Law provided investment incentives to tenant companies in industrial parks,
regardless of companies’ nationalities, in the same way as 2005 Investment Law; and
 The revised Investment Law was enacted in 2020. It includes many changes that clarify the points
unclear in the previous investment laws and supplement by the subordinate laws. It is said that it
does not involve major changes in investment rules.
In general, amended laws have a provision for investment protection. When the investment incentive is
changed due to the amendment, the revised law will be applied if the revised law is more advantageous to
investors, and the current law will be applied if the current law is more advantageous. In this way,
investors are protected to receive the investment incentives at least the same as the previous level.
1.5 Example of Industrial Parks
(a) Northern Vietnam
In recent years, the expansion of industrialization to rural areas has been remarkable in Vietnam. In the
Northern Vietnam, industrialization has spread from Hanoi and Haiphong to neighboring Vinh Phuc, Bac
Nihh, and Hung Yen provinces.
40 | P a g e
Japanese assembly factories for automobiles, motorbikes, electrical and electronic, and Korean
smartphone assembly factories have set up operations in this area. Since then, as a result of various efforts
by the Vietnamese government and investors, supporting industries for them have gradually been
established.
Table 2 summarizes data from industrial parks of Quang Minh Industrial Zone (IZ) in Hanoi and Que Vo
1 IZ in Bac Ninh Province. Quang Minh IZ has 112 local companies, accounting for 75% of the total 150
companies. This industrial park has a high proportion of local companies. Que Vo 1 IZ has 17 local
companies out of 113 total companies, accounting for 15% of the total. Que Vo 1 IZ has a larger
proportion of foreign-affiliated manufacturing industries than the Quang Minh IZ.
Table 2: Example of Industrial Parks in the Northern Vietnam

IP Name Quang Minh IZ Que Vo 1 IZ
Location Hanoi City Bac Ninh Province (North)
(North)
Developer Vietnamese private company Vietnamese private company
Developed Area 400 ha 640 ha
Occupancy (%) 100% 100%
Land lease price USD 140/m2 Inquiry required
Total tenants no. 150 113
Local tenants no. 112 (75% of total) 17 (15% of total)
Major activities Machining, electronic, precision, and Electric & electronic, machining
of IP tenants light industry
Remarks Judging from the products produced in Judging from the products produced in
the industrial park, it is possible that the industrial park, it is possible that
many supporting industrial products are many supporting industrial products are
included. included.
Source: IP Data for North and Central Vietnam (March 2021, JETRO)
(b) Southern Vietnam

In Southern Vietnam, industrialization is spreading from the triangular area of Ho Chi Minh City, Dong
Nai Province and Ba Ria-Vung Tau Province to neighboring provinces such as Bin Duong Province.
Table 5 summarizes the industrial park data of Tan Thuan EPZ in Ho Chi Minh City and Det May Binh
An IZ in Binh Duong Province.
Tan Thuan EPZ is famous as the first EPZ in Vietnam, which was established in 1991. Tax incentive for
CIT as for export processing enterprise (EPE) was abolished in 2012. In recent years, a 40ha E-office
Park was built in the EPZ, attracting high-tech companies and software companies. Incentives will be
applied to companies recognized as high-tech or software by the Ho Chi Minh City Export Processing
and Industrial Zone Authority (HEPZA). Currently, the total number of local companies is 236, of which
33 are local companies, accounting for 14% of the total. Of these, 20 are companies of software
development, data center and Internet related companies, of which 75%, or 15 companies, are local
companies.
41 | P a g e
Det May Binh An IZ is a small industrial park of about 18 ha, and there are many Vietnamese companies
that manufacture products in the textile and garment fields (fabric, sewing thread, sewing accessories,
auxiliary materials, etc.), plastic packaging, and paper products. If such a company is recognized as a
supporting industry, a high investment incentive will be applied.
Table 3: Example of Industrial Parks in the Southern Vietnam

IP Name Tan Thuan EPZ Det May Binh An
Location Ho Chi Minh City Binh Duong Province (South)
(South)
Developer JV (Taiwan 70%, Vietnam 30%) Vietnamese private company
Developed Area 300 ha 18.08 ha
Occupancy (%) 79% 100%
Land lease price USD 260/m 2
Not available
Total tenants no. 236 16
Local tenants no. 33 (14% of total) 13 (81% of total)
Major activities Software, data center, food, motor bike, Apparel parts, textile, garment,
of IP tenants bicycle, automotive parts, electronic, packaging, warehouse, label roll
machining, precision, software, garment,
medical equipment, etc.
Remarks E-office Park has been established in a Supporting industries
40ha land area to attract investors for hi-
tech and software.
Source: IP Data for Ho Chi Minh City and its surrounding (March 2019, JETRO)
2. Lessons to be Learned from Vietnam’s Case of Industrial Parks

(1) Construct Industrial Parks while Observing the Occupancy Rate
It was found that Vietnam's Ministry of Planning and Investment monitors the occupancy rate of
industrial parks nationwide and controls the development permission of new industrial parks to
prevent the harmful effects of oversupply of industrial parks. This could be a useful example for
Ethiopia to prevent oversupply of industrial parks in the same way, since oversupply will give bad
impression to the Foreign Direct Investment and doubt to the Government policy.
(2) Attracting Investment on an Investment Incentive Basis
In Vietnam, investment incentives may apply to encouragement locations such as industrial parks or
encouragement industries such as high-tech, software development and supporting industries.
The incentive for investment in industrial parks may be a proof that the Vietnamese government
considers industrials park as an important stimulus for investment by foreign and local companies.
The importance of industrial parks lies in the fact that more than 300 industrial parks have been set
up throughout the country, and not only foreign capital but many local companies are also located.
As of October 2016, the total number of employees reaches about 2.7 million.
42 | P a g e
As mentioned earlier, CIT incentives for Export Processing Zones (EPZ) were abolished in 2012.
This is a change in investment rules decided by the Vietnamese government to close the gap between
foreign and local companies. In order for EPZ to have a ripple effect on the domestic economy, it is
necessary for domestic companies to supply raw materials and intermediate products required by
foreign-affiliated companies within EPZ. It is a common wisdom in the world that in order to realize
this linkage, it is indispensable to grow local companies with a capacity to supply products that meet
the strict quality requirements of foreign companies. In Vietnam, CIT incentives were applied to
companies located in EPZ, but this did not create the required linkage, so it may not have been
possible to close the gap between foreign companies and local companies. It may be important for
Ethiopian government to establish effective investment incentives with due consideration of various
conditions in the country.
Investment promotion for industrial parks is not necessarily limited to foreign companies, but it
should also be open to local companies which can make a synergy with them.
(3) Differences in Investment Incentives between Foreign-affiliated and Local Companies
In Vietnam, it took nearly 20 years to close the gap in investment incentives between foreign-
affiliated and local companies. In Ethiopia, there seems to be no difference in investment incentives
between foreign and local companies under the current legal system on incentives. However, it is
necessary to verify whether such legal system is being implemented correctly. Other legal systems,
such as the foreign currency system controlled by the National Bank of Ethiopia, have been
complained that there is a disparity between foreign companies and Ethiopian companies. To address
this issue, a legal counseling service for investors will be needed.
Such dissatisfaction may be caused by an inability to supply quality raw materials and intermediate
products to foreign companies on time, insufficient funds for technological development, and lack of
foreign currency to import raw materials. Poor service of the multimodal transportation does not
seem to be satisfied by local companies either.
(4) Attracting Investors led by IP Developers
In Vietnam, industrial park developers are engaged in attracting investors, both domestic and foreign,
in to industrial parks. For Vietnamese developers, whether private or state-owned enterprises, it is
difficult to contact with foreign investors. So, when conducting investment promotion, they ask
foreign collaborators or Vietnamese embassies overseas to mediate through the provincial People's
Committee and the Industrial Zone Authority.
43 | P a g e
B. Surveyed List of Local Companies (LCs)
Date of Field Observation
No. Company Name
(Interview)
1. Adama
1.1 Eagle Pack Industries PLC 28, Jan 2021
2. Addis Industrial Village
2.1 Dre Industries PLC 14, September 2021
2.2 Hibir Crystal Trading PLC 14, September 2021
2.3 Tamra Technology Packaging 15, September 2021
2.4 Yunus Garment 17, September 2021
2.5 Zelalem Habte Shoes factory 15, September 2021
3. Dire Dawa
3.1 Han Plastic Packaging 10, March 2021
4. Hawassa
4.1 JAS Holdings Garment Solution PLC 13, February 2021
4.2 NASA Garment PLC 17, February 2021
5. Kilinto
5.1 The New millennium PLC 5, February 2021
5.2 Lewi Pharmaceutical PLC 14, January 2021
5.3 Dagim Derege Pharmaceutical PLC 5, February 2021
5.4 The New millennium PLC 14, January 2021
C. List of Operational IPs under IPDC’s possession and Surveyed LCs

Number of Companies by
LC
Ownership Type
No. Name of IPs Status
Foreign +
Foreign Domestic Surveyed C %
Domestic
Operational, Oct.
1 Adama 6 - 1 1 100
2018
Addis Industrial
2 Operational, 1980 3 0 18 5 27.8
Village
3 Bahir Dar Operational, 2019 1
4 Bole lemi Operational, 2014 15
5 Debre Birhan Operational, 2019 3
6 Dire Dawa Operational, 2019 3 1 1 100
7 Hawassa Operational, 2016 18 1 2 2 100
8 ICT Park Operational, 2015 2 2 9 0 0
9 Jimma Operational, 2019 1
10 Kilinto 4 2 6 3 50
11 Kombolcha Operational, 2017 6 1 0 100
12 Mekele Operational, 2017 7 1 1 0 0
Total 69 7 38 12 25
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D. Addis Industrial Village Profile
Company Owner’s Origin Type of Working Premises
Domestic Rented
No. Company Name Own Specialization
Domestic + Foreign from Both
building
Foreign IPDC
1 Zelalem Habte Shoe Leather
x x
and Sole Factory
2 African Cottons PLC Garment &
x x
textile
3 Hebre Crystal PLC x x Leather
4 Yunus Garment PLC x x Garment
5 Concept International Garment
x x
Ethiopia PLC
6 Pittards products Leather
x x
Manufacturing S.C
7 Dire Industries P.L.C x x Leather
8 Tezal Global Foot Leather &
x x
Wear Industries PLC Packaging
9 OASIS Abyssinia Garment
x x
PLC
10 TRIO CRAFT PLC x x Garment
11 Wossi Garment PLC x x Garment
12 Lusy Garment Garment
x x
Industries PLC
13 Tamra Techno Packaging
x x
packaging PLC
14 Belay ab Motor x x Assembling
15 Mulat Garment PLC x x Garment
16 Hafeda PLC x x Garment
17 Electronics
and
Delnesaw Nebret x x
multimedia
devices
18 Elfnesh Zelalem
Shoe & Leather
Products
x x Leather
Manufacturing
/Ramsay Shoe
Factory
19 Hamlin Trading PLC Agricultural
x x
inputs trading
20 Omedla Wood and
Rented for
Metal Works
x x office & Store
Enterprise (Mr.
by WFP
Belay)
21 Standard Last Shoe form
x x
International PLC /Mold
Total 18 0 3 3 14 4
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A. Questionnaire
Data Collection Instrument
Prepared by EIPP-JICA research team
Title: Local Companies Challenge and Support Framework in the Industrial Parks
I. General Background
1.1 Name of the Company ……………………………
1.2 Ownership Sole owner Private Limited Company (PLC)
Share Company (SC) Other (Please specify) …………..
1.3 What is or are the origin or nationality of company owner(s)?
Domestic Foreign + Domestic
1.4 In which investment sector your company engaged in?
Textile/Garment/Apparel Agro-processing
Pharmaceutical Other (Please specify) ……………..
1.5 Please sate the original registration of your company …………….
1.6 Please state your company year of establishment …………..
1.7 What is your business type?
1.8 Please mention your company actual and plan production amount and number of employees
Item Actual Plan
Production amount
Number of employees
II. Challenges Faced by Local Companies

2.1 What kind of challenges your company faced? (You can state more than one challenge)
Alternatives
No. Types of Challenge Definitely Possibly Moderately Extremely
not an issue not an issue an issue serious issue
1 Raw material procurement
2 Supply of manpower
3 Sales/marketing
4 Logistics/transportation
5 Customs service
6 IP’s infrastructure/utilities
7 External infrastructure
8 Finance
9 Other (please specify)
46 | P a g e
2.2 Does your company unable to overcome the following challenges? (You can state more
than one challenge)
Alternatives
No. Types of Challenge Not an Remarks
Yes No
issue
1 Raw material procurement
2 Supply of manpower
3 Sales/marketing
4 Logistics/transportation
5 Customs service
6 IP’s infrastructure/utilities
7 External infrastructure
8 Finance
9 Redressing incentives
infringements such as knowledge
and technology transfer
10 IP management
III. Support for LCs

3.1 What kinds of support your company needed?
Alternatives Remarks
No. Types of Challenge
Yes No
1 Shed rental price adjustment
2 Shed rental price payment in local currency
3 Financial (loan) support
4 Technical (training) support
5 Market linkage
6 Special incentives for LCs
47 | P a g e
Contents
Part I: Introduction .............................................................................................................................. 1
1.1 Background........................................................................................................................... 1
1.2 Rational for Establishing Logistic Park ................................................................................... 1
1.3 Objectives of this Document ................................................................................................. 2
1.4 Scope of the Document ......................................................................................................... 2
1.5 Structure of this Document ................................................................................................... 3
Part II: Logistic and Logistic Park .......................................................................................................... 5
2.1 Overview .............................................................................................................................. 5
2.2 The Notion of Logistics .......................................................................................................... 5
2.3 Strategic Consideration for Logistic Parks .............................................................................. 7
2.4 Basic Facts in Logistic Consideration in Ethiopia .................................................................... 7
Part III: Site Selection ......................................................................................................................... 12
3.1 Introduction........................................................................................................................ 12
3.2 Methodology ...................................................................................................................... 12
3.3 Site Selection ...................................................................................................................... 13
Part V: Assessment of Identified Sites ....................................................................................... 26
4.1 Introduction ............................................................................................................................. 26
4.2 Prioritization ............................................................................................................................ 27
ii | P a g e EIPP‐JICA
Part I: Introduction
1.1 Background
Over the past two decades, Ethiopia has been demonstrating a strong economic performance
with a double digit Gross Domestic Product (GDP) growth. The Prevailing stable macroeconomic
condition and national policy management have helped to achieve strong economic growth
with average annual growth rates ranging from 7% to 11%. Ethiopia is now towards the end of
GTP II period, that anticipated to double the county’s GDP 2020. In response to the national
policy and strategic programs, in recent years the manufacturing sector has got priority in
Ethiopia. Currently, there are about 29 industrial parks owned by private and government
enterprise. Majority of the industries are specialized in textile and garment sector.
To accelerate industrial development and meets the vision of becoming an industrial hub in the
horn of Africa, logistic is an indispensable component. Though, the manufacturing sector gets
priority by the government, there is a lacuna and chronic problem in the logistic related
activities. This situation makes Ethiopia to incur extra cost for the port and reduce the
competitiveness in the global market.
This document tries to explain the notion of logistic parks; identify the prevailing logistic
problem that prevail in Ethiopia in general and in the eastern economic corridor of Ethio‐
Djibouti railway line in particular; identify and label potential logistic park sites using scientific
selection criteria; and propose best suited logistic park sites at Sebeta, Indode, Mojo, Adama,
and Dire Dawa.
1.2 Rational for Establishing Logistic Park

The need for logistic parks is unequivocal for landlocked counties like Ethiopia. Logistic Parks
improve economic growth over a broader economic spectrum as compared other types of
developments. It provides low transportation costs and a high transportation service level.
1|Page EIPP‐JICA
With clusters, transportation companies can deploy larger trucks, and trains, thereby bringing
down costs.
Another benefit of logistics Parks is that they generate new jobs beyond logistics. There will be
a whole range of activities within and around logistic Parks. They create jobs for people at the
bottom of the ladder, not only for highly trained experts and engineers. The parks
accommodate A broad, stable base of non‐offshorable local jobs, as well as a wide range of
complementary economic activity in repairs, maintenance, packaging, and manufacturing.
1.3 Objectives of this Document

The overall objective of this document is to identify the best suited logistic site on the eastern
economic zone that runs from Sebeta to Dewele. The document has the following specific
objectives:
 To set scientific criteria for the selection of potential logistic parks development sites;
 To identify, designate and prioritize potential logistic parks in conformity with the
national, urban and sectorial plans;
 To identify and propose minimum of two logistic sites in Sebeta, Indode, Mojo, Adama
and Dire Dawa
1.4 Scope of the Document

This document mainly focuses on identification of logistic parks along the Ethio‐Djibouti railway
line and road transport corridor. It examines different scientific methods to identify suitable or
appropriate logistic park area.
The spatial delimitation of this document is on the eastern economic corridor that runs from
Sebeta to Dewele. (See Map 1) Here the document gives special emphasis to station based
urban centers1 of Sebeta, Indode, Mojo, Adama and Dire Dawa.
1
Art. 2 (8) of Proc. No. 574/2008 define Urban centers as any locality with established municipality or having a
population size of 2000 or above inhabitants, of which 50% of its labor force is primarily engaged in non‐
agricultural activities
2|Page EIPP‐JICA
Map 1: Study Area for Logistic Park Site Selection; Source: IPDC, EIPP, 2019
1.5 Structure of this Document

This preliminary study has been systematically structured in to five parts to understand the process of
selecting appropriate logistic sites that has been followed in formulating the strategic advice presented.
Part I ‐ Introduction: (Current section) provides the background and the reasons for preparing
this document. It also provides an outline of the document structure.
Part II ‐ Description of Logistic Parks: defines and explain the notion of logistics park and
presents a description of the features needed to facilitate such a land use.
Part III ‐ Site Selection: details the methodological processes involved in identifying suitable sites
for the location of a logistics park. This section also identifies a number of suitably
located sites.
3|Page EIPP‐JICA
Part IV ‐ Assessment of Identified Sites: Outlines the characteristics of the different sites
identified as potentially suitable and compares their relative merit using a weighted
Performance Assessment Matrix.
Part V ‐ Conclusion: Provides an overview of the characteristics of the site identified as the most
suitable for the location of a logistics park and details the benefits and constraints of the
site relative to the other sites identified as potentially suitable.
4|Page EIPP‐JICA
Part II: Logistic and Logistic Park
2.1 Overview
Ethiopia is a highly populated land locked country in the world. Ethiopia is striving to achieving
the lower middle‐income country level by 2025.The new administration is working on
improving “Doing Business” in Ethiopia. One of the “Doing Business Indicators” focuses on
Trading across borders. It is agreed that it is important to work on time & cost to export
products of comparative advantage. Making movement of materials (Logistics) as efficient and
effective as possible is essential for doing business. The results that we get from improving the
logistic sector is significant, as they directly affect customer service, costs.
Ethiopia has high hopes for manufacturing and exports, but the country will not be competitive
until it solves its logistical problems. To that end, the state is starting to expand the sector.2
The government is trying to improve efficiency and reduce logistics costs by as much as possible.
The parks are expected to serve four key functions: Freight aggregation and distribution,
multimodal freight movement, storage and warehousing, and value‐added services such as
custom clearances.
Logistics costs as a percentage of total value of goods stands at 20 %, compared with 7‐8% in
developed nations. This proportion has increased over the past few years, indicating structural
inefficiencies. Also, the average speed of freight vehicles is about 35‐40 kmph, which is very
slow adding to the freight cost.
2.2 The Notion of Logistics

According to Asgari (2009) logistic is defined as “the means and methods related to the physical
organization of a company, and specially the flow of materials before, during, and after the
2
https://www.theafricareport.com
5|Page EIPP‐JICA
production.” Logistics consists of identifying the steps in a production value chain, ensuring just
in time delivery of the inputs for an assembly process, coordinating the flow of information, and
the scheduling of delivery. 3
Rushton, et. al. (2010) defines logistic as: efficient transfer of goods from the source of supply
through the place of manufacture to the point of consumption in a cost‐effective way whilst
providing an acceptable service to the customer (Rushton, Croucher, & Baker, 2010). Similarly,
Chartered institute of Logistic and Transport of UK (2005) defined logistic as the positioning of
resource at the right time, in the right place, at the right cost, at the right quality.
Logistics involves the integration of the production and delivery of a product or service in order
to ensure efficient and effective management. One quite widely accepted view shows the
relationship as follows (Asgari, 2009)
Logistics = Supply + Materials Management + Distribution.
Figure 1. Components of Logistics
3
Merriam Webster dictionary
6|Page EIPP‐JICA
2.3 Strategic Consideration for Logistic Parks
Strategic considerations form an important element in selecting the appropriate location of a
logistics park. Such strategic considerations center on the following items:
 International, national, regional and local location and links
The availability of high‐quality transport linkages between local, regional, national and
international freight destinations is essential to ensuring the viability of a logistics park.
 Proximity to an urban center
A Logistics park requires a degree of proximity to an urban center in order to connect to
the infrastructural services (electrical, water, waste etc.) present at that center.
Proximity to an urban center also provides a potential pool of labor, existing allied
services providers (catering, building, mechanical parts etc.) and the residential, retail
and civic amenities necessary to facilitate the employees of the logistics park.
 Identification of current need and/or future benefit
The establishment of a logistics park can be driven by an identified current need or via
an assessment of the future benefit that might accrue from such a facility.
 Land availability
The availability of significantly sized parcels of land is an important pre‐requisite for the
location of a logistics park.
 Environmental and Social Issues
The site’s environmental and social conditions need to be evaluated. Conditions like
Slope, ground and surface water, protected areas.
2.4 Basic Facts in Logistic Consideration in Ethiopia

a. Dry Ports
Ethiopia is suffering with lack of standard logistic service; however, the existing dry ports has been
serving as logistic centers by providing many activities such as customs clearance, temporary storages,
transshipment of goods, stuffing and un‐stuffing of containers, consolidation of less than container loads
and maintenance and repair of containers.
Currently there are 13 dry ports in Ethiopia under the supervision of the Federal Government, of these
seven are operational. (See Table 1) The full implementation of these dry ports has big impact in
7|Page EIPP‐JICA
reducing imported goods dalliance form sea port and transit costs. However, there is a lacuna of modern
logistic service provision that meets the existing and upcoming demands of the industry, agriculture and
service sectors.
Table 1: List of Operational and Planed Dry Ports

No. Dry ports Name Area in hectare Status
1 Mekele 3.05 Operational

2 Semera 2.5 Operational
3 Wereta ‐ Planed
4 Kombolcha 4 Operational
5 Mojo 29.12 Operational
6 Nekemte ‐ Planed
7 Jimma ‐ Planed
8 Hawasa ‐ Planed
9 Jigjiga ‐ Planed
10 Moyale ‐ Planed
11 Addis Ababa/Kaliti 6.2 Operational
12 Gelan 4.5 Operational
13 Dire Dawa 0.78 Operational
b. Infrastructure
Although Ethiopia is a landlocked country,
the geographical location makes the
country strategically connected with three
continents: Europe, Asia and Africa as well
as the current political stability at the
national level, peaceful diplomatic relation
with all neighboring countries and free
trade treaty has comparative advantages
for doing business and a destiny for
investors.
To make the business climate pleasant for

investors, Ethiopia has been taking an
initiative to modernize the logistic
environment. The three vital elements for
logistic service are: infrastructure, human
capital and ICT. Map 2 demonstrates basic
infrastructure (road, railway, sea ports and
frights stations) for logistic service delivery.
Map 2: Road and Railway Networks of Ethiopia
Source: IPDC & EIPP, 2019
8|Page EIPP‐JICA
Railway transport has a direct
nexus to industrialization. Due to
its salient traits of: carrying
heavy goods for a longer distance
with in shortest time and
reasonable price, as well as
becoming an eco‐friendly modes
of transport, the Ethiopian
government has designed and
constructing railway lines with
the aim of creating railway
network in the country. Map 3
demonstrates functional, under
construction and future planed
railway lines.
Map 3: Existing and Planned Railway Networks of Ethiopia

c. Industrial Parks
Sectorial transformation is one of
the strategies to achieve the
national vision of reaching middle
income country in 2025. IPs has
playing an indispensable role for the
realization of the national vision,
transforming from agrarian to
industrial, attracting FDI, technology
transfer and jobs creation.
To make IPs functional and brings

the intended desire modern logistic
service is mandatory. Map 4 depicts
the existing IPs administered by
IPDC. Of the 11 functional IPs 5 are
existed on the eastern economic
corridor that runs from Addis Ababa
to Djibouti. Map 4: Road and Railway Networks of Ethiopia
9|Page EIPP‐JICA
d. Urban Cluster
The National Urban Development

Spatial Plan (2015) indicates that one
of the biggest urban based economic
clusters is located at the center which
encompasses the central and the
south east part of Ethiopia. There is
also an urban based economic cluster
in the eastern part of Ethiopia. (See
Map 5)
This indicates that there should be

modern logistic parks that fasten
industrialization and business
transaction.
Map 5: Urban & Economic Clusters in Ethiopia

Source: Adopted form NUDPS, 2019
If we examine the nature of urban

clusters and economic development
corridors of the country, there will be
high level of urbanization in the
central and south central part of
Ethiopia; and it creates an urban‐
urban continuum as well as an urban
based development corridor on the
eastern direction. (See Map 6)
Map 6: Urban Clusters in Ethiopia

Source: Adopted from NUDPS, 2019
10 | P a g e EIPP‐JICA
The prevalence of industrialization at
the central and south eastern parts of
Ethiopia has been backboned by the
eastern part trade corridor that links
the central part of Ethiopia to the
port are the prominent driers for
rapid growth of urbanization. (See
Map 7)
Therefore, it is mandatory to design

and develop logistic parks along the
eastern economic corridor with a
sense of urgency.
Map 7: Drivers of Urbanization in Ethiopia

Source: Adopted from NUDSP, IPDC & EIPP, 2019
e. Environment
The Proposed logistic

park must be eco‐friendly
in every aspect: site
location, development
and operation and
management. Therefore,
in site selection phase
environmentally sensitive
areas like water body
and preserved areas
were taking in to
account.
Map 8: Natural Hazards Prone Areas Map of Ethiopia

Source: Adopted from NUDSP, IPDC & EIPP, 2019
Part III: Site Selection
3.1 Introduction
This section discussed the multiple criteria for logistic site selection. To develop multiple criteria for ideal
logistic park site selection the document reviewed: Industrial Parks Site Selection Check List (IPDC, 2015),
Industrial and Logistic Site Selection Factors in Mexico (McCadden, 2015), Identification of Suitable Sites
for the Location of a Logistics park in the Greater Carlow Town Area and other national documents like
National Urban Development Spatial Plan (2015), Structural Plan Manual (2012), Manual for the
Preparation and Implementation of Basic Plans (Structure Plans) of Small Towns of Ethiopia (2010).
3.2 Methodology
The document employed multiple criteria logistic site selection approach. This approach tries to identify
the comparative advantages of the selected sites. To effectively utilize this multiple criteria approach,
the document used descriptive and explanatory methodology as well as document review and field
survey methods. To confirm the suitability of selected logistic park sites, space syntax analysis was used.
Space syntax approach utilize the so‐called global integration (Rn) method to measure the relative
accessibility of a space within a spatial system measuring how many locations in the city are relatively
strongly integrated (connected) and how many are less integrated and probably belong to the city fringe.
Higher integration values are assumed to correlate with higher rates of movement and activity. Spaces
with few connections that lie “deep” within a system have lower integration values and often
experience lower levels of activity. In the space syntax graphic, red lines represent the highest
integration value; dark blue lines represent the lowest integration value, in other words, areas with the
highest level of segregation.
In order to address the intended objectives on logistic sites selection the document used both primary
and secondary data sources.
3.3 Site Selection
General Background
All the proposed logistic parks will be located along the Ethio‐Djiboity railway line, which is expected the
corridor as the catalyst and engine for future economic development of the country. The new railway
line has a potential for economic development. The new railway line that runs from Sebeta to the port
of Djibouti has a total length of 743km of this 661.3km (88.96%) existed with in the Ethiopian
Jurisdiction. This railway line has an enormous potential for the industrialization and reducing rental
costs for goods at the port.
The Ethiopian government has also planned and implemented new road construction on this economic
corridor. The FDRE government has already secured fund from the African Development Bank towards
the cost of Ethiopia –Djibouti Transport Corridor Project Phase I. This project encompasses design &
builds expressway extension 60km from Adama.
Station section Distance Between Study Areas
From To Distance in Km From To KM
Sebeta Lebu 13.322
Sebeta Indode 31.631
Lebu Indode 18.309
Indode Bishoftu 37.61
Indode Mojo 58.263
Bishoftu Mdjo 20.653
Modjo Adama 23.361 Mojo Adama 23.361
Adama Feto 41.171
Feto Methara 63.122 Adama Awash 157.15
Methara Awash Sebat Killo 29.496
Awash Sebat Killo Sirba Kunkur 43.4
Sirba Kunkur Mieso 48.28
Adama Dire Dawa 325.589
Mieso Bike 35.56
Bike Dire Dawa 64.56
Dire Dawa Arawa 53.068
Arawa Adigala 61.778
Adigala Aysha 50.95
Aysha Dawele 40.8
Dawele Alishabeh 20
Alishabeh Holhol 46
Holhol Negad 32
743.44
Railway Station Character
Station Name Station Type Distance from the Port

Fright Passenger
Sebeta √ √ 743.44
Labu √ 730.118
Indode √ 711.809
Bishoftu √ 674.199
Modjo √ √ 653.546
Adama √ √ 630.185
Feto √ √ 589.014
Methara √ √ 525.892
Awash Sebat Kilo √ √ 496.396
Sirba Kunkur √ 452.996
Mieso √ √ 404.716
Bike √ 369.156
Dire Dawa √ √ 304.596
Arawa √ 251.528
Adigala √ 189.75
Aysha √ 138.8
Dawele √ √ 98
Alishabel √ √ 78
Holhol √ 32
Negad √ 0
The length of the whole international railway line from Sebeta to Nagad is 743.245km. According to
ERC the freight train will operate with an average speed of 80km/hr.
According to ERA data the total length of the road is 903Km with the average speed of 60km/hr
tariff of 0.047USD/ton/km.
Harbor 2010 G.C. 2015 2019

Djibouti port 93% 75%
Berbera port 5% 15%
Port Sudan 2% 10%
Modal share
Mode Addis Ababa – Adama – Awash Sebat Awash Sebat Kilo – Djibouti
Adama Kilo
Truck 58% 20% 15%
Train 42% 80% 85%
The logistic park site selection criteria are systematically categorized in to:
a) Logistics infrastructure: proximity to main highways, railroads, airport, and ports

b) Proximity to industrial parks
c) Proximity to an urban center
d) Availability of appropriate land (slop, size)
e) Availability of utilities (Water, electricity and telecom)
f) Distance from environmental sensitive areas
Table 2: Basic Assumptions
Infrastructure Unit Value Rational

r800 800m is the average walking distance (400‐1200m). For
two truck that drives with 40‐50km/h speed, 150m length
Highways
is sufficient to turn round and stop to check point loading
and unloading goods
r2000 This meter radios is economically sound to construct
Railway line
new line that connects logistic site with the rail line
r1000 1000m radius should be preserved for commercial
Railway Station Meter activities (TOD)
r30 This 30r buffer is essential to prevent radioactive and
High tension electric line
other related risks
r2500 This meter radios is economically sound to construct
Power Sub‐Station
new line for the logistic park
r50 This 50r buffer is essential to protect the water body
River
form pollution and to protect the site from flooding
Utilities
 Water: will be developed with in the logistic parks using ground water or the nearby rivers.
 Telecommunication: all the selected logistic sites are existed within a reasonable radius from the
city and telecom center; thus fiber cables will be dragged from it with in a minimum cost
 Power: all the selected logistic parks are existed with in 2000m radius. It is economical to
dragged power from the nearest station.
Using these assumptions minimum of two potential logistic park sites are identified for each study area
using GIS software. In the following pages each sites will be examined.
Space Syntax
To take note of essential spatial information in the street layout: network connectivity, network distance,
angular distance, and so on, which, in turn, have been shown to have a strong influence on congestion,
street users behavior, and other influences on logistic park site selection.
Space syntax is a set of analytical tool for quantifying and describing the interaction between human and
built environment (Hillier and Hanson 1984). Space syntax measures the accessibility of urban street and
building configuration, initially based on the assumption that people move to areas where they can see,
describing how the street network is connected (Hillier et al. 1993b).
As compared to the traditional geographical network analysis, space syntax is a dual approach, which
identifies streets as nodes and intersections as links (Batty 2004). Two important measures of spatial
accessibility: (a) integration, also known as closeness, and (b) choice, also known as betweeness. The
team measure integration at different radii global N m (the entire city grid model).
Studies indicate that, the different radii can be associated with different uses of the grid. For example,
400–1200 m is the walking scale and 1600–2000 m is the cycling or running scale, while above 2500 m is
automobile scale. Choice of radius also depends on the area of study. Larger study areas obviously
require a wider range of radius. Taking these scientific studies as a base for analysis the team used
global integration of Rn analysis for each selected areas using space syntax.
A. Sebeta
It is located at the southwest

of AA & at the edge of the
new railway line.
Population ‐
Total Area ‐ 623.28km2
Pop. Density ‐ p/km2
Proposed Logistic Sites
‐ Both ‘A’& ‘B’ are existed
very close to the highway
and rail station.
‐ Unlike site ‘A’, site ‘B’
does not have sufficient
land for future expansion
& affected by high tension
lines Map 9: Proposed Logistic Sites for Sebeta
Map 10: The relative position of LPs from Kilinto and BLIP
Table 3: Logistic Park‐ Multiple Criteria Matrices of Sebeta

Criteria Variables Site ‐ A Site ‐ B Remarks
Highways 350 1km
Railway line 850 250m
Logistic Railway Station 330m 100m
Infrastructure Airport 26.5km 25.4km Air distance from Bole
Power 1.2km 1.2km
Ports 743.44
Industrial Parks 32.5 31.8
Proximity to
Urban Center 6.4km 5.5km
Site Area/ha
A 65.3
B 61.4
 Site ‘A’ is larger than ‘B’
 in both sites majority of the area lays
within desired slope range (2.1‐10%) for
logistic parks
Map 11: Slope Analysis Map of Proposed Logistic Sites for Sebeta
B. Indode
It is located at the
southern part of AA.

‐ Both ‘A’ & ‘B’ are
existed very close to
the highway and rail
station.
‐ Site ‘A’ is encircled
with transportation
lines
‐ Unlike site ‘A’ site ‘B’
have sufficient land
for future expansion;
however, site ‘B’ will
have a potential to
affect the downstream
Map 12: Proposed Logistic Sites for Indode
& lake.
Table 4: Logistic Park‐ Multiple Criteria Matrices of Indode

Highways 1km 1km
Railway line 300m 750
Logistic Railway Station 600m 450
Infrastructure Airport 14km 15.3km Bole International Airport
Power
Ports 711.809
Industrial Parks 15.9km 17km
Proximity to
Site Area/ha
A 97
B 112
 Site ‘B’ is larger than ‘A’
A
logistic parks
B
Map 13: Slope Analysis Map of Proposed Logistic Sites for Indode
A
Map 14: Global Integration Map of Indode Rn
C. Mojo
southeastern direction of AA.
Population ‐ 43,479
Total Area ‐ 4536km2
Pop. Density ‐ …p/km2
‐ Both ‘A’& ‘B’ are existed
very close to the highway
and rail station.
‐ Each site are very near to
the dry port
‐ Each land have almost
equal area
‐ Site ‘A’ is encircled with
major roads and closest to
the dry port.
‐ Site ‘B’ will affected by
Map 15: Proposed Logistic Sites for Mojo
high tension lines
Table 5: Logistic Park‐ Multiple Criteria Matrices of Mojo

Highways 100m 70m
Railway line 102km
Logistic Railway Station 2km 2.1km
Infrastructure Airport 60km 59.8km Bole International Airport
Power
Ports 653.546
Industrial Parks 54.5km 54.7km
Proximity to
Site Area/ha
A 93.5
B 97.5
A
logistic parks
Map 16: Slope Analysis Map of Proposed Logistic Sites for Mojo Source: IPDC & EIPP, 2019
A
Map 17: Global Integration Map of Mojo Rn
D. Adama
southeastern direction of
AA.
Total Area ‐ 29.86km2
Pop. Density ‐ 10,850p/km2
Proposed Logistic Sites B
‐ Site ‘B’ is located near
to the transportation
lines & larger than site
‘A’;
‐ Site ‘A’ will affected by
high tension lines
‐ Taking the planed
expressway road A
development site ‘B’ is
Map 18: Proposed Logistic Sites for Adama
appropriate for logistic
Map 19: The relative position of LPs from Adama IP
Table 6: Logistic Park‐ Multiple Criteria Matrices of Adama

Highways 300m 350m
Railway line 2.5km 2.8km
Logistic Railway Station 3.2km 3.5km
Infrastructure Airport 79.4km 80.3 Bole International Airport
Power
Ports 630.185
Industrial Parks 3.9km 2.6km
Proximity to
Site Area/ha
A 61.8
B 140
logistic parks
Map 20: Slope Analysis Map of Proposed Logistic Sites for Adama; Source: IPDC & EIPP, 2019
A
Map 21: Global Integration Map of Adama Rn
E. Dire Dawa
Dire Dawa is one the federal city
located in the eastern part of
Ethiopia.
Total Area ‐ 1213km2
Pop. Density ‐ 187.14p/km2
‐ Both sites are located within
the major road and rail line.
‐ Site ‘B’ is located near to the
railway station, but does not
have sufficient place for
expansion;
Map 22: Proposed Logistic Sites for Dire Dawa

Map 23: The relative position of LPs from Dire Dawa IP
Table 7: Logistic Park‐ Multiple Criteria Matrices of Dire Dawa

Highways 1.3km 1.5km
Railway line 300m 140m
Logistic Railway Station 2.5km 2km
Infrastructure Airport 11km 10.6km Dire Dawa Airport
Dry port 1.6km 500m
Ports 304.596
Industrial Parks 2.8km 3.4km Dire Dawa IP
Proximity to
Urban Center 3km 2.5km Melka Jebdu
Site Area/ha
A 71.3
B 42.9
 Site ‘A’ is larger than ‘B’
logistic parks
Map 24: Slope Analysis Map of Proposed Logistic Sites for Dire Dawa; Source: IPDC & EIPP, 2019
A
B
Map 25: Global Integration Map of Dire Dawa Rn
Part V Assessment of Identified Sites
:
4.1 Introduction
This part critically evaluates the selected two options and chooses one best suited logistic park
site from each study area. The site selection process used an iterative multiple criteria approach
that examines all the parameters enshrined in part 3.2 and other additional elements like the
site potential for future development that serve as a node and economic hub, the multimodal
share of the area, ground distance between each study areas, and the geopolitical position of
the study area.
The site evaluation process has four stages:
i) Parameter setting: by referring different national and international special planning

documents, the team set objective criteria to evaluate each sites;
ii) assignment of Score: based on the evaluation criteria the team gives score for each
site;
iii) Selection: then select the site with the highest score form each study area;
iv) Prioritizing: after finalizing the best suited site for logistic park, the team proposed
which site develops first using H‐Form method.
Recent studies indicate that railway, road and air transports are complimentary rather than
competitive. Due to this in the developed nations planning practice they make synergy between
these mods of transports. These infrastructures are intrinsic elements of logistic park. Thus, the
team gives high value to the nearest site and low value to the farthest site. The other selection
criterion is proximity to dry port. Logistic park and dry port have providing similar service, they
differ solely in scale. As a result the team gives more weight for those sites, which locates far
away from the existing dry ports. There is a direct nexus between logistic park and Industrial
Parks. Therefore, the team gives highest value for the nearest site to the industrial parks and
vies versa. Accordingly, from Sebeta site‐B, Indode site‐B, Mojo site‐B, Adama site‐B, and Dire
Dawa site‐A are selected. (See Table Annex A and Summary Table of selected logistic parks)
4.2 Prioritization
It is known that developing all logistic park at a time is very expensive, hence the team propose
Sebeta and Indode should take the first priorities. Particularly, Sebeta should get the first
because it will serve as a logistic hub for the western and south western part of Ethiopia.
Summary Table of Selected Logistic Parks
City/Town Selected Site Rational

Sebeta B The area has potential for future expansion & will serve as distribution
hub for the western and south western part of Ethiopia
Indode B The site is conducive for future expansion
Mojo B Although the site is appropriate for LP, the existence of dry port nearby
makes the site unrealistic
Adama B Since the site is very close to IP and suitable for future expansion it is
appropriate for LP
Dire Dawa A The area is best suited for the requested LP
Annex – A
Potential Logistic Park Selected Sites Assessment Index
Sebeta Indode Mojo Adama Dire Dawa

Selection Criteria Value Score Rating
A B A B A B A B A B
0.0 ‐ 0.5km +++++ High
0.5 ‐ 1km ++++ High medium
Distance from
+++++ ++++ ++++ ++++ +++++ +++++ +++++ +++++ +++ +++ 1 ‐ 1.5km +++ Medium
Highway
1.5 ‐ 2km ++ Low medium
> 2km + Low
0.0 ‐ 0.5km +++++ High
Distance from
++++ +++++ +++++ +++++ + ++ + ++ +++++ +++++ 1 ‐ 1.5km +++ Medium
Railway
> 2km + Low
0.0 ‐ 0.5km +++++ High
Distance from
+++++ +++++ ++++ +++++ ++ ++ + + + ++ 1 ‐ 1.5km +++ Medium
Railway Station
> 2km + Low
0 – 15km +++++ High
15 ‐ 30km ++++ High medium
Distance from Air
+++ +++ +++++ ++++ ++ ++ ++ ++ +++++ +++++ 30 – 45km +++ Medium
Port
45 – 60km ++ Low medium
>60km + Low
>8km +++++ High
6 ‐ 8km ++++ High medium
Distance from Dray
+++++ +++++ ++ ++ ++ + ++ +++ + + 4 ‐ 6km +++ Medium
port
2 ‐ 4km ++ Low medium
0 ‐ 2km + Low
0 – 5km +++++ High
Distance from IP + + ++ ++ ++ ++ +++++ +++++ +++++ +++++ 5 ‐ 10km ++++ High medium
10 ‐ 15km +++ Medium
Sebeta Indode Mojo Adama Dire Dawa
Selection Criteria Value Score Rating
A B A B A B A B A B
15 ‐ 20km ++ Low medium
>20km + Low
2.1 ‐ 5% +++++ High
5.1 ‐ 10% ++++ High medium
slope ++++ +++++ +++++ +++++ ++++ +++++ +++++ ++++ +++++ + 10.1 ‐ 15% +++ Medium
>15.1% ++ Low medium
0 ‐ 2% + Low
120 ‐ 90ha +++++ High
90 ‐ 60ha ++++ High medium
Area ++++ ++++ +++++ +++++ ++++ +++++ ++++ +++++ ++++ +++ 60 ‐ 30ha +++ Medium
30 ‐ 20ha ++ Low medium
<20ha + Low
Sum 31 32 32 32 22 24 25 27 29 25 Maximum = 40
Annex – B
Existing Dry Ports Performance
Holding Start Annual performance

No Name Category Area /ha Unite
capacity/ha Operational
2008 2009 2010 2011 GR
1 Mojo Old 29.12 TEU* 630 2009 484,163 534,375 520,167 507,776 0.05
2 Gelan Roro Old 4.5 # 377 2013 13,153 17,517 10,955 6,845 (0.48)
3 Kombolcha Old 4 TEU 472 2013 12,279 17,372 11,752 18,852 0.54
4 Mekele Old 3.05 TEU 472 2013 25,831 26,342 29,008 57,782 1.24
5 Kaliti Old 2.67 TEU 630 73,440 81,477 73,947 0.01
6 Semera Old 2.5 TEU 472 2012 3,781 8,267 7,229 0.91
7 Dire Dawa Old 0.78 TEU 472 2013 17,664 13,954 16,612 (0.06)
8 Hawasa New NA TEU 2017
9 Woreta New NA TEU 2020
*Twenty‐Foot Equivalent Unit
Annex – C
Existing Industrial Parks in Ethiopia
Bole Lemi
Industrial Park ‐ 172 Addis Ababa Addis Ababa Garment Operational
I
Hawassa 400ha (140 in
SNNP Hawassa Garment Operational
Mekele 1000 (75 in
Tigray Mekele Garment Operational
Kombolcha 700 (75 in
Amhara Kombolcha Garment Operational
Jimma Industrial 1000 (75 in
Oromia Jimma Garment Operational
Park phase 1)
Assembling,
Adama 2000 (365 in
Oromia Adama food processing Operational
& Garment
Bole Lemi
Under
Industrial Park ‐ 181 Addis Ababa Addis Ababa Garment
construction
II
Pharmaceutical,
Kilinto Industrial Under
Federal 279 Addis Ababa Addis Ababa Medical
Park construction
Government equipment
/IPDC/ Assembling,
Dire Dawa 4187 (150 in Under
Dire dawa Dire Dawa food processing
industrial Park phase 1) construction
& Garment
Bahir Dar 1000 (150 in Under
Amhara Bahir Dar Garment
Industrial Park phase 1) construction
Construction
Arerti Industrial Planning
150 Amhara Arerti products, home
Park stage
appliance
Garment
Debre Birhan 1000 (100 in Debre Under
Amhara apparel & agro
Industrial Park phase 1) Birhan construction
processing
Aysha Industrial 1000 (100 in Planning
Somali Aysha Live stock
Park phase 1) stage
Assosa 1000 (100 in Benshangul/ Planning
Assosa Pulp paper
Industrial Park phase 1) Gumuz stage
Semera 2000 (75 in Free trade Planning
Afar Semera
Industrial park phase 1) export stage
Mojo Leather Planning
290 Oromial Mojo Leather
City stage
Regional Bure Integrated Under

260.35 Amhara Bure Agro‐processing
Government Agro Industrial construction
Park
Bulbula
Planning
Integrated Agro 263.09 Oromia Bulbula Agro‐processing
stage
Industrial Park
Yirgalem
Under
Integrated Agro 214.86 SNNP Yirgalem Agro‐processing
construction
Industrial Park
Baeker
Under
Integrated Agro 258.62 Tigray Agro‐processing
construction
Industrial Park
Eastern
500 Oromia Dukem Various Operational
Industrial Zone
Huajian Light Shoes & Partly
138 Addis Ababa Addis Ababa
Industry City Garment operational
Modjo George
Under
Shoe Industrial 50 Oromia Modjo Leather
Constraction
Park
Private Planning
CCECC 380 Dire Dawa Dire Dawa Various
Investors stage
Partly
CCCC 100 Amhara Arerti Various
operational
DBL Industrial Textile &
PLC Garment
Velocity
Textile &
Apparetz 176.5 Tigray Mekelle Operational
Garment
Companies PLC
ICT Park:
Land and Property Valuation
EIPP-JICA June, 2021

Executive Summary
In a third-world country like Ethiopia, almost all developments are coupled with land and the way land is treated.
Depending on the size, location, topographic features, anticipated development, etc. various parcels of land
might have the same economic advantages. The anticipated use of land determines the types of conditions
needed on the land to make it more suitable. To avoid unnecessary consumption of land and to result in the
best and highest use, land grading should be conducted before the beginning of the development phase.
Various attempts to guide the development of the ICT Park have been made since its establishment. IPDC has
conducted “land grading and property pricing” two years ago. However, it has not been very successful in
allowing the ICT Park/IPDC to attract investment and benefit from the Lease and rental prices. Although some
of the shortfalls are the results of the repetitive reorganization, the outdated land grade and the rental price
have also adversely affected the amount of relevance. Hence, considering relevant changes on the ground and
anticipated developments, this document focused on proposing a land grade and property prices for the ICT
Park. If strictly followed IPDC will be able to facilitate, guide, and mobilize additional resources for the
development.
In the process, data was collected through both primary and secondary data collection methods. Face-to-face
interviews, discussions with concerned stakeholders, and review of relevant documents were parts of the
process. “Kobo toolbox” has also been used to document site surveys.
The immovable property assessment of the ICT Park has shown that around 200ha of land is located in the ICT
Park compound; of this, the total leasable area has been found to be around 107.55ha ( 55.39%) of the total
area. In addition, the ICT park has been constructed buildings that will serve for generating income through
renting office space within 4.6ha of land. To propose a realistic leasable price and rent amount, the document
used the three most known and applicable methods, i.e. cost or contract method, account or profit method, and
spatial analysis method. The cost method examines the entire expenses spent for development and it also
includes the future development cost to fulfill infrastructure demand. The accounting method discussed the
viability of the park using two options based on the role of IPDC/ICT Park in the development. The last method
critically examines the existing situation of the Park and relies on the two options of account method as scenario
I and II cost to determine lease price.
The result depicts that, the cost and account method mainly focused on reimbursing expenses while the spatial
analysis method foresees IPDC to make profits. Therefore, it is recommended to apply the option I account-
based spatial analysis method for leasable land pricing. With regards to rental space pricing, the document
computes the two available building construction amounts that are computed under the cost recovery method
and Option II of the accounting method. As the option II account method anticipates future mixed building
development, the document used the cost recovery method to determine space rental price. The result indicates
that USD 9.06 to 9.49 per m2 a month, with a profit margin of 10% to 20% respectively. Taking into account the
prevailing market condition and international experience the team recommends a monthly rental price of USD
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9.06, 9.29, and 9.49 per m2 for domestic investors, joint foreign and domestic investors, and foreign investors
respectively.
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Acknowledgment
This ICT Park land valuation and Property pricing document were prepared by an Ethiopian Industrial Parks
Promotion/EIPP/ Japan International Cooperation Agency /JICA/ team, which composed of Ethiopian and
Japanese Nationals. The EIPP-JICA team gratefully acknowledges concerned IPDC Management Boards for
their elicit comments and thought-provoking debate. The EIPP-JICA team would like to extend its sincere
thanks to the ICT Park managements and all employees for their kind cooperation and for providing the
necessary information.
Contributions and helpful comments from: Mr. Sanduka Debebe (CEO of the IPDC), Mr. Shiferaw Solomon
(D/CEO of IPDC), Mr. Surafel Shimelis (ICT Park Standing Director of ICT Park), Mr. Dawit Feleke
(Transformation Team), Mr. Abeiy Mesfin (Finance Advisor), Mr. Birhan Alem (IPs Follow up and Support
Department Head) and Mr. Sintayehu Beyene (Transformation Team).
EIPP Japanese Core Team

1 Teddy Massanori Leader / Investment Promotion / Business Environment Improvement 1
2 Akifumi Watanabe Financial and Economic Analyst
3 Yutaka Taniguchi Industrial Park Planning & Infrastructure development
4. Kazuyo Kaneko Sub-Leader / Investment Promotion / Business Environment
Improvement 2
EIPP Ethiopian Core Team

1. Biruk Tilahun Urban Planner/ National Team Manager
2. Abiye Girma IT/ ICT/ DX Expert
3. Amanuel Atlabachew Urban/ Environmental Planner
4. Daniel Tesfaw Geographer/ Urban Developer and Manager
5. Getahun Habtamu Water Engineer/ Infrastructure Engineer
6. Kinfe Abzo Architect/Urban Designer
7. Tsion Lemawossen Industrial Parks Promotion Master Planner/ Chief Engineer
EIPP Supporting Staff

1 Bezawit Yohannes Industrial Park Promotion
2 Habtamu Dereje Industrial Park Promotion
3 Zobra Ahmed Industrial Park Promotion
Contents
Executive Summary..................................................................................................................................... i
Acknowledgment ...................................................................................................................................... iii
List of Tables ............................................................................................................................................ vi

List of Figures ..........................................................................................................................................viii
List of Equation.......................................................................................................................................viii
Acronyms ...................................................................................................................................................... x
PART ONE: Introduction ........................................................................................................................... 1
1.1 Background ................................................................................................................................... 1

1.2 Objectives...................................................................................................................................... 2
1.3 Scope ............................................................................................................................................. 2
1.4 Methodologies .............................................................................................................................. 2
PART TWO: ICT Park at a Glance............................................................................................................ 3
2.1 Description of the Area ................................................................................................................. 3

2.2 The ICT Park and “Digital transformation of Ethiopia” ................................................................. 4
2.3 ICT Park Function and Zoning ....................................................................................................... 5
2.4 Organizational Structure ............................................................................................................... 9
2.5 Development Phase .................................................................................................................... 10
PART THREE: Basic Conditions for Valuation of Revenue and Cost ................................................. 11
3.1 The current real-estate market surrounding ICT Park ................................................................ 11

3.1.1 Land Lease Price for Public Land ......................................................................................... 12
3.1.2 Building Selling Price ........................................................................................................... 13
3.1.3 Floor Area rental Price for private office buildings ............................................................. 14
3.1.4 Floor area rental price for public office buildings ............................................................... 15
3.2 ICT Park Costs and Fares ............................................................................................................. 16
3.2.1. Development Costs ..................................................................................................................... 16
3.2.2. Operation and Management Cost .............................................................................................. 17
3.2.3. Lease Cost ................................................................................................................................... 18
3.2.4. Utility Cost ................................................................................................................................... 18
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3.3 ICT Park Assets Inventory............................................................................................................ 18
3.3.1 Asset Inventory ................................................................................................................... 18
3.3.2 IPDC’s Experience of Immovable Property Valuation ......................................................... 24
PART FOUR: Countries Experience On ICT Park Property Valuation .............................................. 25
4.1 Countries Experience .................................................................................................................. 25

4.1.1 Regional countries............................................................................................................... 25
4.1.2 Global experiences .............................................................................................................. 30
4.2 Findings ....................................................................................................................................... 31
PART FIVE: Financial Analysis ............................................................................................................... 32
5.1 An Overview ............................................................................................................................... 32

5.2 Immovable Property Valuation Methods ................................................................................... 33
5.3 The Status of ICT Park Leasable Land and Office Space .............................................................. 34
5.3.1 The Status of ICT Park Leasable Land .................................................................................. 34
5.3.2 Rental Space of the Building ............................................................................................... 36
5.4 Financial Viability of the ICT Park Using Account Method .......................................................... 37
5.4.1 Cost ..................................................................................................................................... 37
5.4.2 Revenue .............................................................................................................................. 38
5.4.3 Cash Flow Analysis .............................................................................................................. 40
5.4.4 Sensitivity Analysis .............................................................................................................. 46
5.5 Leasable Land and Building Floor Area Pricing ........................................................................... 46
5.5.1 The Practice of ICT Park Leasable Land and Office Space Pricing ....................................... 47
5.5.2 Proposed Leasable Land and Floor Area Pricing for the ICT park ....................................... 48
5.5.3 Rental Space Pricing ............................................................................................................ 65
5.5.4 Sample Progressive payment for Lease Transaction .......................................................... 68
PART SIX : Conclusion and Recommendation ...................................................................................... 72
6.1 Conclusion ......................................................................................................................................... 72

6.2 Recommendations ............................................................................................................................ 72
Reference .................................................................................................................................................... 75
Annex .......................................................................................................................................................... 77
v|Page
List of Tables
Table 1: Current Development status ........................................................................................................... 7
Table 2: Lease Bench Mark Price ................................................................................................................ 13
Table 3:The Addis Ababa City Administration 28th Round Lease Auction Offer ......................................... 13
Table 4: Land or Building Market Selling Price around ICT Park ................................................................. 14
Table 5: Government-Owned Shed Rent Price ........................................................................................... 15
Table 6: IPDC Owned IPs Shed Rent Price per m2 ....................................................................................... 16
Table 7: Plote area developed by different stakeholders in the ICT Park .................................................. 17
Table 8: Operation and Management cost (2018 -2020) ........................................................................... 17
Table 9: ICT Park Maintenance Cost (2018-2020)....................................................................................... 17
Table 10: ICT Park Utilities Cost (2018-2020) ............................................................................................. 18
Table 11: Land-use Audit ............................................................................................................................ 19
Table 12. Constructed Buildings Status ...................................................................................................... 20
Table 13: Blue moon Ethiopia pricing (USD) ............................................................................................... 29
Table 14: Ice Addis pricing (USD) ................................................................................................................ 29
Table 15: Summary of prices....................................................................................................................... 31
Table 16: Types of Property Valuation and Pricing Methods ..................................................................... 34
Table 17: Net Leasable land Area of the ICT Park ....................................................................................... 35
Table 18: Available Buildings in the ICT Park .............................................................................................. 36
Table 19: Alternative Infrastructure Development Construction Cost ....................................................... 37
Table20: Alternative Price for Leasable Land Transfer .............................................................................. 39
Table21: Alternative Floor Area Rental Price for Renting Office Space ...................................................... 39
Table 22: Comparison of the Option I & II in the Account Method ............................................................ 40
Table 23: Option I - Development Cost & Revenue of ICT Park .................................................................. 41
Table 24: Option I – Profit from Operation & IRR within 10, 15, and 20 Years .......................................... 42
Table 25: Proportional Distribution of Planned Develop Land (in Ha) ....................................................... 43
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Table 26: Building Height, Built-up Area & Occupancy Rate of the ICT Park .............................................. 44
Table 27: Option II - Development Cost & Revenue of ICT Park ................................................................. 45
Table 28: Option II – Profit from Operation & IRR within 10, 15, and 20 Years ......................................... 45
Table 29: Sensitivity Analysis Resalts of IRR for Option I & II ..................................................................... 46
Table 30: ICT Park's Overall Infrastructure Development Cost .................................................................. 50
Table 31: Total development Cost recovery within 10 years ..................................................................... 51
Table 32: Total development cost recovered within 15 years.................................................................... 51
Table 33: ICT Park Infrastructure Development Cost Recovery in 10 Years ............................................... 52
Table 35: ICT Park Progressive Scheduler Based Lease Payment in 10 years Period (USD) ....................... 52
Table 36: ICT Park Progressive Scheduler Based Lease Payment in 15 years Period (USD) ....................... 52
Table 37: Account-Based Option I Lease Price (10 years) ........................................................................... 55
Table 38: Account-Based Option I Lease Price (15 Years) .......................................................................... 55
Table 39: Account-Based Option I Lease Price (20 years) .......................................................................... 56
Table 40: Account-Based Option II Lease Price (10 years).......................................................................... 57
Table 41: Account-Based Option II Lease Price (15 Years) ......................................................................... 58
Table 42: Account-Based Option II Lease Price (20 years) .......................................................................... 58
Table 43: Comparison Matrices for Spatial Analysis ................................................................................... 61
Table 44: Scenario I - Account Method Option I Based Spatial Analysis Lease Price ................................. 63
Table 45: Scenario II – Account-Based Option II Spatial Analysis Lease Price ............................................ 64
Table 46: Proposed Space Rental Price with 10%, 15% & 20% Profit Margin for Cost Recovery and Option
II of Account Method .................................................................................................................................. 67
Table 47: Account Method Option I – Progressive Payment for 15 years .................................................. 69
Table 48: Account Method Option II – Progressive Payment for 15 years ................................................. 69
Table 49: Spatial Analysis Method Scenario I – Progressive Payment for 15 years ................................... 70
Table 50: Spatial Analysis Method Scenario II – Progressive Payment for 15 years .................................. 71
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List of Figures
Figure 1: Location Map of the ICT Park ......................................................................................................... 4
Figure 2: ICT Park Zoning Map ...................................................................................................................... 6
Figure 3: The New ICT Park Structure ......................................................................................................... 10
Figure 4: Developmental Phase .................................................................................................................. 10
Figure 5: ICT Park and the surrounding area .............................................................................................. 11
Figure 6: Building Floor Area Market Rental Price ..................................................................................... 15
Figure 7: Land-use Plan ............................................................................................................................... 19
Figure 8: Well-maintained street with proper street lighting..................................................................... 21
Figure 9: Former Incubation Building and Newly Constructed G+7 Building ............................................. 21
Figure 10: Former MCIT Building ................................................................................................................ 22
Figure 11: Ethio-Telecom HQ Building ........................................................................................................ 22
Figure 12: Public Space Building & Open Space Area ................................................................................. 23
Figure 13: Secured lands without any further improvements/construction .............................................. 23
Figure 14: No of Tech hubs found in different African countries ............................................................... 26
Figure 15: The Innovation Hub, Pretoria, Lynnwood .................................................................................. 27
Figure 16: Kigali special economic zone...................................................................................................... 27
Figure 17: Cairo's smart village ................................................................................................................... 28
Figure 18: Blue moon Ethiopia .................................................................................................................... 28
Figure 19: International technology park Bangalore .................................................................................. 30
Figure 20: Technology park Malaysia.......................................................................................................... 30
Figure 21: ICT ParkLeasable Area (m2) ........................................................................................................ 36
Figure 22: Comparison of Horizontal VS Vertical Space Use Concept ........................................................ 44
Figure 23. ICT Related Business Companies Distribution within 6km Radius from Bole International
Airport ......................................................................................................................................................... 48
Figure 24: Slope Map of ICT Park ................................................................................................................ 62
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List of Equation
Equation 1: Down Payment ........................................................................................................................ 51
Equation 2: Progressive Payment ............................................................................................................... 54
Equation 3: Leasable Land Price Sating....................................................................................................... 62
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Acronyms
AACPPO Addis Ababa City Planning Project Office
AAICB Addis Ababa Industry Development Bureau
ANN Artificial Neural Networks
BAR Built-Up Area Ratio
BPO Business Process Outsourcing
CSA Central Statistical Agency
EIPP-JICA Ethiopian Investment Promotion Project-Japan International Cop ration Agency
FDRE Federal Democratic Republic of Ethiopia
FDRE-HoPR Federal Democratic Republic of Ethiopia-House of People Representatives
FDRE-PDC Federal Republic of Ethiopia-Planning Development Commission
ICT Information and Communication Technology
IRR Internal ret of Return
IT Information Technology
ITES Information Technology Enabled Service
KPO Knowledge process outsourcing
MCIT Ministry of Communication & Innovation technology
SDG Standard Development Guideline
SME Small and Medium Enterprise
SOPM Standard Operation Procedure Manual
VC Venture Capital
VSAT Very-Small-Aperture Terminal
x|Page
PART ONE: Introduction
1.1 Background
In the last couple of decades, the government of Ethiopia has set policies and strategies that could
transform the country’s economy through the advancement of industries and industrial parks. The
government positioned itself by formulating strategies and road maps on the development and operation
of industrial parks. The recent ten-year strategic plan targets “to bring quality based economic growth”.
The key development sectors of the plan are agriculture, manufacturing industries, mining, tourism, urban
development, innovation, and technology. (FDRE-PDC, 2021)
In an effort to accelerate national development, the ICT sector has been taken as a backbone. Hence, the
government has provided more focus to the ICT Park. The ICT Park establishment regulations give the
mandate to develop and operate information and technology parks and render services related to
information and technology (FDRE-HoPR, 2010). Article 5 (1) of the IPDC establishment proclamation gives
a broader mandate for the Corporation to develop and administer IPs’ lease developed land lease or
transfer through sale, constructions thereon (FDRE-HoPR, 2014).
As the Park is dedicated to ICT-related business, all the infrastructure and architectural development
activities should adhere to meet its business objectives. Therefore, based on the mandate given to
IPDC/ICT Park, all necessary land preparation and infrastructure development should be performed by
the ICT Park. Then ICT Park will transfer leasable land for investors using the value-for-money approach.
All in all the ICT Park is intended to develop the local ICT sector, attract foreign investment, create
employment opportunities and spur the participation of local companies in the global ICT Enabled Service
(ITES) market.
The need for the preparation of this document arises from:

• The expiration of the previous (2018) document
• The dynamic nature of the land value of the city
• The need to readjust the land price adhere to value for money principle
• To optimize the use of the scarce resource, i.e. land
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1.2 Objectives
The land is crucial for development. Therefore, the best and highest use of the limited urban land should
be given priority. All plot of land is not the same, as each is more suitable for certain foreseen
development. The anticipated use of land, determines the types of the condition need on the land to
make it more profitable.
ICT Park needs to have a new land grade with a system for constant updating, which takes into
consideration relevant changes on the ground and anticipated developments. IPDC will then be able to
facilitate, guide, and mobilize additional resources for the development.
Therefore, the major objective of the study is to propose appropriate leasable land and building space
rental prices for the ICT Park that ensure the sustainability of the Park.
The specific objectives include:
• To create more appropriate land lease benchmark prices

• To provide a basis for the creation of a land price system that will attract both domestic and
foreign investment
• To prepare a document that will set the rental and lease property price for ICT Park
1.3 Scope
The existing land grade of ICT Park has not been very successful in allowing IPDC to benefit from the Lease
and rental prices. Although some of the shortfalls are the results of the repetitive reorganization, its being
outdatedness has also constrained the amount of relevance. Hence, the scope of the document centers
on proposing a land and property prices and evaluation system for the ICT Park.
1.4 Methodologies
The overall approach of this study can be summarized as follows:
• Review of the current land grade and rental prices in the ICT Park
• Review of literature on current practices and methodologies used elsewhere
• Consideration on a new land grading, base rental prices, and new land grading categories
The study has utilized both primary and secondary data collection methods. The data was collected
through face-to-face interviews, discussions with concerned stakeholders. Documents have been
reviewed and the “Kobo toolbox” has been used to document site surveys.
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PART TWO: ICT Park at a Glance
2.1 Description of the Area
The ICT Park, formerly known as ‘Ethio ICT Village’, is located in the south-eastern part of Addis Ababa, at
the Bole Lemi Industrial Zone.
The mission of the ICT Park is to:
● Provide impetus for the development of the ICT sector in the country by offering a world-class
business environment.
● Create a destination for overseas investment and an ongoing generation of foreign earnings.
● Create employment and career opportunities for Ethiopian citizens and professionals.
At the time of its establishment, it was expected that the proximity to Bole International Airport, the city
of Addis Ababa (as the largest business center in the country) as well as Bole Lemi Industrial Park will make
the ICT Park an ideal location for attracting investment and creating an integrated Bole Lemi Smart
Industrial city in the future. (IPDC, 2019)
The idea of creating a smart city is still part of the vision for the future of the ICT Park, yet in the short
term, the main focus is to improve the facilities and infrastructure available in the park and transform it
into a dynamic digital Innovation hub. (IPDC, 2019) The total area allocated for the ICT Park is 200 hectares
(out of which approximately 13.7ha or 7% is utilized) and the park is traversed with major highways
running north to south and east to west of the city (see Figure 1).
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Figure 1: Location Map of the ICT Park; Source: EIPP-JICA, 2020
2.2 The ICT Park and “Digital transformation of Ethiopia”
Digital transformation is the process of using digital technologies to create new or innovative digital
products and services. In June 2020, Ethiopia launched a Digital Transformation Strategy to accelerate the
digitalization of the economy and transform Ethiopia into a leading digital hub in Africa (FDRE-PC, 2020).
The expansion of the digital economy creates many new economic opportunities. More importantly,
digital innovation can be used to solve development-related problems, and to create value that increases
income and keeps enterprises and countries competitive at both national and international markets.
Ethiopia’s digital transformation strategy takes into consideration the country’s current economic drivers
– agriculture, manufacturing, and services, especially tourism – and the national priority goals, particularly
job creation, foreign exchange earnings, and inclusive prosperity as starting points for charting enabling
digital development pathways. The strategy identifies four pathways to be achieved through digital
innovation and transformation. They are:
▪ Pathway 1: Unleashing value from agriculture;
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▪ Pathway 2: The next version of global value chains in manufacturing;
▪ Pathway 3: Building IT-enabled services; and
▪ Pathway 4: Digital as a driver of tourism competitiveness.
Undoubtedly, the role of the ICT Park will be directly relevant and critical for the implementation of the
second and third pathways – “The next version of global value chains in manufacturing” and “building
IT-enabled services” respectively. Given the low level of ICT sector development in Ethiopia and limited
digital infrastructure and skills, the emergence of the ICT Park as a pocket of the digital ecosystem could
provide opportunities and enabling environment for the development of technology entrepreneurship
and digital transformation.
2.3 ICT Park Function and Zoning
With its location closer to the Bole International Airport, the City Expressway that crossed the Park, and
nearby a freight railway station, the Park is well-positioned to attract FDI. This could be highly facilitated
with clear and efficient land use and a land grading system. The master plan proposes five major zones
for the Park:
✓ Zone 1 ICT Related Business

✓ Zone 2 Technology Related Manufacturing & Warehouse
✓ Zone 3 Research and Development
✓ Zone 4 ICT Vocational & Training Center
✓ Zone 5 Commercial area
✓ Zone 6 Residential area
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Figure 2: ICT Park Zoning Map
As the world enters into the new era of industry 4.0, technology is disrupting every traditional
way of doing business. Today, almost every way of lively hood and business activities are
interrelated with technology one way or another. With the world being more dependent on
technology, it’s impossible for business to conduct their activities without it. Thus, every sector
from agriculture, healthcare, retail, finance, education, and so on are directly dependent on
technology to produce or deliver their products and services. Although there are no clearly
established definitions for ICT-related business, a listing of groups is a better way of explaining.
a) ICT and Technology related manufacturing

• Companies involved in producing technology-based items for consumers and
enterprises.
• Consumer products include Televisions, computers, cellphones, home appliances,
wearable gadgets, cars, etc.
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• Enterprise technology equipment production, telecom business equipment,
semiconductor design and productions, robots, etc.
b) IT-enabled services (ITES)
• Commonly companies involved in Business process outsourcing (BPO), Knowledge
process outsourcing (KPO), backend office activities, etc.
• These types of companies target big enterprises and use the world wide web
infrastructure as the main channel to deliver their products to their clients.
• Includes enterprise-based software, web services, artificial intelligence-based
products, fintech, etc.
• Data-based services, social media, cloud computing, mobile-based services, apps,
etc.
Table 1: Current Development status

Zone Status
- Seven buildings on land equal to 13.7ha are developed or under

construction
- Space is available for new investors (about 4 floors) at the existing
buildings and two G+7 buildings of MCIT
ICT related Business
- The total functional area is 17,040m2 (including MCIT buildings
under construction)
- ICT Business Center Building is ready for operation.
- 9600 m2 new building, 7 floors – Construction at the final stage
- An administration building with 2500 sq. m. and four-story with A
Tier II - Data Center is currently providing services to the park
administration and local companies.
- Six private companies have subleased approximately 6ha.
- 17 tenants have leased a working space with a monthly rent price
of 30Birr/m2
- The total leasable Area is 54.00 ha.
- The total area of 62.94 ha.
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Zone Status
- Techno Mobile was allocated with a 2.54ha area and is currently

Technology related operational in this zone.
Manufacturing and
- The total leasable area is 18.64 ha
warehouse
- There is no development in this zone

Research &
RR
- The total leasable area is 8.42 ha

Development Area

Vocational & Training - The total leasable area is 8.42 ha
Center
Commercial Area - The total leasable area is 19.06 ha.

Residential Area - The total leasable area is 4.59 ha

- The Park currently has around 2MW electric power. Additional

10MW power is expected to reach the Park in the coming few
months.
- Lacks dedicated power as it is known that the base for ICT
development is a provision of power.
Basic Infrastructure - The Park also has dedicated fiber optics coming from 2 regional
stations of Ethio-telecom, making the connection redundant.
Though currently, it can provide any required data speed from
the client, additional construction of telecom infrastructure is
needed as the Park becomes fully operational in the near future
the demand might be very high.
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Zone Status
- The park currently has no water source of its own, as it takes its
source from AWSSA, which might be difficult as the Park becomes
fully operational.
- According to the ICT Park Master Plan, the total area of road
coverage is expected to be 37.21 ha. (18.72%), whereas the
existing road network developed is 21.09ha (57%) of the total ICT
Park is covered by the road, however, in order to maximize intra-
connectivity and accessibility in the Park, the rest of the road
should be constructed.
- Currently, the Park has developed one public space/ open space
near the center of the Park with sufficient furniture; however,
due to lack of proper maintenance and care the public space is
decaying. The Park needs to maintain the public space
accordingly, and in the near future, it needs to develop different
public spaces, gardens, and forest areas within the Park as well as
adjacent buffer areas.
Source: EIPP-JICA 2020
2.4 Organizational Structure
The organizational structure of ICT Park has been adjusted twice since its establishment in 2010. The first
structure was introduced when the ICT Park was administered and managed by MCIT. Currently, ICT Park
is administered by IPDC and is considered as one of the branch offices of IPDC (see Figure 3).
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Figure 3: The New ICT Park Structure; Source: IPDC, 2020
2.5 Development Phase
The current ICT Park is not well

developed. There are areas that
needs
Figure basic Phase
3. Developmental infrastructure
developments and some needs
improvements. This section
demonstrates the development
phase of each zone. The draft
Strategic Plan of IPDC indicates that
basic infrastructure such as
redundant internet, power, water,
waste treatment etc. will fulfill until
the end of 2022. In line with this
draft strategic plan, the team
proposed the following
development phase (see Figure 4).
Figure 4: Developmental Phase; Source: EIPP-JICA 2020 (Adopted)

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PART THREE: Basic Conditions for Valuation of Revenue and Cost
3.1 The current real-estate market surrounding ICT Park
The real estate market assessment examined the recent lease price, the current sale price, and the rental
price of the land house that is owned by both public and private individuals. For the real estate market
analysis data were collected within a 5km radius from the ICT Parks; however, special data related to
land/building used for industrial and warehouse purposes were collected outside a 5km radius.
Figure 5: ICT Park and the surrounding area; Source: EIPP-JICA 2020
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3.1.1 Land Lease Price for Public Land
As a general principle, land in Ethiopia is not subject to sale or other means of exchange (Art. 40 (3) of the
1995 FDRE Constitution) (FDRE-HoPR, 1995). However, the government has a responsibility to ensure the
right of private investors to the use of land on the basis of payment arrangements (Art. 40 (6) of the 1995
FDRE Constitution). Accordingly, the FDRE government implements a lease system to transfer land in
urban centers. The currently applicable land law is the ‘Lands Lease Holding Proclamation No. 721/2011’
(FDRE-HoPR, 2011). Under Article 4 of the Lease Proclamation, urban land can be permitted to be held by
lease, with the below conditions:
- In conformity with plan guidelines where such a plan exists, or, where it does not exist, in
conformity with the law which Region or City government makes, as the case maybe, and
- On auction or through negotiation; or
- According to the decision of the Region or City government.
Article 12 (1, e) of the Proclamation gives power for city administrators to allot land for the manufacturing
industry. According to Article 18 (1, b) of Proclamation No. 721/2011, the lease period for the city of Addis
Ababa is presented as 70 and 60 years for industry and commerce respectively (FDRE-HoPR, 2011). Article
18 (1, a) of the same Proclamation set 99 years lease period for residential housing, science, and
technology, research, and study (FDRE-HoPR, 2011). Moreover, advance payment of lease based on the
type of investment is not less than 10% (Art. 20(2) of Proc. No. 721/2011). The lease price is payable after
the grace period annually.
In line with the lease proclamations: i.e. Industrial Park Proclamation No. 886/2015, Industrial Park Council
of Ministers Regulation No. 417/2017 and Investment Proclamation No. 1180/2019 and Council of
Ministers Regulation No. 474/2020, address issues related to acquisition, ownership, development, and
transfer of land/immovable assets (FDRE-HoPR, 2015) (FDRE-HoPR, 2017) (FDRE-HoPR, 2019) (FDRE-,
2020).
So far, the Addis Ababa City Administration transfers land in conformity with the urban land lease
Proclamation No. 721/2011. The City Administration sets a benchmark of a lease price for different levels
of developments (see Error! Reference source not found.).
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Table 2: Lease Bench Mark Price
Zone
Central Market District Transitional zone Expansion zone
Price
Level Level Level
1st 2nd 3rd 4th 5th 1st 2nd 3rd 4th 5th 1st 2nd 3rd 4th
Price/M2
1686 1535 1323 1085 894 1035 935 809 685 555 355 299 217 191
(ETB)
Price/M2
43.65 39.74 34.25 28.09 23.14 26.79 24.20 20.94 17.73 14.37 9.19 7.74 5.62 4.94
(USD)
1 USD = 38.6268 as of December 17, 2020
Source: Addis Ababa City Administration, 2021

As stated above the ICT Park is located in the periphery of the City. As a result, the Park and its
surroundings lie in the 4th level of the expansion zone. The lease benchmark price for level III/4 is ETB
191.00 or USD 4.94/m2. However, this figure does not reveal the actual market price of the area. To
know the actual land price, the team used the recent lease auction result.
So far, the Addis Ababa City Administration has issued 28 bids, and the recent lease action was the 28th
round, which was conducted in 2018. The result of this auction revealed that bidders offered ETB
11,000.00 (USD 405.75) and ETB 19,000.00 (USD 700.85) as a minimum and maximum price per m2
respectively (see Error! Reference source not found.).
Table 3:The Addis Ababa City Administration 28th Round Lease Auction Offer
Bid initial Minimum Maximum Average Lease
Lease Grace Average Lease
Price per offer per Offer per Price payment
period period price/m2/Year
m2 m2 m2 per m2 period
4.39 405.75 700.85 553.3 60 30 2years 18
NB: 1 USD = 27.11ETB (2018)
Source: IPDC, 2020
As Error! Reference source not found. indicates the City Administration’s 28th round average lease price
is USD 553.30/m2. IPDC can use this price as a benchmark to transfer leasable land for investors.
3.1.2 Building Selling Price
On the field survey, the team interviewed immovable asset brokers about the current building selling price
in the vicinity of ICT Park. Error! Reference source not found. depicts that private individuals have been
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selling their plots or land, for mixed uses with a price range of USD 244.01 to 588.24/m2. On the other
hand, the market price of a plot for residential purposes is between USD 649.65 to 1,035.95/m2.
Pertaining to industry and warehouse, most of them are found in the Akaki Kality sub-city and the selling
price is the same i.e. USD 261.44/m2.
Table 4: Land or Building Market Selling Price around ICT Park

Specific Unit Price in Total Price Average
Sub-City Function Area m2
site m2 (USD) (USD) Unit Price in m2 (USD)
Bole Goro Mixed Use 350 522.88 183,006.54 451.71
Goro Mixed Use 200 588.24 117,647.06
Goro Mixed Use 150 244.01 36,601.31
Semit Residential 100 649.65 64,964.90 868.37
CMC Residential 175 919.51 160,914.91
Ayat Residential 106 1,035.95 109,810.90
Akaki kaliti Saris Industry 2000 261.44 522,875.82 261.44
Source: EIPP-JICA Field survey 2020
By taking the selling price of privately owned immovable property or building, IPDC can transfer
developed land to investors through the leasing method with an average price per m2 of USD 451.71,
869.37, and 261.44 for commercial or ICT business, residential, and ICT related manufacturing purpose
respectively.
3.1.3 Floor Area rental Price for private office buildings
During the field visit, the team also identified the rent prices of floor areas in the vicinity of ICT Park. This
data helps the team to determine the rental price and estimate the future yield from renting on the
existing developed building's floor area. Figure 6 depicts that the rental price for office, residential,
commercial, warehouse, and industrial purposes. Accordingly, private building owners collect an average
rental price of USD 7.16, 5.74, 11.24, 2.56, and 0.39/m2 for office, dwelling, commercial, and warehouse,
and industry functions respectively.
This figure gives an insight for ICT Park to earn revenue from renting the current buildings for office or
ICT-related businesses with a rental price of USD 7.16 and 11.24 respectively.
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Figure 6: Building Floor Area Market Rental Price Source: EIPP-JICA 2020
3.1.4 Floor area rental price for public office buildings
A) The Addis Ababa Industrial Development Bureau Floor Areas Rent for SME
As per the publicly-owned buildings that are engaged in renting floor areas for industrial activities, the
team identified G+4 sheds that are owned by Addis Ababa Industry Development Bureau (AAICB). These
buildings are found at Goro and Hayat. The rental price of floor area in these buildings is fixed throughout
the City: as the building heights increase the floor area rental price decreases.
Table 5: Government-Owned Shed Rent Price

Floor Height Rent Price m2/month (ETB) Rent Price m2/month (USD)
4th 36 0.94
3rd 37 0.97
2nd 38 0.99
1st 39 1.02
G 40 1.05
Source: AAICB, Computed by EIPP-JICA 2020
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This floor area rental price is designed to support micro and small enterprises that are engaged in textile
and leather manufacturing. Therefore, such kind of rental price arrangement is appropriate for ICT-
related business start-ups with the aim of subsidizing the sector.
B) IPDC’s Shed Rental Price in Each IP’s
The team also considered the price for rental sheds in IPDC’s IPs. Among ten IPs currently operational, six
of them were purposively selected using location as a major selection criterion: i.e. those IPs are located
in the vicinity of larger urban centers or big cities. So far, the Corporation has used a progressive rental
price for a defined period and then a flat rate afterward (see Table 6).
Table 6: IPDC Owned IPs Shed Rent Price per m2

Bole
Name of IPs Adama Hawassa Dire Dawa Mekele Bahir Dar
Lemi II
1 to 4 3 2.75 2 2.75 2 2
5 to 7 3.5 3 2.5 3 2.5 2.5

Period
8 to 10 4 3.5 2.75 3.5 2.75 2.75
in Year
11 to 14 4.5 4 3 4 3 3
> 15 5
Lease Price of Existing Park (in USD)

Kilinto Industrial park (Average) – 4.88/m2/Leas Period
Source: IPDC 2020
3.2 ICT Park Costs and Fares
3.2.1. Development Costs

The development of infrastructure is vital to the full functionality of the Park. The major infrastructures
that enable the ICT Park to function are road, drainage, utilities, and basic land preparations. There are
buildings, which are constructed both by IPDC and private developers (tenants). The infrastructures are
concentrated only on the two-development zones: i.e. ICT related business area and ICT-related
manufacturing. The other remaining zones are still in demand of all infrastructures; this uneven
distribution of the infrastructure makes the majority of the development zones less utilized and less
attractive for developers.
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Table 7: Plote area developed by different stakeholders in the ICT Park
Function Area in hectare Developer Status
The building used for 4.6 IPDC Completed
administration, office space 2.5 Private developer (Techno) Completed
& manufacturing 3.6 Ethio-telecom Complited
Road 21.09 IPDC Completed
Green area 1.28 IPDC Completed
Data center, ICT related 8.68 Different Private Under construction
manufacturing, and business developers
Source: EIPP-JICA, 2021
3.2.2. Operation and Management Cost

ICT Park’s operation and management costs are shown below increment for the consecutive three years.
The rate of increase was more than 1.5 in the fiscal year 2018-2019, then it declined to 0.02 in the fiscal
year 2019-2020 (see Table 8).
Table 8: Operation and Management cost (2018 -2020)

Rate of Increase
Year Cost in ETB Cost in USD
2018-2019 2019-2020 2018-2020
2018 5,823,531.26 210,539.81
2019 15,484,936.54 530,124.50 1.52 0.02 1.56

2020 18,806,640.46 539,800.24
Source: IPDC 2020
With regards to the maintenance cost, the amount also increases significantly every year, as shown in
Table 9.
Table 9: ICT Park Maintenance Cost (2018-2020)

Rate of Increase
2018-2019 2019-2020 2018-2020
2018 4,165.29 150.55
2019 17,348.19 593.87 3.16 0.52 5.33
2020 26,361.94 819.97

Source: IPDC 2020
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3.2.3. Lease Cost
As stated earlier, IPDC/ICT Park is a government-owned enterprise established based on special
regulations. For this reason, the Park possesses land free of charge and there is no lease payment expected
from the Park.
3.2.4. Utility Cost

Availability of basic utilities such as electricity, water, telecommunication, as well as infrastructures for
wastewater treatment and solid waste management are crucial for an ideal technology park operation
that attracts investors. In the field visit, the team identified that the ICT Park’s infrastructure supply is still
below the required level. The ICT Park has no water supply sources of its own and wastewater treatment
plant. The electricity is also supplied directly from the surrounding grid which causes frequent power
interruptions.
For the last three consecutive years, the ICT Park utility expenses for water, electricity, and telecom have
shown an increment (see Table 10).
Table 10: ICT Park Utilities Cost (2018-2020)

Rate of Increase
2018-2019 2019-2020 2018-2020
2018 115,212.04 4,165.29
2019 506,740.52 17,348.19 3.40 0.81 6.97
2020 918,449.94 26,361.94
Source: IPDC 2020
3.3 ICT Park Assets Inventory

3.3.1 Asset Inventory
This subsection solely covers the existing immovable assets (land and building). As stated earlier the total
area of the ICT Park is nearly 200ha. The Park has six Zones: i.e. Commercial area, ICT-related Business,
Research & Development (R&D), Technology Related Manufacturing & Warehouse, Vocational & Training
Center, and Residential area. Of these ICT-related businesses covers the largest portion, followed by
Technology Related Manufacturing & Warehouse (see Table 11).
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Table 11: Land-use Audit
No Land use Area (m2) Area (ha) %
1 ICT Related Business 606,100.00 60.61 31.22
2 Technology Related Manufacturing & Warehouse 209,200.00 20.92 10.77
3 ICT Research & Development (R&D) Area 74,500.00 7.45 3.84
4 Vocational & Training Center 82,500.00 8.25 4.25
5 ICT Commercial area 173,600.00 17.36 8.94
6 Residential Area 36,700.00 3.67 1.89
7 Green Area 344,900.00 34.49 17.76
8 Road +Power Station 414,100.00 41.41 21.33
Total 1,941,600 194.16 100
Source: IPDC 2020
Figure 7: Land-use Plan; Source: IPDC 2020

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With regards to available buildings, there are about six buildings with ranging floor height of 3 to 9 floors.
These buildings are already constructed and have the potential to generate income for the Park by renting
floor areas. Table 12 indicates the total rentable space and the existing building and other infrastructure
situations are pictorially presented below.
Table 72. Constructed Buildings Status

Total area Development Year of
No. Description
(m2) Status Construction
1 B+G+7 (MCIT-Building) 14,967.64 Not Complete 2017/2018
2 IT-Incubation Center and Powerhouse building (Under Construction)
2.1 IT-Incubation Center building 9,471.56 Completed 2017/2018
2.2 Incubation Power house building 154.86 Completed 2017/2018
3 Information technology business incubation 12,188.22 Completed 2017/2018
building
4 G+2 Prefab building-1 1,799.23 Completed 2016/2017
5 G+2 Prefab building-2 1,799.23 Completed 2016/2017
6 Data Center and office building
6.1 Data Center building 765.23 Completed 2016/2017
6.2 Office building 1,673.02 Completed 2017/2018
6.3 Connecting block 71.00 Completed 2017/2018
7 IT park café (land scape) 544.34 Completed 2019/2020
8 IT park toilet (landscape) 56.60 Completed 2019/2020
Source: IPDC 2020
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Admin Bul. Data Center Twin Buildings
Figure 8: Well-maintained street with proper street lighting; Source; EIPP JICA Field Survey 2020.
Tenant Bul.
Figure 9: Former Incubation Building and Newly Constructed G+7 Building;

Source: EIPP JICA Field Survey 2020.
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MCIT Bul. Which will serve as tenant
Figure 40: Former MCIT Building; Source; EIPP JICA Field Survey 2020
There is also Ethio-Telecom head office building under construction. This building has functional integrity
in the ICT Park (see Figure 11). It will also have great potential in attracting different ICT-related companies
to search for office space in the Park. The existing Ethio-Telecom head office is also an asset for the Park
in acquiring the necessary information about licensing and related procedural issues on the spot.
Ethio-telecom Building
Figure 51: Ethio-Telecom HQ Building; Source: EIPP JICA Field Survey 2020
Another valuable asset that the Park developed is public open space or greenery which will serve as a
cafeteria for workers. The area is well designed and developed to serve as a recreation as well as cafeteria
and restaurant services (see Figure 12). The Park can collect revenue either by directly operating and
managing the service or letting the area to the third party with a contractual agreement. However, the
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open space is not providing the intended purpose at this moment, due to a lack of proper care and
maintenance. Hence, it is very important to exercise due care for such assets as it could be a great means
of creating aesthetical quality on top of other benefits it gives to the well-being in the Park.
Public greenery /court yard
Figure 62: Public Space Building & Open Space Area; Source: EIPP JICA Field Survey 2020
On the contrary, some areas were transferred to local investors who simply fenced for a long time without
starting construction or tried to start construction but it didn’t show any progress for the past two years
(see Figure 13). These private investor's behavior will degrade the quality of the area. Therefore, necessary
action should be taken by IPDC.
Figure 13: Secured lands without any further improvements/construction;

Source: EIPP JICA Field Survey 2020
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3.3.2 IPDC’s Experience of Immovable Property Valuation
IPDC has sound experience of transferring developed land or shades in a lease or rent form respectively.
To transfer those immovable assets, prior studies had been conducted and set values for those properties.
(IPDC, 2018) About ICT Park, so far two asset valuation documents were developed. The first document
was prepared with the objective of determining the benchmark lease price of the Park using the cost
method (EIC, 2018). Following this, the Park conducted an asset valuation in 2019 (IPDC, 2019).
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PART FOUR: Countries Experience On ICT Park Property
Valuation
4.1 Countries Experience
Technology parks are built on the presumption of creating an exclusive environment where ICT research,
business, and related technologies could flourish. For more than four decades, countries all over the world
have been adapting and developing science and technology parks on these assumptions. The success of
the likes of “Silicon Valley” models had triggered the need to build these types of places as the world
became more dependent on science and technology. Developing and planning section of the process
requires a significant amount of effort and finance, so does the administration and business model. While
most science and technology parks are funded through public spending, setting up a sustainable business
model is crucial for the survival of these types of parks. One section of this is the administration, location,
and pricing of immovable assets such as land, buildings, etc.
As there is no defined unilateral way of ensuring the success of technology parks, most models share a
common value in building an environment where tenants can flourish. Even though many parameters play
different roles to achieve the intended results, affordability ranks at the top. This includes the price of
land, building rent, and other amenities. Thus, making sure to keep tenants’ costs of doing business with
the parks as low as possible is one of the decisive factors for the success of the Park. In examining
successful technology parks, one can observe these methods and patterns popping out in most places. In
the following sections, regional and international science and technology parks’ experiences will be
examined in terms of land and building pricing.
4.1.1 Regional countries
African countries have shown rapid developments of science and technology parks, albeit starting recently
compared to the rest of the world. The aspect of this movement in most African countries shows that
governments are starting to understand the key role technology plays in the development of a nation. The
evidence for this is the high number of science and technology parks being built all over the continent
(see Figure 14).
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Figure 14: No of Tech hubs found in different African countries; Source: GSMA Ecosystem Accelerator
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4.1.1.1 South Africa
South Africa is one of the major

economies in Africa. The country has
been leveraging its economic success
to build the ICT sector. Thus, placing
the country at the top of the list in
terms of owning large and
standardized technology parks in the
continent. Whilst, the country owns
many parks of equivalent character:
e.g. Technopark Stellenbosch, Soft
Line Technology Park, Highveld
Figure 15: The Innovation Hub, Pretoria, Lynnwood
Technopark, Innovation Hub Science
Park Pretoria, and Coega Technology Park Port Elizabeth, are to mention a few. Below is the average price
for rental and land leasing price.
❖ Average office rental price: USD 13.67m2/month
❖ Average land lease price: Based on the agreement
4.1.1.2 Rwanda
Rwanda is one of the fastest-growing

countries in Africa. Even though Rwanda
was among the latecomers to invest and
engage in the technology industry as a
whole, the country displayed an enormous
amount of boom on the technology front.
Besides developing policies and manuals to
help the technology sector, the government
took upon itself a special economic zone Figure 76: Kigali special economic zone
consisting of a technology park at the heart of its capital Kigali. With government spending being the main
driver, here are the costs associated with land price and leasing.
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❖ Average office rental price: USD 12-15 Per/m2/month
❖ Average land lease price: USD 24-62 Per/m2/year
❖ Average land lease period: Based on the agreement
4.1.1.3 Egypt
Egypt is one of the countries

that harnessed the advantages
gained from establishing
science and technology parks
early. The country's technology
parks are hosting many
prominent global tech
companies the likes of HP,
Microsoft, IBM, and such. By
Figure 87: Cairo's smart village
targeting Europe as the main
market, Egypt was able to create many high-end jobs for its citizens. Maadi Technology Park and Borg Al
Arab Tech and Science Park are some of the prominent parks operating in the country.
❖ Average office rental price: USD 381.9 (co-working space)

❖ Average land lease price: USD 1-10 per/m2/year
❖ Average land lease period: 49 years (usufruct)
4.1.1.4 Local experiences

(Addis Ababa)
The growth of the number of

youths and the need for access
to technology is driving tech
business and entrepreneurship
in the city. It is becoming
evident to see an emerging new
tech startup in every aspect of
Figure 98: Blue moon Ethiopia
the business. Noticing the rapid
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change and opportunity, private companies are taking it upon their selves to establish venture capital (VC)
and shared co-working spaces. Blue moon and Ice Addis are among the prominent ones. Although prices
offered are relatively low compared to private rental properties, they might still be a little high for starting
companies and this could be a challenge for them. Price offered by the different companies is listed below.
Table 83: Blue moon Ethiopia pricing (USD)

No. Types of Rental Services Monthly Weekly Daily
1 Open Space
Fixed desk 77.12 25.77 7.73
Hot desk (any free desk) 38.66 15.46 7.73
Day pass (no desk) - - 5.15
2 Offices 257.73 90.21 25.77
3 Board Room (for 10) Half-day Full-day -
Weekday 64.43 103.09 -
Weekend 38.66 64.43 -
4 Events 60 max 85 max 150 max
Up to 4 hours 257.73 386.60 515.46
Full day 463.92 644.33 902.06
Source: https://www.bluemoonethiopia.com/ 2020
Table 94: Ice Addis pricing (USD)

Day Pass 5 Days Ticket 20 Days Ticket ICE Addis startup team
7.22 30.93 97.94 64.43
1 Table 1 Table 1 Table Startup Space
Unlimited Internet Unlimited Internet Unlimited Internet Internet connection
Fair usage print b/w 10 pages print b/w 10 pages print b/w per Mentorship & coaching
per day day
--- -- -- Min. 6 months
commitment
-- -- -- Fill in the application form
Source: http://www.iceaddis.com/about/, 2020
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4.1.2 Global experiences
4.1.2.1 India
India is stated as one of the earlier

adapters of technology parks inside
the country. It is believed that the
development of these parks coupled
with other methods has made India
be one of the prominent leaders in Figure 1910: International technology park Bangalore
the technology industry. Specifically, by tailor-making, the educational system to serve the industry
guaranteed a front seat in the tech industry such as BPO, development, and such. Average prices for
occupying land and spaces are listed below.
❖ Average office rental price: USD 14.31 - 16.68 per/m2/month (furnished)
USD 7.2 - 8.2 per/m2/month (unfurnished)
❖ Average land lease period: Based on an agreement
4.1.2.2 Malaysia
As one of the major economic powers in Asia,
Malaysia had made sure that technology
played a key role in the country’s economic
process. As a result, the country was able to
achieve well-built infrastructures and
financial systems that made it an attractive
place for tech startups and entrepreneurs.
Figure 110: Technology park Malaysia
Following the need for suitable work and
innovation environment, the government together with private institution involvement built several
science and technology parks across the country.
❖ Average office rental price: USD 6.4 - 9.6 per/m2 (month)

❖ Average land lease price: Enterprise USD 58 - 75 per/ m2/year
❖ Residential USD 172 - 231.4 per/ m2/year
❖ Commercial USD 204.1 - 290.6 per/ m2/year
❖ Average land lease period: Up to 76 years
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4.2 Findings
Analysis of most science and technology parks suggests that a significant amount of financial investment
comes from public spending. Since the main objectives of these parks across the world are similar, i.e.
creating an environment where science, technology, research, and development can grow, business
models often overlook profits. Whilst creating a sustainable business model ensures the continuation of
these types of parks, careful considerations must be made not to drive pricing points beyond certain
affordable limits.
Table 105: Summary of prices

List of Land lease price (Per m2 / Land lease
Rental price (Per m2/month)
countries year) period
South Africa USD 13.67 Based on request
Rwanda USD 12 – 15 USD 24 – 62 Based on
agreement
Egypt USD 381.9 (fixed co-working USD 1 – 10 Up to 49 years
space)
India USD 14.31 – 16.68 (furnished) Based on
USD 7.2 – 8.2 (unfurnished) agreement
Malaysia USD 6.4 – 9.6 Enterprise USD 58 – 75 Up to 76 years
Residential USD 172 – 231.4
Commercial USD 204.1 – 290.6
Consistently enough land lease and office space renting prices are at the low end of the range across the
globe safeguarding tenants and entrepreneurs from overhead costs. Regularly, this type of approach is
used as an incentive to attract investors, tenants, and entrepreneurs into joining the parks. Therefore,
profits derived from this model are usually considered long-term. But this does not in any way mean that
science and technology parks are loss-generating entities. On the contrary, these parks create wealth and
profit by providing other types of services in the forms of infrastructure, internet, housing, and a broad
spectrum of similar services.
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PART FIVE: Financial Analysis
5.1 An Overview
This chapter covers the financial analysis of the ICT Park. To conduct this financial analysis the team first
examined relevant national and sectoral-based strategic documents such as the Growth and
Transformation Plan (GTP II), the Ten-Year Development Plan (2021-2030), the Digital Ethiopia: 2020-2025
strategic plan, the new investment proclamation and regulation (FDRE-NPC, 2015) (FDRE-PDC, 2021)
(FDRE-PC, 2020). Particularly, the document examines IPDC and ICT Park establishments regulations, IPDC
Strategic Plan and Roadmap (2021-2030) (draft), and other relevant documents to determine the
appropriate sources of revenues that meet the mission, vision, and objective of ICT Park (IPDC, 2021).
Before proposing lease price and rent space price the document discussed the financial viability of the ICT
Park using the accounting method. To conduct a financial analysis of the Park, first, a real estate property
market survey was carried out to identify the current rental and selling prices for immovable assets i.e.
building or land. In the meantime, the different sources of revenue and types of expenses of the Park
were identified. Then the financial analysis is conducted taking 30 years as a lease period.
The financial analysis of the ICT Park takes the following conditions:
▪ The Park will provide the necessary infrastructures (power, water, telecom, etc.) within two years
▪ The park will generate revenue from renting office space and leasing developed land
▪ The office space rental price and lease price varies based on the types of business types and
zonings respectively
▪ Administration, operation and management, and maintenance activities of the Park are carried
out by IPDC.
▪ The maximum lease period is 30 years
▪ Since the Park has been financing by the government loan payment and interest does not take
into account
Taking these as general conditions for financial analysis, the document analyzes the viability or
sustainability of the Park using two options.
Option I: If ICT Park only conducts additional infrastructure development and administers, operates, and
manages the Park as it is.
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Option II: If ICT Park constructs additional infrastructure + construct buildings through developing 40ha of
land for mixed-use purpose within 10 years and administration, operation, and management
of the Park are still under IPDC possession.
In the following pages the document first gives an insight into the different property valuation methods.
Then the current status of the two major sources of revenue (leasable land and rental spaces) of the ICT
Park is presented. Then after the financial analysis of the ICT Park is presented based on these two options.
Finally, the document discussed the lease and rent price methods as well as propose the best-suited one.
5.2 Immovable Property Valuation Methods
Valuation methods are a set of formal principles and procedures that provide guidance to evaluators in
the process of determining the market value of the property for a variety of purposes (Xiao & Yang, 2017).
As used by professional evaluators, valuation methods are in essence practical toolkits, representing a
bridge between the theory of economic value and the practical measuring required to facilitate socio-
economic transactions (Xiao & Yang, 2017).
There are different types of immovable property valuation methods. The most commonly applied
methods of immovable property price evaluation can be broadly divided into two groups: traditional and
advanced methods (Mooya & Manya, 2016). There are five well-known traditional valuation methods in
the field of property valuation: i.e. comparative method (comparison), contractor’s method (cost
method), residual method (development method), profits method (accounts method), and investment
method (capitalization/income method). Advanced methods include techniques such as hedonic price
modeling, artificial neural networks (ANN), case-based reasoning, and spatial analysis methods (Mooya &
Manya, 2016).
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Table 16: Types of Property Valuation and Pricing Methods
Property Valuation Methods Applicabl
A. Traditional Methods e Application
Method
1 Cost or Contractor’s Method √ To determine to price for leasable land & office
space
2 Accounts or Profits Method √ To examine the viability of the Park and
To determine to price for leasable land & office
space
3 Comparative or Comparison X
Method
4 Development or Residual Method X
5 Investment or Capitalization or X
Income Method
B. Advanced methods
1 Spatial Analysis Methods √ To give value for the geographical location and
spatial feature of the area and
To determine to price for leasable land & office
space
2 Hedonic Price Modeling X
3 Artificial Neural Networks (ANN) X
4 Case-Based Reasoning X
5.3 The Status of ICT Park Leasable Land and Office Space
5.3.1 The Status of ICT Park Leasable Land
As stated above the Park has nearly 200h of land. This land is systematically categorized into 6 major
zones: ICT Related Business, Technology Related Manufacturing & Warehouse, Vocational & Training
Center, ICT Research & Development (R&D) Area, ICT Commercial area, and Residential Area. (See Table
11)
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After identifying the land allotted for different development zones, the team calculates the leasable area
in accordance with Industrial Park Council of Ministers Regulation No. 417/2017. Article 5 (5) of Regulation
No. 417 indicates that an IPs land that too is used for factory building, facilities for common use,
infrastructure, residence, and related buildings within the area of the industrial park shall neither be less
than 50 percent nor exceed 75 percent. Accordingly, the leasable area of the ICT Park is 1,136,800 m2
or113.68ha, which accounts for 58.55% of the total area. This area excludes green areas, roads, power
stations, and the already constructed buildings that serve for administration and generate revenue
through renting spaces. (See Table 17) From the total leasable area, ICT-related business and commercial
area account for 64.56%. This situation gives an ample opportunity for the Corporation to generate more
revenue through leasing the land.
Table 17: Net Leasable land Area of the ICT Park

Net-Leasable % of Net-
No Land use Total Area (M2)
Area (M2) Leasable Area
1 ICT Related Business 606,100 560,300 49.29
Technology Related Manufacturing
209,200 209,200 18.40
2 & Warehouse
3 Vocational & Training Center 82,500 82,500 7.26
4 ICT Research & Development (R&D) Area 74,500 74,500 6.55
5 ICT Commercial area 173,600 173,600 15.27
6 Residential Area 36,700 36,700 3.23
Total 1,182,600 1,136,800 100
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Figure 12: ICT ParkLeasable Area (m2)
5.3.2 Rental Space of the Building
In the ICT Park compound, there are six buildings, which are under the possession of the Park. The gross
floor area of these buildings is 177,433.04m2. Of these buildings, the former MCIT’s headquarters building
has the largest (70.37%) floor area or rentable space. (See Table 18)
Table 18: Available Buildings in the ICT Park

Plot Area Built-up Area in Floor Area
No. Name of the Building Floor Area in m2
in m2 m2 %
1 Former MCIT Head 24,200 18,150.00 127,050.00 70.37
Quarter Building
2 New Incubation 5600 4200.00 33,600.00 18.61
Building
3 Admin Building 2500 652.36 3,261.80 7.30
4 Incubation Building 9000 1,647.05 13,176.40 1.91
5 Tenant Buildings (2 4500 1,148.28 344.84 2.10
Prefab Buildings)
Total 45,800 25,797.69 177,433.04 100.29
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5.4 Financial Viability of the ICT Park Using Account Method
As stated earlier the team had been conducted a market survey to assess and identify the current
infrastructure development construction cost as well as immovable property (land and office
space) lease/rent price.
5.4.1 Cost
It is known that the predominant infrastructure such as power, telecom, waste treatment does
not satisfy the demand of ICT Park. To fulfill the infrastructure demand of the park, IPDC should
give priority. For the realization of infrastructure provision, different kinds of costs are expected.
These costs could be categorized as: infrastructure development costs, Operation and
management, and administration costs.
i) Infrastructure Development Cost
As stated above the existing infrastructure is not sufficient for the creation of a pleasant ecosystem in the
Park. Therefore, the Corporation should fulfill the remaining basic infrastructures such as power, water,
fiberoptics, road, waste treatment plant, etc. To calculate the remaining costs for basic infrastructure
development, the team first collected cost information from already constructed infrastructures and
buildings from the IPDC Head office as well as ICT Park. The team also gathered estimated construction
costs per m2 from CSA and selected Grade – I Contractors. Then the team developed an aggregate
construction cost for the different kinds of infrastructure, architectural or building, and other related
development costs. Finally, the team developed three alternatives for infrastructure development cost
calculation by combining the CSA, IPDC, and Grade – I contractor's construction cost. (See Table 19) In this
document, the team used the average construction cost to compute the account or profit method.
Table 19: Alternative Infrastructure Development Construction Cost

Average
Item Low (USD/ M2) (USD) Maximum (USD/ M2)
(USD/ M2)
Infrastructure 233.00 260.25 287.50
157.00 (Manufacturing Build 261.00 (Commercial Build

Architecture 209.00
Considered) considered)
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Basic land
27.82 27.82 27.82
Preparation
Compensation 0.50 2.20 4.0
Greenery 54.40 68.00 81.60
Power Station 51.35 64.19 77.03
Road 915.5 1,052.80 1,190.1
Secondary road, drain, water, Primary Road, drainage, water,

Conditions
power, fiber & fire protection power, fiber & fire protection
ii) Operation and Management Cost

To estimate the operation and management cost for the future infrastructure, architectural and
related development, the team reviewed the current ICT Park practice as well as other related
development projects that used for operation and management. Accordingly, the accounting
method computes 1.5 percent of the basic cost as operation and management costs.
iii) Administration Cost
As for the operation and management costs, there are different rates used for administration
costs. After reviewing different related projects' financial analysis and IPDC/ICT park past
experiences, the document used 2 percent of the basic cost as administration cost.
iv) Loan and Repayment

As the international and regional experience indicated, the majority of ICT or Technology parks
are funded by the government. Likewise, ICT Park has been using government budgets to avail
the necessary infrastructure architectural and related developments. As a result, this document
does not include loan repayment in the calculation. However, investors or tenants will expect
to pay interest for the residual lease amount with a bank interest rate.
5.4.2 Revenue
The study mainly considered three sources of revenue for the ICT Park. These are revenue from
leasable land, renal space, and provision of services. On the following page, the three sources of
revenue are briefly discussed.
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i) Revenue from Leasable Land
In the account or profit method, all the costs should be covered and some level of profit is expected.
Therefore, the method seeks the different sources of revenue that should make the project at hand
becomes profitable. After examining the real estate market in Addis Ababa, the team developed three
alternatives: Lowest, Average, and Highest lease price per m2 per annum and monthly rental price per m2.
To compute financial analysis, this document used the average lease price and rental price. (see Table
20)
Table20: Alternative Price for Leasable Land Transfer

Lease Price Per m2/Year (USD)
Zone Function
Lowest Average Highest
ICT related business, commercial & residential 28.95 34.02 39.08
R & D and Vocational and training center 8.71 10.24 11.76
Technology related manufacturing 15.06 17.69 20.33
1 USD = 38.25 ETB
ii) Revenue from Renting Office Space
It is known that ICT Park has six buildings and those buildings have rentable spaces. The team developed
three alternatives depending on the function of the floor area.
Table21: Alternative Floor Area Rental Price for Renting Office Space
Rental Price (USD M2/Month
Building (Floor Area) function
Minimum Average Maximum
Business (Office) 7.16 8.41 9.67
Commercial 11.24 13.21 15.17
Technology related manufacturing 5.16 6.06 6.97
Vocational & Training 2.56 3.01 3.46
1 USD = 38.25 ETB
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iii) Other Sources of Revenue
The document also considered two other sources of revenue. This source of revenue is systematically
categorized in: Operation and Maintenance Fee and other potential sources of services. The operation
and maintenance fee will expect 1.5% of the construction cost.
The other potential sources of services that will serve as sources of revenue for the Park might be a
provision of: Telecom related business (High-speed internet service, Virtual private network service, VSAT
connection service); Data infrastructure-related (Datacenter service, Email, hosting, and related, Cloud
computing service, High-performance computing); Hard Infrastructure related (Consumer Electrical
power, High power electricity, Renewable electrical power or solar, Water, Recreational amenities e.g.
Gym, Spa, etc., Shopping, cafeteria, restaurant and related); Human capital related (Excellence center,
Test center, Human requirement for companies); and Others (One-stop center, Co-working space rental,
Furnished working space rentals). This document considered 10% of the construction cost from other
potential sources of revenue.
5.4.3 Cash Flow Analysis
The cash flow analysis is based on the average cost and revenue stated in table 19, 20, and 21. The account
or profit method examines the profitability of the project at hand using two options. These two options
mainly differ on the role of IPDC/ICT Park in infrastructure and architecture development. (See Table 22)
Table 22: Comparison of the Option I & II in the Account Method

Description Option – I Option – II
Infrastructure development IPDC provide basic infrastructure IPDC provide basic infrastructure
Architecture or building IPDC does not develop any IPDC will develop only 40ha (20% of
building other than the existing the total area) of land for office
3.16ha of land. space and mixed-use purposes
within 10 years
Operation & maintenance It is IPDC’s role It is IPDC’s role
Park Administration It is IPDC’s role It is IPDC’s role
Source of revenue Mainly from leasing land Mainly from renting office space
and leasing land
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Option – I
This option takes into account the existing condition of the Park. Here IPDC is expected to fulfill all the
necessary infrastructure and collect revenue mainly for leasing developed land as well as providing
different kinds of services to the tenants.
Basic Fact
▪ The total area of the ICT Park 194.14ha

▪ Leasable land i.e. 113.65ha, or 58.54%
▪ 64.56% of the leasable land is labeled for ICT related business & ICT commerce
▪ So far, IPDC/ICT Park has developed 4.6ha of land for different purposes like
administration, tenant, former MCIT headquarter, and incubation.
▪ The total floor area of those buildings that are existed in the developed 4.6ha of land is
177,433.04m2
▪ So far the ICT Park spent a total of USD 336,734,562.62 to construct existing
infrastructure and building in the Park
Basic Assumptions
▪ The occupancy rate of this office space will be 60% for the first year, 65% for the second
year, and 70% for the remaining 28 years lease period.
▪ Operation and maintenance fee (1.5% of the development cost) and
▪ Other potential sources will generate an equivalent amount of 10% of the total
development cost.
Result
Based on the existing facts and basic assumptions stated above the Park will spend USD 1,090,234,058.27
for infrastructure development, administration, and repair and maintenance costs within the lease period
of 30 years. On the other hand, the Park will obtain USD 3,487,345,732.59 revenue from leasing developed
land, renting office space, and providing different kinds of services.
Table 23: Option I - Development Cost & Revenue of ICT Park

Cost in USD Revenue in USD End Balance
A. Types of Cost
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1 Construction cost 620,651,731.00
(Infrastructure )
Building construction cost 26,034,480.00
2 Administration 379,036,170.00
3 Repair & maintenance 64,511,677.27
Sum 1,090,234,058.27
B. Types of Revenue
1 Leasing developed land 910,943,012.00
2 Office space rent 302,185,785.00
3 Management fee 379,036,170.40
4 Other sources of revenue 1,895,180,765.19
Sum 3,487,345,732.59
Balance (Revenue – Expense) 2,397,111,674.32
If we further examine the viability of the Park, the cash flow indicates that the ending balance of each
year shows positive except in the first two consecutive years. The ICT Park’s profit from operation and IRR
is presented in table 24.
Table 24: Option I – Profit from Operation & IRR within 10, 15, and 20 Years
Operation Year
Descriptions
10 20 30
Profit from Operation in USD 264,761,921 1,274,461,451 2,397,111,675
IRR 8.4% 15.8% 16.7%
Note: IPDC should take engage in the provision of different kinds of services like: Telecom related
business, Data infrastructure-related services, Hard Infrastructure related services, and
Human capital related services, for the sustainability of the Park.
Option – II
This option emanates from the draft IPDC Strategic Plan and Road Map (2021-2030). The draft Strategic
Plan and Roadmap indicates that IPDC will develop a total of 40ha of land for office space and mixed-use
purposes.
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Basic Fact
▪ The total area of the ICT Park 194.14ha

▪ Leasable land i.e. 113.65ha, or 58.54%
▪ 64.56% of the leasable land is labeled for ICT related business & ICT commerce
▪ So far, IPDC/ICT Park has developed 4.6ha of land for different purposes like
administration, tenant, former MCIT headquarter, and incubation.
▪ The total floor area of those buildings that are existed in the developed 4.6ha of land is
177,433.04m2
▪ So far the ICT Park spent a total of USD 336,734,562.62 to construct existing
infrastructure and building in the Park
Basic Assumptions
▪ IPDC will develop 40ha of land within the coming 10 years

▪ The leasable land will be 73.66ha
▪ The occupancy rate of office space will be 60% for the first year, 65% for the second
year, and 70% for the remaining 28 years lease period.
▪ Operation and maintenance fee (1.5% of the development cost)
Additional Assumptions
This option imposed duties and responsibilities on IPDC to provide all the necessary infrastructure +
construct buildings for mixed-use purposes in 40ha within 10 years. The draft Strategic Plan and Roadmap
indicates that 15ha of land up to 2025 and the remaining 25ha of land up to 2030 (IPDC, 2021). Based on
this IPDC’s draft plan, the team proportional distributes the 40ha of land to ICT-related business,
Technology related manufacturing & warehouse, commercial, and residential zones. (See Table 25)
Table 25: Proportional Distribution of Planned Develop Land (in Ha)

Area to be IPDC Plan to develop 2021 to 2026 to
Zone
developed within 10 Years 2025 2030
ICT related business 56.01 22.87 8.58 14.29
Technology related 20.92 8.54 3.20 5.34
manufacturing & warehouse
commercial 17.36 7.09 2.66 4.43
residential 3.67 1.50 0.56 0.94
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Total 97.96 40.00 15 25
This Option allows IPDC to use vertical development concept and economical as well as prudent use of
space. Using this vertical development concept, the team computed the viability of the project using
governing legal documents to determine building height and built-up area. The Addis Ababa Master Plan
indicates the maximum building height of the area as 35m or 11 floors (AACPPO, 2017). Regulation No.
417/2017 also indicates the built-up area for the ICT Park ranging from 50% to 75% depending on the land
use type. Accordingly, this document proposed the maximum built-up area for all zones with the
exception of R & D (60%) and Vocational and Training Center (40%). Similarly, the building height for all
zones is taking the maximum of 11 floors, except R & D (7 floors) and Vocational and Training Center (5
floors). (See Table 26)
4000M2 4000M2
A: IPDC Prepare Leasable Land for Investors B: IPDC Prepare Office Space for Investors
Figure 132: Comparison of Horizontal VS Vertical Space Use Concept; Source: Computed by EIPP-JICA, 2021
After developing the area, IPDC will get revenue through renting office spaces. The document assumes
that the occupancy rate of the buildings will start with 60% in the first year and grow to 65% in the second
year, and remaining constant at 70% for the rest of the years. (See Table 26)
Table 26: Building Height, Built-up Area & Occupancy Rate of the ICT Park
Building Built-up Occupancy Rate
Zone (Land Use Function)
Height area % 1st Year 2nd Year >3rd Year
ICT related business, 11 75 60 65 70
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Technology related manufacturing &
7 75
warehouse
Research & development, 11 60
Vocational & training center 5 40
Commercial 11 75
Residential 11 75
Result
Based on the existing facts and assumptions stated above the Park will have 73.66ha of leasable land and
44.58ha of developing land to get revenue from leasing land and renting office space respectively. To
develop the 44.58ha of land, IPDC will spend USD 1,717,110,944.65for for building and infrastructure
development, administration as well as repair and maintenance costs within the lease period of 30 years.
On the other hand, the Park will obtain USD 6,763,590,740 revenue from leasing developed land, renting
office space, and providing administration service.
Table 27: Option II - Development Cost & Revenue of ICT Park

A. Types of Cost Cost in USD Revenue in USD End Balance
1 Infrastructure Construction cost 644,589,565
2 Building construction cost 613,641,407
3 Administration 392,076,862
4 Repair & maintenance 66803110.65
Sum 1,717,110,944.65
B. Types of Revenue
1 Leasing developed land 523,358,133
2 Office space rent 5,848,155,745.00
3 Management fee 392,076,862
Sum 6,763,590,740
Balance (Revenue – Expense) 5,046,479,795.35
Source: Computed by EIPP-JICA, 2021
If we further examine the viability of the Park, the cash flow indicates that the ending balance of each
year shows positive except in the first year. The ICT Park’s profit from operation and IRR is presented in
table 28.
Table 28: Option II – Profit from Operation & IRR within 10, 15, and 20 Years
Discretion Operation Year
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10 20 30
Profit from Operation 2, 290,639,250 6,381,872,582 8,432,260,899
IRR 49.0% 50.8% 50.8%
The cash flow result shows positive and makes IPDC profitable; however, this option requires a huge
amount of money to develop the park within ten years.
5.4.4 Sensitivity Analysis
To examine the financial viability of a project during the time of market instability, sensitivity or risk
analysis is vital. This document examines the Parks sustainability by taking four scenarios, which will most
often be occurred during the project lifetime due to different reasons. These three scenarios are:
a) If the construction Cost increased by 10%

b) If the revenue decreased by 10%
c) If the occupancy rate decreased by 10%
Based on these scenarios the internal rate of return (IRR) result depicts positive and the Park will be
financially viable.
Table 29: Sensitivity Analysis Resalts of IRR for Option I & II

Scenarios Option -I (Years) Option – II (Years)
10 20 30 10 20 30
If the construction Cost increased by 10% 8.1% 15.5% 16.5% 45.8% 47.9% 47.9%
If the revenue decreased by 10% 7.6% 15.1% 16.1% 42.9% 45.3% 45.3%
If the occupancy rate decreased by 10% 7.8% 15.3% 16.3% 39.1% 41.8% 41.9%
5.5 Leasable Land and Building Floor Area Pricing
In section 5.2 a brief explanation has been given on the different types of property valuation methods. In
this sub-section, the document discussed the three property valuation methods: i.e. cost recovery
method, accounting method, and spatial analysis method.
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The rationale to use these methods
- Cost recovery method is well known and applicable in the functional IPs, which are owned by
IPDC;
- Cost recovery and the spatial analysis methods had been implementing in the ICT Park
Therefore, IPDC has been a profound experience in applying the cost recovery and spatial analysis method
and in all functional IPs and the ICT Park respectively.
To propose an ideal price for leasable land and space rent that is reasonable for both private investors or
developers and IPDC; the team conducts a market study and financial analysis using the accounting
method. This in turn will help to check the financial viability and sustainability of the Park.
5.5.1 The Practice of ICT Park Leasable Land and Office Space Pricing
So far, the Park transfers developed land in a lease from using 2018 approved ‘Land Lease Benchmark
Pricing Study Document’ (EIC, 2018). The document had been enforced for two years and now it is subject
to revision. This document allows the Park to transfer developed land with an average price of USD
4.00/M2/ for the lease period (EIC, 2018).
On the other hand, there are also some rentable office spaces within the Park. However, on the field
survey, the existing office spaces have been rented ETB 30.00/m2/Month. This rental price amount is
insignificant and ten to fifteen times lower than the market price.
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5.5.2 Proposed Leasable Land and Floor Area Pricing for the ICT park
It is known that the ICT Park location is becoming more accessible from time to time and strategically ideal
place within the Metropolitan city region of Addis Ababa. The Park is in close vicinity to the Bole
International Airport, Ethio-
Djibouti railway station namely
Indodie, and different higher
institutions like Addis Ababa
Science and Technology
University, Kotebe
Metropolitan University, Addis
Ababa University, Civil Service
University, etc. If we examine
the different IT or ICT-related
companies’ location, almost all
of them exists within 6km
radius from Bole International
Airport. Apart from this, ICT
Park will become an IT hub
Figure 143. ICT Related Business Companies Distribution within 6km
when the Ethio-telecom
Radius from Bole International Airport; Source: EIPP-JICA 2021
headquarters starts operation. These situations make the Park competent in attracting both domestic and
foreign investors.
In the following subsections proposed leasable land pricing and office space rental price presented using
the three different methods.
5.5.2.1 Proposed Leasable Land Pricing

As stated in chapters three and four, the team examined and analyzed the prevailing market price of
immovable property (land/building rental and selling price) as well as case studies from regional and
international experiences. Then the team examined the existing development status of the ICT Park and
its surrounding area as well as its connectivity and accessibility to the local, regional and international
community. Above all, the team tried to make a balance to attract both local and foreign investors and
address the general objectives of IPDC/ICT Park: i.e. enhance job creation, attract FDI and technology
transfer, while proposing attractive lease and rent price.
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In order to propose a selling price for leasable land, the team examined three different methods: Cost
Method, Account Method, and the Spatial Analysis Method.
5.5.2.1.1 Cost Method or Contractor’s Method
As stated earlier, IPDC is familiar with this method and it has been implementing to transfer shades and
developed lands to investors in all functional IPs. This method requests to assess the books and accounts
of the Park. Accordingly, we reviewed the financial statements and contractual agreements of the Park to
gathered all expenses that ICT Park had spent so far and its plan of infrastructure development costs.
Since those expenses were spent in different fiscal years, we used the average three basic years ETB to
USD conversion rates: 2018 - USD 27.66 for land preparation, infrastructure, and building; the 2019 - USD
29.21 for operational cost and 2021 year USD 40 for the future infrastructure cost. Accordingly, the total
infrastructure development cost is ETB 11,335,169,212.65 or USD 387,646,508.70. (See Table 30)
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Table 1130: ICT Park's Overall Infrastructure Development Cost
Categories of
Types of Cost Cost in ETB Cost in USD
Cost
Land Landscape design 173,995.00 6,290.49
preparation Landscape supervision & contract 254,495 9,200.83
administration service
Landscape construction 35,334,407.82 1,277,455.09
Compensation 31,380,375.09 1,134,503.80
Sub total 67,143,272.91 2,427,450.21
Infrastructure Road construction 8483423539 306,703,670.95
water supply 15,000,000.00 542,299.35
Electric power connection & 2,721,129.08 98,377.77
transformer
Telecom infrastructure 90,885,938.71 3,285,825.69
Public utility infrastructure design & 255,300.00 9,229.93
supervision
Sub total 8,592,285,906.40 310,639,403.70
Building All buildings 649,795,574.82 23,492,247.82
ICT Park fence building 4,853,248.00 175,460.88
Sub total 654,648,822.82 23,667,708.71
Operation Utility 1,540,402.52 52,735.45
cost Miscellaneous (Salary, stationary, etc.) 40,113,308.00 1,373,273.13
Sub total 41653710.52 1,426,008.58
Future Road, power, telecom, water, etc. 1,912,500,000.00 47,812,500.00
infrastructure Repair and maintenance cost (1.5%) 28,687,500.00 717,187.50
cost Administration cost (2%) 38,250,000.00 956,250.00
Sub total 1979437500 49,485,937.50
Grand total 11,335,169,212.65 387,646,508.70
Source: IPDC, 2021 and Computed by EIPP-JICA
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Since all the development cost has been covered from the government treasure, the Park does not have
a loan. Therefore, the simplest way of calculating development cost recovery per m2 in 10 and 15 years
are presented in the following tables.
Table 31: Total development Cost recovery within 10 years

Total Total Total Non- Development cost per Development Cost per Annual Revenue
Development leasable leasable M2 (D)=A/B M2/Year in 10 years (F)=B*E
cost (A) area (B) area (C) payment period (E)=D/10
387,646,508.70 1,136,800.00 804,800.00 341.00 34.1 38,764,650.87
Source: EIPP-JICA
Table 1232: Total development cost recovered within 15 years

Total Total Total Non- Development Development Cost per Annual Revenue
Development leasable leasable area cost per M2 M2/Year in 10 years (F)=B*E
cost (A) area (B) (C) (D)=A/B payment period (E)=D/15
387,646,508.70 1,136,800.00 804,800.00 341.00 22.73 25,843,100.58
Source: EIPP-JICA
Once we know the development cost we can compute the annual payment for the leasable land per m2.
To proceed with the proposed lease price, the document considered the following basic conditions:
i) There is a 10% down payment

ii) The lease payment period is 10 to 15 years,
iii) Interest is calculated from the residual cost/amount using the Commercial Bank interest rate
iv) There is one year holiday for the principal amount; and
v) There is one year grace period for the bank Interest
Therefore, the total down payment will be calculated using the formula:
Equation 1: Down Payment

Where:
D = C*R - D – Down payment

- C – Infrastructure development cost
- R – Rate
D = 387,646,508.70*10% = 2,267,033,842.53
Then the remaining cost will be recovered within ten and fifteen payment period of years. Based on the
above assumptions and equation the annual payment per m2 is illustrated in the following tables.
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Table 33: ICT Park Infrastructure Development Cost Recovery in 10 Years
Total Infrastructure Development Cost (C) 387,646,508.70
Down Payment (B)= C*10% 38,764,650.87
Remaining Infrastructure Development Cost (D) = (C-B) 348,881,857.83
Total leasable Total Non- Development cost Development Cost per Annual Revenue
area (E) leasable area (F) per M2 (G)=D/E M2/Year in 10 years (I)=E*H
payment period (H)=G/10
1,136,800.00 804,800.00 306.90 30.7 34,888,185.78
Table 34: ICT Park Infrastructure Development Cost Recovery in 15 Years
Total Infrastructure Development Cost (C) 387,646,508.70

Down Payment (B)= C*10% 38,764,650.87
Remaining Infrastructure Development Cost (D) = (C-B) 348,881,857.83
Total leasable Total Non- Development cost Development Cost per Annual Revenue
area (E) leasable area (F) per M2 (G)=D/E M2/Year in 15 years (I)=E*H
payment period (H)=G/15
1,136,800.00 804,800.00 306.90 20.5 23,258,790.52
Therefore, the ICT Park can avail developed land for investors using progressive payment methods within
10- and 15-years period. Accordingly, the proposed scheduler-based payment is presented in Table 34
and 35 for 10 and 15 years respectively. The schedular-based payment system advocates a progressive
rate in the majority of the payment period and a flat rate at the end of the payment period.
Table 35: ICT Park Progressive Scheduler Based Lease Payment in 10 years Period (USD)
Development cost per 1 to 3 (25%) 4 to 6 (50%) 7 to 9 (75%) >9 (Flat rate )
2
M in USD
30.7 7.67 15.34 23.02 35.20
Table 136: ICT Park Progressive Scheduler Based Lease Payment in 15 years Period (USD)
Development cost 1 to 3 (25%) 4 to 6 (50%) 7 to 9 (75%) >9 (Flat rate)
per M2 in USD
20.5 5.11 10.23 15.34 24.84
Source: Computed by EIPP-JICA, 2021; 1USD = 38.25
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Tables 35 to 36 depict interest is not included; therefore, interest should be calculated from the residual
cost/amount using the Commercial Bank interest rate. The other important thing as the number of years
increases the yearly payment amount per m2 decreases. It is known that; the Addis Ababa city
Administration Leas Payment period is 20 years and the lease period for the industry is 60 years; however,
for technology-related businesses, the lease period is 99 years. On the other hand, the 2018 benchmark
pricing document gives 30 years lease period, with 10 years payment period (EIC, 2018). Therefore, it is
advisable to extend the amortization period from 10 to 15 or 20 and the lease period from 30 to 50 or 50
years.
Since IPDC/ICT Park is a public enterprise, established with the intention of making a profit; for public
interests like attracting investors for job creation, technology transfer, and FDI, this method is not
recommendable for IPDC or the ICT park.
Advantage and Disadvantage of the Cost Method

ADVANTAGE DISADVANTAGE
- It is very easy to calculate - Since the method allows IPDC only to

- It helps IPDC to reimburse the reimburse development cost, it is seldom
development cost easily; to get profit;
- Since the calculation only consider - Some of the cost might be overlooked or
development cost the leasable price is missed;
relatively low; due to this the price become - It adversely affects the sustainability of
attractive for developers/investors the Park;
- the development cost prices will be
inflated
5.5.2.2 Account Method or Profits Method
On 5.4 the document analyzed the financial viability of the project using the account or profit
method. To recapitulate sub-section 5.4 addresses the financial viability of the ICT Park using two
options:
▪ Option I – IPDC will only provide basic infrastructure and administer, operate and manage
as it is and
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▪ Option II – IPDC will develop 40ha of land and construct additional buildings for missed
use purposes and provide basic infrastructure as well.
Based on these two options we identified the development cost. Here we used infrastructure
development cost to propose a price for leasable land. The document use building construction
cost to determine floor area rental price.
To proceed with the proposed lease price, as the cost recovery method, the accounting method also
considered the following basic conditions:
i) There is a 10% down payment

ii) The lease payment period is 10 to 20 years,
iii) Interest is calculated from the residual cost/amount using the Commercial Bank interest rate
iv) There is one year holiday for the principal amount; and
v) There is one year grace period for the bank Interest
Then, the proposed price for leasable land is computed using the following formula.
Equation 2: Progressive Payment

P = P + (n-1) d Where:
n 1
𝑆 (𝑛−1)𝑑 - C: Initial Cost

P1 = −
𝑛 2
- D: Down payment
- R: rate of interest
- S: the remaining sum
Note: S = (C – D) (1 + r%)
- n: the number of years (paired) to complete the payment ‘S’
- d: the difference (Increment of payment in each year)
As Equation 2 indicates, the formula requires three basic data: development cost, leasable land, and rate.
Given information
Description Option – I Option – II

Total development cost (USD) 624,785,510 649,145,961
Total leasable land (m2) 1,136,500m2 736,600m2
Rate of interest* 9.5% 9.5%
Rate for down payment 10% 10%
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*Interest rate should consider the Commercial Bank Interest rate
Based on the above-mentioned conditions and information the proposed lease price per m2 for 10, 15,
and 20 years for the two options demonstrated in the following tables.
Table 37: Account-Based Option I Lease Price (10 years)

Cost/m2 in
Variables Total Cost (USD) USD
c Initial cost 624,785,510.00 549.75
D Down payment 62,478,551.00 55.70
r The rate of interest 9.50%
s The remaining sum 615,726,120.11 494.04

No. of years to complete the
10 10
n(t) payment
increment of payment in each
13,682,802.67 10.98
d year
Payment Period Year Payment/year Payment/m2
Progressive Payments within
P1 2021 - -
P2 2022 13,682,802.7 11.0
P3 2023 27,365,605.3 22.0
10 years period
P4 2024 41,048,408.0 32.9

P5 2025 54,731,210.7 43.9
P6 2026 68,414,013.3 54.9
P7 2027 82,096,816.0 65.9
P8 2028 95,779,618.7 76.9
P9 2029 109,462,421.4 87.8
P10 2030 123,145,224.0 98.8
Table 38: Account-Based Option I Lease Price 15 Year)

Cost/m2 in
Variables Total Cost (USD) USD
C Initial cost 624,785,510.00 549.75
D Down payment 62,478,551.00 55.70
R The rate of interest 9.50%
S The remaining sum 615,726,120.11 494.04
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15 15
n(t) payment
D increment of payment in each year 5,864,058.29 4.71
Payment Period Year Payment/m2 Payment/m2
P1 2021 - -
Progressive Payments within 15 years
P2 2022 5,864,058.3 4.7

P3 2023 11,728,116.6 9.4
P4 2024 17,592,174.9 14.1
P5 2025 23,456,233.1 18.8
P6 2026 29,320,291.4 23.5
P7 2027 35,184,349.7 28.2
period
P8 2028 41,048,408.0 32.9

P9 2029 46,912,466.3 37.6
P10 2030 52,776,524.6 42.3
P11 2031 58,640,582.9 47.1
P12 2032 64,504,641.2 51.8
P13 2033 70,368,699.4 56.5
P14 2034 76,232,757.7 61.2
P15 2035 82,096,816.0 65.9
Table 39: Account-Based Option I Lease Price (20 years)

Total Cost Cost/m2 in
(USD) USD
c Initial cost 624,785,510.00 549.75
D Down payment 62,478,551.00 55.70

20 20
n(t) payment
increment of payment in
3,240,663.79 2.60
d each year
Payment
Period Year Payment/m2 Payment/m2
P1 2021 - -
Payments within
15 years period
P2 2022 3,240,663.8 2.6

Progressive
P3 2023 6,481,327.6 5.2

P4 2024 9,721,991.4 7.8
P5 2025 12,962,655.2 10.4
P6 2026 16,203,319.0 13.0
P7 2027 19,443,982.7 15.6
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P8 2028 22,684,646.5 18.2
P9 2029 25,925,310.3 20.8
P10 2030 29,165,974.11 23.4
P11 2031 32,406,637.9 26.0
P12 2032 35,647,301.7 28.6
P13 2033 38,887,965.5 31.2
P14 2034 42,128,629.3 33.8
P15 2035 45,369,293.1 36.4
P16 2035 48,609,956.9 39.0
P17 2035 51,850,620.6 41.6
P18 2035 55,091,284.4 44.2
P19 2035 58,331,948.2 46.8
P20 2035 61,572,612.0 49.40
Table 37 to 39 depicts the proposed lease price for 10, 15 and 20 payment periods. If we expand the
payment period it will become more convenient for investors to pay the annual lease amount without
feeling the pain. The main difference between the three payment periods lays in yearly incremental
amount, that is USD 10.98, USD 4.71, and USD 2.60per m2 for 10, 15, and 20 years respectively.
Table 40: Account-Based Option II Lease Price (10 years)

Variables Total Cost (USD) Cost/m2 in USD
c Initial cost * 649,145,961.00 881.27
D Down payment 64,914,596.10 57.87

10 10
n(t) payment
14,216,296.55 18.30
d each year
Payment
Period Year Payment/year Payment/m2
Payments within
10 years period
P1 2021 - -
Progressive
P2 2022 14,216,296.5 18.3

P3 2023 28,432,593.1 36.6
P4 2024 42,648,889.6 54.9
P5 2025 56,865,186.2 73.2
P6 2026 71,081,482.7 91.5
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P7 2027 85,297,779.3 109.8
P8 2028 99,514,075.8 128.1
P9 2029 113,730,372.4 146.4
P10 2030 127,946,668.9 164.7
Table 41: Account-Based Option II Lease Price (15 Years)

Variables Total Cost (USD) Cost/m2 in USD
c Initial cost 649,145,961.00 881.27
D Down payment 64,914,596.10 57.87

No. of years to complete
15 15
n(t) the payment
increment of payment
6,092,698.52 7.84
d in each year
P1 2021 - -
Progressive Payments within 15 years
P2 2022 6,092,698.5 7.8

P3 2023 12,185,397.0 15.7
P4 2024 18,278,095.6 23.5
P5 2025 24,370,794.1 31.4
P6 2026 30,463,492.6 39.2
P7 2027 36,556,191.1 47.1
period
P8 2028 42,648,889.6 54.9

P9 2029 48,741,588.2 62.7
P10 2030 54,834,286.7 70.6
P11 2031 60,926,985.2 78.4
P12 2032 67,019,683.7 86.3
P13 2033 73,112,382.2 94.1
P14 2034 79,205,080.8 101.9
P15 2035 85,297,779.3 109.8
Table 42: Account-Based Option II Lease Price (20 years)

Total Cost (USD) Cost/m2 in USD
c Initial cost 649,145,961.00 881.27
D Down payment 64,914,596.10 57.87
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20 20
n(t) payment
3,367,017.60 4.33
d each year
P1 2021 - -
P2 2022 3,367,017.6 4.3
Progressive Payments within 15 years period
P3 2023 6,734,035.2 8.7

P4 2024 10,101,052.8 13.0
P5 2025 13,468,070.4 17.3
P6 2026 16,835,088.0 21.7
P7 2027 20,202,105.6 26.0
P8 2028 23,569,123.2 30.3
P9 2029 26,936,140.8 34.7
P10 2030 30,303,158.43 39.0
P11 2031 33,670,176.0 43.3
P12 2032 37,037,193.6 47.7
P13 2033 40,404,211.2 52.0
P14 2034 43,771,228.8 56.3
P15 2035 47,138,246.4 60.7
P16 2035 50,505,264.0 65.0
P17 2035 53,872,281.6 69.3
P18 2035 57,239,299.3 73.7
P19 2035 60,606,316.9 78.0
P20 2035 63,973,334.5 82.34
Table 40 to 42 depicts that the proposed lease price for 10, 15 and 20 payment periods. If we expand the
payment period it will become more convenient for investors to pay the annual lease amount without
feeling the pain. The main difference between the three payment periods lays in yearly incremental
amount, that is USD 18.30, USD 7.84, and USD 4.33 per m2 for 10, 15, and 20 years respectively.
Like the cost recovery, both options of the Account method do not consider the real estate maxim of
‘location, location, location’. It does not give value to the strategic location of the Park and some
intrinsic element that plays a significant role in adding value for the Park. This is technically known as
hedonic price. Therefore, the team does not recommend IPDC to use the account method results for
the leasable land transaction.
Advantage and Disadvantage of the Account Method
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- It is relatively easy to calculate - Since the method allows IPDC only to

- It helps IPDC to reimburse the reimburse development cost, it is seldom
development cost; to get profit;
- Since the calculation only consider - The development cost might be
development cost using the current market adversely affected by unhealthy market
price, the cost price should not affect by price;
inflation - It adversely affects the sustainability of
the Park;
5.5.2.3 Spatial Analysis Method
As the name indicates the spatial analysis method examines the existing condition of ICT Park by sating
different parameters. In this document, the Park is examined from the availability of basic infrastructure,
land use, physical property, and availability of services. The physical property encompasses slope, plot
size, frontage, and accessibility. Proximity to or availability of basic infrastructure enshrined: distance from
the main road, distance from a transportation hub, availability of water and sewerage line, availability of
power, availability of telecom line. Social service encompasses distance from administration and distance
from public space.
To compute each plot and zone the team, develop a matrix and give weight for each variable. Then each
variable is systematically categorized into three groups. Then the team set criteria for rating the plot or
the zone. The different values given for each variable are demonstrated in table 43.
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Table 43: Comparison Matrices for Spatial Analysis
Category Variables Alternatives Values Weight Remark
Basic Distance from main road 0-75m 20 20% As the distance from
Infrastructure 75-150 16 the main road increase,
150-400 12 the value decreased.
400-750 8
750-1500 4
Distance from transportation 0-75m 10 10% As distance from
stop (station) 75-150 8 transportation stop
150-400 6 increase the value
400-750 4 decreased.
750-1500 2
Availability of water & Yes 5 5% To give more weight to
sewerage line No 0 available infrastructure
Availability of electric line Yes 5 5%
No 0
Availability of telecom Yes 5 5%
infrastructure No 0
Sub-total 45%
Land use ICT Related Business 5% Each land use has been
Technology Related Manufacturing 25% assigned weight out of
& Warehouse 35%. The least weight is
Vocational & Training Center 15% given as per the relation
ICT Research & Development (R&D) Area 10% of the use with the ICT
ICT Commercial area 35% business, to keep the
Residential Area 10% cost as minimum as
possible.
Sub-total 35%
Physical Slop 0% < x < 1% 0 3% As the slop increased
property 1% < x < 2% 1 the value also
2% < x < 3% 2 increased.
>3% 3
Plot Size 0-0.5ha 1 5% As plot size increased
0.5-1ha 2 the value also
1h-1.5ha 3 increased.
1.5h-2ha 4
>2h 5
Frontage 0-100m 1 4% Plot which has long
100-200m 2 frontage get high value
200-300m 3
>300m 4
Accessibility 1 1 3% Access to road or
2 2 streets
3 3
Sub-total 15%
Proximity to Distance from Administration 0-500m 2 2% Plot near to admin
Services Building 500-1000m 1 space get high value
>1000m 0
Distance from public space 0-200m 3 3% Plot near to public
200-500m 2 space get high value
500-1000m 1
>1000m 0
Sub-total 5%
Grand Total 100%
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Figure 24: Slope Map of ICT Park; Source: Computed by EIPP-JICA 2021.
Based on the aggregate value, the document calculates the Price for leasable land using the following
formula.
Equation 3: Leasable Land Price Sating

Where:
o LP – Lease price
LP= DC + dc (a +b +c +d) o DC – Development cost

o a – aggregate sum of available basic infrastructure
o b - the aggregate sum of land use
o c - the aggregate sum of Physical property
o d - the aggregate sum of available service
As equation 3 requests, development cost (DC) and all the values of other variables are built on it. In this
part, we used the two options development costs that are stated on the accounting method. There is
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uncertainty on the amount of developmental cost, which is mentioned in the cost recovery method,
because of the time laps and improper documentation.
Therefore, based on the above assumptions and formula the proposed lease price (LP) based on account
method Option I & II development cost is presented below. The leas price labeled for each zone indicates
the proposed price in USD per m2 for the lease payment period. Unlike the previous methods, the spatial
analysis method proposed a lease price for each zone or land use function.
Table 44: Scenario I - Account Method Option I Based Spatial Analysis Lease Price
No. Land Use (Zone) Min Average Max
1 ICT Related Business 648.70 729.67 907.08
2 Technology Related Manufacturing & Warehouse 786.14 870.06 945.56
3 ICT Research & Development 676.19 691.58 703.67
4 Vocational & Training Center 819.12
5 Commercial 863.10 96.88 1,072.07
6 Residential Area 786.14 824.62 846.61
Table 44 indicates the minimum average and maximum LP for each major land use zones. In order to
attract more investors, the price per m2 is relatively low for ICT-related businesses and R & D. On the other
hand, to deter technology-related manufacturing in the area, a relatively high price is labeled to it. The
commercial area is located closer to the municipal major road and relatively developed area, as a result,
the area has the highest lease price.
In this scenario, the leasable land lease price is ranging from 648.70 to 1,072.08 per m2 for the lease period
(30 years). This indicates that the crude lease price per m2 will be between USD 21.62 to 35.73 per year.
The result depicts the real market price of leasable land in the area because, it shows a reasonable price
increment from the 28th average lease price (USD 558.3/m3), and almost equal to the market assessment
result conducted by the team.
Therefore, the price is plausible for both IPDC and investors, because it is within the range of the average
market price of the area, almost within the range of Rwanda (USD 24.00 - USD 62.00/m2 per year) case
and lower than Malaysia (USD 58.00 - USD 75.00/m2 per year).
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Table 45: Scenario II – Account-Based Option II Spatial Analysis Lease Price
No. Land use (Zone) Min Average Max
1 ICT Related Business 1,039.90 1,169.70 1,454.10
2 Technology Related Manufacturing & Warehouse 1,260.22 1,394.76 1,515.79
3 ICT Research & Development 1,083.97 1,108.64 1,128.03
4 Vocational & Training Center 1,313.10
5 Commercial 1,383.60 1,598.04 1,718.48
6 Residential Area 1,260.22 1,321.91 1,357.16
Like scenario I, The leas price labeled for each zone indicates the proposed price in USD per m2 for the
lease payment period; and we also used the same logic for Scenario II, to determine the price per m2 for
each zone. Due to this ICT, related business areas have the least lease price and technology-related areas
have the highest lease prices compare to other zones. (See Table 45)
If we further examine the results in both scenarios the lease price is ranging from 1,039.90 to 1,718.48
per m2 for the lease period (30 years). This indicates that the crude lease price per m2 will be between
USD 34.66 to 57.28 per year. This result indicates the future leasable land price after the development
of 40ha of land by IPDC. This result is also lays within the range of both Rwanda (USD 24.00 - USD
62.00/m2 per year) and Malaysia (USD 58.00 - USD 75.00/m2 per year) cases.
The team proposed to use Scenario I Account Method Option I Based Spatial Analysis result for leasable
land transaction with investors. Because, conditions to determine the development cost are based on
the existing situation of the Park, excluding new architectural or building development. Due to this the
lease price is relatively lower than Scenario II.
The team also recommends IPDC use the minimum, average and maximum results of Scenario I Account
Method Option I Based Spatial Analysis for domestic companies, jointly owned companies, and foreign
companies respectively.
With regards to the lease period, as stated above the applicable lease period for technology-related
investment is 99 years; countries experience also indicates 49 years in Egypt and 76 years in Malesia.
Therefore, IPDC should reconsider the lease period and extend 40 to 50 years, to make the Park more
preferable to the municipal land.
64 | P a g e
Advantage and Disadvantage of Spatial analysis Method
- It allows IPDC to critically evaluate the area using - Since the method allows IPDC
different variables to get profit, it will deter
- It helps IPDC to reimburse the development cost as developers;
well as add additional revenue; - The development cost might
- Since the calculation allows IPDC to use the current be adversely affected due to
market price, the development cost price should not unhealthy market price;
affect by inflation
5.5.3 Rental Space Pricing
At the asset inventory or property auditing part, the Park has six buildings with a total plot area of 45,800
m2 and a total floor area of 143,612m2. This space has ample potential to generate revenue in the form of
renting the area for offices and other ICT-related businesses.
Here, the rental space price for the existing building floor area using the market survey data and the
construction contract amount.
Basic information
Description Cost Method Account method Option – II
Total area (m2) 45,800 445,800
Total building development cost (USD) 26,034,489 613,641,407
Adjusted building development cost* (USD) 43,113,113.78 1,016,190,169.99
Total floor area (m2) 143,612.00 2,555,924.00
Cost per m2 (USD) 300.21 397.58
*Price Adjustment on building development cost: inflation is one of the major external variables which
has an adverse effect on the development cost of building construction. To mitigate the impact of inflation
on the building's construction cost, the document used the past five consecutive years' average USA
Federal Inflation rate.1 Based on this the average inflation rate is USD 1.656. The document used this
1 http//www.statista.com/statistics/244983/projected-inflation-rate-in-the-united-states; Accessed in 02/19/2021
65 | P a g e
inflation rate to adjust the price per m2 for the rentable office space price calculation. Therefore, the
adjusted building development cost price is presented in table 46.
Based on this basic information we set the following assumptions to determine the rent price for the floor
area.
Assumptions
- The profit margin is 10% or 15% or 20% of the building estimated total value
- Building development cost includes: 1.5% of the development cost for maintenance + 2% of the
development cost for administration
- The building useful life is 20 years
- Building occupancy rate is 30% of the total floor area due to COVID-19
Using the above basic information and assumptions, the proposed rent price is demonstrated in table 46.
The table compares the estimated building values obtained using the cost method and option II of the
accounting method. It has also shown the proposed monthly rental price of the floor area in these two
methods with 10%, 15 %, and 20% profit margin.
Accordingly, the proposed monthly rental price per m2 ranges from USD 9.06 to 9.49 with a 10% to 20%
profit margin for the cost recovery method and USD 12 to 12.57 for Option II of the accounting method.
Unlike the option II account method, the cost method computes the existing buildings' developmental
cost-plus additional administration costs as well as ten to twenty percent of profit margin. Apart from this,
the proposed rental price makes the Park preferable, because it is lower than the maximum market survey
result price (USD 9.67 m2/month) for business office rent. Compare to other countries market condition
the price is almost equivalent to the maximum rental price of Malaysia (USD6.4 - 9.0/m2/month) and in
some cases, even lower than the average rental price of South Africa (USD 13.67/m2/month) and Rwanda
(USD12-15/m2/month).
Therefore, the team recommends IPDC use a monthly rental price of USD 9.06 per m2/month for
domestic business organizations, USD 9.28 per m2/month for companies owned by both foreign and
Ethiopian nationals, and USD 9.49 per m2/month for foreign organizations. (See Table 46)
66 | P a g e
Table 46: Proposed Space Rental Price with 10%, 15% & 20% Profit Margin for Cost Recovery and Option II of Account Method
10% profit margin 15% Profit Margin 20% Profit Margin
Variables Account Method - Account Method - Account Method -
Cost method Cost method Cost method
Option II Option II Option II
Total Floor Area m2 (A) 143,612.00 2,555,924.00 143,612.00 2,555,924.00 143,612.00 2,555,924.00
Building development cost (B) 26,034,489.00 613,641,407.00 26,034,489.00 613,641,407.00 26,034,489.00 613,641,407.00
Administration cost (C) = B*2% 520,689.78 12,272,828.14 520,689.78 12,272,828.14 520,689.78 12,272,828.14
Operation and Mentenance
390,517.34 9,204,621.11 390,517.34 9,204,621.11 390,517.34 9,204,621.11
Cost(D)= B*1.5%
Total building development cost (E)
26,945,696.12 635,118,856.25 26,945,696.12 635,118,856.25 26,945,696.12 635,118,856.25
= B+C+D
Adjusted building development
44,622,072.77 1,051,756,825.94 44,622,072.77 1,051,756,825.94 44,622,072.77 1,051,756,825.94
cost (F) = E*Inflation (1.656)
Profit margin (G) = F*10% or 15%or
49,084,280.04 1,156,932,508.54 51,315,383.68 1,209,520,349.83 53,546,487.32 1,262,108,191.13
20%
Total value of the house (H) = F+G 93,706,352.81 2,208,689,334.48 95,937,456.45 2,261,277,175.77 98,168,560.09 2,313,865,017.07
Rental Price per m2 (I)= H/A 652.50 864.15 668.03 884.72 683.57 905.29
If the occupancy rate is 30% of the
43,083.60 766,777.20 43,083.60 766,777.20 43,083.60 766,777.20
floor area (J) = A*30%
Adjusted rental price m² (K) = H/J 2,174.99 2,880.48 2,226.77 2,949.07 2,278.56 3,017.65
Adjusted rental price m²/year (L) =
108.75 144.02 111.34 147.45 113.93 150.88
K/20
Adjusted rental price per m²/month
9.06 12.00 9.28 12.29 9.49 12.57
(M) = L/12
67 | P a g e
Post covid effect
As the covid-19 pandemic hit the planet its negative effect spread throughout all the endeavors of human
activities. Businesses and economy being the major activities hit severely among others, its rapid spread
made it difficult for countries to deal with. Contrary to the common assumption about the disaster, the
tech business flourished tremendously and came out on top in the world of business. The covid pandemic
has also had taken its’ toll in every business sector in Ethiopia affecting the supply and demand chain,
which result caused price fluctuation. While some items, the likes of food and consumer products had
shown a price rise, the service industry took a hit for some time. As result, the Ethiopian government took
actions to control prices on necessary food items, while only putting recommendations for the citizen to
ease up on prices and consider the time on rents and such.
Despite the problem and recommendation from the government no significant amount of price reduction
was seen on the rental market both for residence and business. As this study was started following the
month's pandemic hit, no amount of price fluctuation on the current market regarding rental price for
office was observed. An additional survey made on the local rental properties listed above showed the
same price tag being used by the companies.
5.5.4 Sample Progressive payment for Lease Transaction

Assume that Mr. K wants to buy B8-Lot-4 of the ICT Related Business Zone.
- The leasable area of the plot is 3000.19 m2

- Down payment 10%
- The interest rate is 9.5%
- The payment period is 15 years
Methods Options/Scenario Lease Price/m2 USD

Account Method I 549.75
II 881.27
Spatial Analysis I 728.67
II 1,169.70
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Based on the above information, IPDC can treat Mr. K using the accounting method or spatial analysis
method. in the following tables Account-Based Option I & II, as well as Spatial Analysis Method Scenario I
& II, the proposed lease price is presented:
Table 47: Account Method Option I – Progressive Payment for 15 years

Variables Total Cost Cost/m2
c Initial cost 1,649,354.45 549.75
D Down payment 164,935.45 54.98

15 15
n(t) payment
15,480.37 4.71
d each year
P1 2021 - -
P2 2022 15,480.4 4.7
P3 2023 30,960.7 9.4
P4 2024 46,441.1 14.1
Progressive Payments within 15
P5 2025 61,921.5 18.8

P6 2026 77,401.8 23.6
P7 2027 92,882.2 28.3
years period
P8 2028 108,362.6 33.0

P9 2029 123,843.0 37.7
P10 2030 139,323.3 42.4
P11 2031 154,803.7 47.1
P12 2032 170,284.1 51.8
P13 2033 185,764.4 56.5
P14 2034 201,244.8 61.3
P15 2035 216,725.2 66.0
Table 48: Account Method Option II – Progressive Payment for 15 years

c Initial cost 2,643,167.39 881.00
D Down payment 264,316.74 88.10
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15 15
n(t) payment
24,808.01 7.55
d year
P1 2021 - -
P2 2022 24,808.0 7.6
P3 2023 49,616.0 15.1
P4 2024 74,424.0 22.7
P5 2025 99,232.1 30.2

P6 2026 124,040.1 37.8
P7 2027 148,848.1 45.3
years period
P8 2028 173,656.1 52.9

P9 2029 198,464.1 60.4
P10 2030 223,272.1 68.0
P11 2031 248,080.1 75.5
P12 2032 272,888.2 83.1
P13 2033 297,696.2 90.6
P14 2034 322,504.2 98.2
P15 2035 347,312.2 105.7
Table 49: Spatial Analysis Method Scenario I – Progressive Payment for 15 years
c Initial cost 2,189,148.64 729.67
D Down payment 218,914.86 72.97

15 15
n(t) payment
20,546.72 6.25
d year
P1 2021 - -
P2 2022 20,546.7 6.3
P3 2023 41,093.4 12.5
years
Progr
perio
withi
ment
2024 61,640.2 18.8

essiv
P4
n 15
Pay
d
e
P5 2025 82,186.9 25.0
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P6 2026 102,733.6 31.3
P7 2027 123,280.3 37.5
P8 2028 143,827.1 43.8
P9 2029 164,373.8 50.0
P10 2030 184,920.5 56.3
P11 2031 205,467.2 62.5
P12 2032 226,014.0 68.8
P13 2033 246,560.7 75.1
P14 2034 267,107.4 81.3
P15 2035 287,654.1 87.6
Table 50: Spatial Analysis Method Scenario II – Progressive Payment for 15 years
c Initial cost 3,509,322.24 1,169.70
D Down payment 350,932.22 116.97
s The remaining sum 3,458,437.07 1,052.73

15 15
n(t) payment
32,937.50 10.03
d year
P1 2021 - -
P2 2022 32,937.5 10.0
P3 2023 65,875.0 20.1
P4 2024 98,812.5 30.1
P5 2025 131,750.0 40.1

P6 2026 164,687.5 50.1
P7 2027 197,625.0 60.2
years period
P8 2028 230,562.5 70.2

P9 2029 263,500.0 80.2
P10 2030 296,437.5 90.2
P11 2031 329,375.0 100.3
P12 2032 362,312.5 110.3
P13 2033 395,250.0 120.3
P14 2034 428,187.4 130.3
P15 2035 461,124.9 140.4
71 | P a g e
PART SIX: Conclusion and Recommendation
6.1 Conclusion
ICT Park is a public enterprise, which primarily engaged in the development, operation, and management
of information and technology parks and renders services related to information and technology. The
total area of the ICT Park is nearly 200ha. To make the Park more functional and well-integrated, there
are six Zones: i.e. Commercial area, ICT-related Business, Research & Development (R&D), Technology
Related Manufacturing & Warehouse, Vocational & Training Center, and Residential area. Of these ICT-
related businesses covers the largest portion, followed by Technology Related Manufacturing &
Warehouse. The property auditing result depicts that, the ICT Park has 1,136,500.00 m2 or 113.65ha
leasable area, which accounts for 58.543% of the total area. This area excludes green areas, roads, power
stations, and the already constructed buildings (4.6ha of plot area) that serve for administration and
generate revenue through renting spaces. From the total leasable area, ICT-related business and
commercial area account for 64.56%. Based on these basic facts the document examines the financial
viability of the Park and evaluates the immovable property of the Park using three well-known methods.
Namely, cost recovery method, account method, and spatial analysis method. The document identified
that: the Park is financially viable both in Option I and II in the 20 years time period. However, the viability
of Option I highly relies on IPDC’s engagement in different kinds of service provision for tenants. The
sensitivity analysis is also indicating the viability of the Park during the time of market instability like
construction cost inflation, revenue reduction, etc. With regards to leasable land price setting, the cost
method is not convenient for leasable land price; because of the ICT Park books and accounts
documentation problem, which will create an adverse effect on the result. However, the building
development cost obtained through the cost method is the best way to determine floor area rental price
with some adjustments. To propose the lease price, the appropriate method is Option I of the accounting
method. Because it examines the immovable property of the Park using the current market price and the
development condition of the park as it is with only additional infrastructure provision.
6.2 Recommendations
Therefore, based on the findings the team forwards the following Recommendations.
➢ From the three methods, the team proposed the Spatial Analysis Method for leasable land price-
setting; because, it allows IPDC to add value for the location, level of infrastructure development,
72 | P a g e
etc. From the two scenarios, the team proposed Scenario I, which allows IPDC to use the current
developmental cost market price and add the value of the location for each zone.
➢ The team proposed Scenario I Lease Price that stated in Table 44: the Minimum price for domestic
investors; Average price for jointly owned companies and Maximum price for foreign investors.
➢ Let comers should be treated based on Scenario II Lease Price that stated in Table 45: the
Minimum price for domestic investors; Average price for jointly owned companies and Maximum
price for foreign investors.
➢ With regards to the office space rental price, the team proposes cost recovery-based results
which are enshrined under Table 46. Like the lease price, IPDC should also use the 10 percent
profit margin (USD 9.06) for domestic investors, the 15 percent profit margin (USD 9.28) for jointly
owned companies, and the 20 percent profit margin (USD 9.49) for foreign investors.
➢ Let comers should be treated based on Account method Option II, which is stated in Table 46. Like
the Cost method, IPDC should use a 10 percent profit margin (USD 12.00) for domestic investors,
the 15 percent profit margin (USD 12.29) for jointly owned companies, and the 20 percent profit
margin (USD 12.57) for foreign investors.
➢ The team recommends a minimum of 10% down payment and one year of the grace period.
however, the interest rate should be taking the Commercial Bank rate and calculated from the
residual amount. The detailed standard operating procedure manual (SOPM) should be
developed to govern the lease payment, incentives for full payment, the penalty for non-
performance or unable to pay, etc.
➢ To create a pleasant eco-system within the ICT Park, standard development guideline (SDG) is
very crucial. Therefore, IPDC should give priority to the development of this guideline.
➢ In order to generate revenue for the sustainability or profitability of the Park, IPDC/ICT Park
should provide different services like Telecom related business (High-speed internet service,
Virtual private network service, VSAT connection service); Data infrastructure-related (Datacenter
service, Email, hosting and related, Cloud computing service, High-performance computing); Hard
Infrastructure related (Consumer Electrical power, High power electricity, Renewable electrical
power or solar, Water, Recreational amenities e.g. Gym, Spa, etc., Shopping, cafeteria, restaurant
and related); Human capital related (Excellence center, Test center, Human requirement for
companies); and Others (One-stop center, Co-working space rental, Furnished working space
rentals) for tenants as well as for other service seekers.
73 | P a g e
➢ It is known that ICT Park is different from the other manufacturing-oriented Parks; therefore, the
lease period of the Park should be revised in line with the lease law.
➢ Last but not least, IPDC should have the mandate to adjust the lease and office rent price, contract
management, and other related activities.
74 | P a g e
Reference
AACPPO. (2017, July). Building Height Plan of Addis Ababa. Addis Ababa, Ethiopia: Addis Ababa City
Planing Project Office.
bluemoonethiopia. (2020, December 22). Retrieved from bluemoon: www.bluemoonethiopia.com
EIC. (2018). Summary and Recomendations for the Approval of ICT Park Land Lease Banchmark Price
Study . Addis Ababa : EIC.
FDRE-. (2020). Investment Regulation No. 474/2020. Addis Ababa : Birhan Ena Selam .
FDRE-HoPR. (1995). Constitution of the Federal Dimocratic Republic of Ethiopia Proclamation No.
1/1995. Addis Ababa : Birhan Ena Selam .
FDRE-HoPR. (2010). Information Technology Park Corporation Establishment Council of Ministers

Regulation No. 177/2010. Addis Ababa : Birhan Ena Selam .
FDRE-HoPR. (2011). Urban Lands Lease Holding Proclamation No. 721/2011. Addis Ababa : Birhan Ena
Selam .
FDRE-HoPR. (2014). Industrial Parks Development Corporation Establishment Council of Ministers

Regulation No. 326/2014. Addis Ababa : Birhan Ena Selam .
FDRE-HoPR. (2015). Industrial Parks Proclamation No. 886/2015. Addis Ababa : Birhan Ena Selam .
FDRE-HoPR. (2017). Industrial Parks Council of Ministers Regulation No. 417/2017. Addis Ababa : Birhan
Ena Selam .
FDRE-HoPR. (2019). Investment Proclamation No. 1180/2019. Addis Ababa : Birhan Ena Selam .
FDRE-NPC. (2015). Grothe and Transformation Plan (2015-2020). Addis Ababa : National Planing
Commission .
FDRE-PC. (2020). Digital Ethiopia 2025: A Digital Strategy for Ethiopia Inclusive Prosperity. Addis Ababa:
Federal democratic Republic of Ethiopia - Planing & Development Commission.
FDRE-PDC. (2021). Ten Years Development Plan: A Pathway to Prosperity (2021-2030). Addis Ababa :
FDRE-PDC.
Geltner, David, Nevufville, D., & Richard. (2018). Flexibility and Real Estate Valuation Under Uncertainty;
A practical guide for Developers. West Sussex, Uk: John Wiley & Sons Ltd Publisher.
iceaddis. (2020, Decemeber 22). Retrieved from iceaddis: www.iceaddis.com
iGuide Rwanda. (2020, December 22). Retrieved from UNCTAD-ICC INVESTMENT GUIDES:
https://www.theiguides.org/public-docs/guides/rwanda
IPDC. (2018). Basline Study for Bole Lemi and Kilinto Industrial Parks Infrastructure Development Cost
Recovery . Addis Ababa : IPDC.
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IPDC. (2018, October). Industrial Parks Development Corporation Bole Lemi II and Kilinto Industrial Parks
Cost Recovery Base line Study (Approved). Addis Ababa: IPDC.
IPDC. (2019). Asset Valuation of Information Technology Park (ICT Park). Addis Ababa: IPDC.
IPDC. (2019). Bole Lemi Smart Industrial City: A Comprehensive Master Plan for Bole Lemi Industrial,
Business and Science Park. Addis Ababa : IPDC.
IPDC. (2021, Janiary 29). Industrial Park Develpment Corporation: Strategic Plan and Roadmap (2021-
2030). Addis Ababa, Ethiopia : IPDC.
ITIDA. (2020, December 02). Retrieved from ITIDA: itida.gov.eg/English/Pages/default.aspx
Manganelli, & Benedetto. (2015). Real Estate Investing; Market Analysis, Valuation Techniques, and Risk
Management. Switzerland: Springer International Publishing .
Mooya, & Manya, M. (2016). Real Estate Valuation Theory: A critical Appraisal. Berlin, German: Springe
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Xiao, & Yang. (2017). Urban Morphology And housing Market. Shanghai, China: Tongji University Press
and Springer Nature Singapore Pte Ltd.
76 | P a g e
Annex
I. Questioners
a) Site Survey Checklist for Building Function Labeling
(This data was collected using KoBotoolbox)
▪ City: Addis Ababa Sub-City: Bole Woreda: 11
▪ Is there a building? Yes ……….. No………
▪ Please take a geo-referenced location of the area ……………..
▪ Please take a picture
▪ If there is a building what is its zoning or function?
Building Name
Zone/function Area M2 Description
▪ If there is no building what is its zoning or proposed function?
Name of the Zone

Zone/function Area M2 Description
b) Market Assessment Tool

Market Assessment Tool of Housing unite price for Bureau (Office) Rental Purpose
Name of the specific site ……………..
Tenure Unit Area Rental Selling
Building Type Story***
Type* Type** (m2) Price/Month Price Remarks
Row house
Villa/Detached
House
Condominium
Apartment
Town house
Other
NB: * 1= Public; 2= Private; 3= Cooperatives; 4= Other
77 | P a g e
**1=a room/Studio; 2= One bedroom; 3= Two bedrooms; 4=Three bed rooms; 5= Four
bedrooms & above
***1= G+0; 2=G+1; 3= G+2; 4= G+3; 5= G+4; 6= G+5 and Above
Market Assessment Tool for Mixed used Land Selling Price

Name of the specific Area ……………..
Selling
Tenure Type Area (m2) Price Remarks
(ETB)
Government owns
- Lease auction
- Negotiation
- Fixed
Private one
Other
78 | P a g e
Ethiopia Investment Commission
REPORT ON INDUSTRIAL PARK
REGULATORY FRAMEWORK
Introduction Report
JICA-EIPP
April 2022
Table of Contents
1 INTRODUCTION............................................................................................................... 1
1.1 Background of the Study .............................................................................................................. 1
1.2 Objective of the Study .................................................................................................................. 1
1.3 Method of the Study ..................................................................................................................... 1
2 LEGAL BASIS FOR INDUSTRIAL PARK REGULATORY WORK............................. 2
2.1 Legal Basis for Economy-based Regulatory Work ...................................................................... 2
2.2 Legal Basis for Social-based Regulatory Work............................................................................ 2
2.3 Legal Basis for Environment-based Regulatory Work ................................................................. 4
3 IMPLEMENTING BODY FOR INDUSTRIAL PARK REGULATORY WORK ........... 8
3.1 IP Regulation Directorate at EIC Head Office ............................................................................. 8
3.2 Branch Office at Industrial Parks ................................................................................................. 8
3.3 External Organizations Depending on Required Expertise .......................................................... 8
4 CURRENT PROVISION OF INCENTIVES TO INVESTORS IN INDUSTRIAL
PARKS ................................................................................................................................ 9
4.1 The Latest Incentive Package for Investors in Industrial Parks.................................................... 9
4.2 Current Status of Incentive Granting Authority ........................................................................... 9
5 ECONOMY-BASED REGULATORY WORK ............................................................... 11
5.1 Overview of Industrial Parks Regulatory Work ......................................................................... 11
5.2 Work Permit and Transfer of Knowledge and Skills.................................................................. 13
5.3 One-Stop Services Provision ...................................................................................................... 19
5.4 Monitoring and Evaluation for Economic Issue ......................................................................... 21
5.5 Way Forward to Further Economic Development...................................................................... 21
6 SOCIAL-BASED REGULATORY WORK..................................................................... 23
6.1 Labor Affairs in the Industrial Parks .......................................................................................... 23
6.2 Monitoring and Evaluation for Social Issue ............................................................................... 24
7 ENVIRONMENTAL-BASED REGULATORY WORK ................................................ 26
7.1 Overview of Industrial Parks Regulatory Work ......................................................................... 26
7.2 Structure of the Regulatory Framework ..................................................................................... 27
7.3 Environmental Performance Indicators ...................................................................................... 30
8 MONITORING AND EVALUATION OF REGULATORY WORK ............................. 34
8.1 Overview of Monitoring and Evaluation .................................................................................... 34
8.2 Monitoring of Country-Level FDI Inflow .................................................................................. 34
8.3 Monitoring of Export and Employment Trends ......................................................................... 35
8.4 Suggested Survey on Operational Status of IP Enterprises ........................................................ 35
8.5 Monitoring of Knowledge and Skills Transfer Training ............................................................ 37
Industrial Park Regulatory Framework
CHAPTER 1: INTRODUCTION
1.1 Background of the Study

As the regulatory body of the industrial park (IP), EIC has a responsibility to regulate all performance
and IP enterprises in the industrial park. To fulfill this task, it is necessary to establish the framework for
easiness implementation and standardized the task to secure the quality and operational continuity.
Therefore, this framework is determining the implementation methodology on the regulatory works for
industrial parks based on the experience was got by the Export Gap Analysis, which was done before
this document preparation targeted to the enterprises located in major industrial parks.
1.2 Objectives of the Study

The study is conducted with the objective of creating a regulatory framework that applies to all
government and private industrial parks.
The regulatory framework suggests regulatory work to be implemented from the following three
perspectives. In addition, the regulatory framework suggests monitoring and evaluation methods related
to the operating status of IP enterprises and regulatory performance.
(1) Economy-based regulatory work for better production and export performance and facilitating the
knowledge and skills transfer to Ethiopians
(2) Social-based regulatory work for labor issues, follow-up of the tripartite committee formed among
employees, employers and Government for an IP, etc.
(3) Environment-based regulatory work for waste and pollution issues in IPs.
1.3 Method of the Study

The regulatory framework is created in the following steps:
(1) Select legal provisions related to IP regulatory work from the current legal framework of Ethiopia
and scrutinize the contents.
(2) Extract the regulatory work items from the selected clauses and describe the regulatory work for
implementation.
(3) Create a method for implementing regulatory work with the forms, questionnaires, survey sheets,
etc. required to implement regulatory work. Also, create a workflow when the regulatory work is
carried out in many steps.
(4) Show indicators, items for monitoring or the performance of regulatory work. Describe the
monitoring and evaluation methods.
1
CHAPTER 2: LEGAL BASIS FOR INDUSTRIAL PARK

REGULATORY WORK
2.1 Legal Basis for Economy-based Regulatory Work

Laws governing economic-based regulatory work include investment-related laws, industrial park-
related laws, and National Bank of Ethiopia (NBE) directives for the foreign exchange saving.
Investment-related laws include investment proclamation, investment regulation, and EIC’s directive
No. 772/2021 for the work permit for experts and the skills and knowledge transfer. In addition, there
are industrial park proclamation and industrial park regulation in the laws related to industrial parks.
The economic-based regulatory works in charge of Ethiopia Investment Commission (EIC) included in
these laws are listed in Table 2.1.
Table 2.1: Legal Basis for Economic-based Regulatory Work
Economic Issue Laws Key Points of Stipulation
Objectives of  Article 5 of Investment  The investment objective is to improve the living standard of the
investment Proclamation people of Ethiopia by enhancing the competitiveness, creating
No.1180/2020 employment opportunity, increasing foreign exchange earnings,
saving foreign exchange, creating inter-sectoral and foreign-
domestic linkages.
Promotion of the  Directive No. 772/2021  Training opportunity to acquire the knowledge and skills from
knowledge and skill by EIC FDI companies regarding manufacturing and production
transfer from experts to  Investment control.
Ethiopian in Proclamation No.  Disseminate knowledge and skills to Ethiopian industry through
combination with 1180/2020 experiencing working for foreign producers. So that the required
issuance of work permit  Investment Regulation knowledge and skills will be transferred to the Ethiopian
No. 474/2020 industry through trained Ethiopian human resources.
 Employment opportunities during the training and subsequent
periods.
Foreign exchange  Directive No.  NBE are required to surrender 70% of the foreign currency
holding and utilization FXD/79/2022 by NBE earnings from export of good and services; exporter of goods
and services shall have the right to retain only 20 % of their
export earnings in foreign currency and the remaining 10 %
shall be surrendered to the respective bank at the daily buying
exchange rate.
 Foreign currency held in a retention account shall be used for
import of goods and services payment without restrictions.
Provision of OSS  Industrial Parks  EIC provides OSS services within the industrial parks, in
services to investors Proclamation 886/2015 collaboration with other competent organs and coordinate their
and coordination of  Industrial Parks day-to-day functions.
relevant agencies Council of Minister  EIC periodically monitors the progress and problems that IP
Regulation No. enterprises are facing.
417/2017  EIC feeds back the monitoring and evaluation results to improve
the OSS service.
Source: EIPP
2.2 Legal Basis for Social-based Regulatory Work

Laws governing social-based regulatory work include investment-related laws, industrial park-related
laws, and labor proclamation. Investment-related laws include investment proclamation, investment
regulation, and EIC’s directive No. 772/2021 for the work permit for experts and the skills and
knowledge transfer. In addition, there are industrial park proclamation and industrial park regulation in
the laws related to industrial parks.
2
The social-based regulatory works in charge of Ministry of Labor and Skill (MoLS), formal Ministry of
Labor and Social Affairs (MoLSA), and EIC included in these laws are listed in Table 2.2.
Table 2.2: Legal Basis for Social-based Regulatory Work
Social Issue Laws Key Points of Stipulation
Employment creation by  Directive No.  EIC facilitate the transfer of knowledge and skills from experts
replacing expert 772/2021 by EIC to Ethiopians.
employees with  Industrial Parks  The Ministry of Trade and Industry (MoTI; follow the name
Ethiopians Council of Ministers stated in website) also design training programs that enable
Regulation No. transfer of skills and knowledge to Ethiopian workers.
417/2017  Tripartite Committee in IP facilitate the transfer of knowledge,
skill and technology.
Employment creation by  Industrial Park  MoTI organize technical and vocational training program in
investment Proclamation No. collaboration with the concerned government entities and IP
886/2015 developer.
 EIC create employment opportunity by monitoring of
employment of IP enterprise.
Complaints and labor  Labor Proclamation  The tripartite committee helps to ensure the rights and duties of
disputes between workers No. 1156/2019 by workers are respected and creating conductive condition to
and employers MoLSA prevent conflict through continuous consultation and
 Industrial Parks engagement.
Council of Ministers  Maintain peace at all IPs.
Regulation No.  Create conditions to prevent conflict.
417/2017  EIC follow up and assist the committee.
 EIC regulate the activities of the committee.
Labor contract between  Industrial Park  Labor contract may be negotiated between the employer and
the employer and Proclamation No. employee taking into account the IP’s peculiar feature.
employee considering the 886/2015  Labor contract between the employer and employee is
IP’s peculiar feature applicable in any IPs.
Assignment of labor  Labor Proclamation  EIC has been monitoring IP Enterprise employment data
inspectors for follow-up No. 1156/2019 by monthly.
and supervision of the MoLSA  Conduct studies and research, supervision, educating, and
inspection service developing labor standards.
 Conducting studies, and compiling data relating to working
conditions.
 Preparing training programs to workers in order to prevent
employment injuries.
 Ethiopia. EIC has been monitoring IP Enterprise employment
data monthly.
 EIC regulate the activities of the committee.
Contract between  Labor Proclamation  A contract of employment shall be stipulated clearly and in such
employers and employees No. 1156/2019 by manner that the parties are left with no uncertainty as to their
MoLSA respective right and obligation.
 Perform work for and under the authority of an employer for a
definite or indefinite period or piece of work in consideration
for wage.
Establishing trade union  Labor Proclamation  A trade union may be established in an undertaking where the
and employer’s No. 1156/2019 by number of workers is ten or more.
association MoLSA  Workers who work in different undertakings but in similar
activities which have less than ten workers may form a general
trade union.
 No worker may belong to more than one trade union at any given
time for the same employment.
Source: EIPP
3
2.3 Legal Basis for Environment-based Regulatory Work

Development programs and projects like industrial parks should comply with available policies,
legislative and Institutional frameworks and standards for proper execution and implementation.
Knowledge of the policy and legal frameworks within which the project is going to be implemented
would facilitate the project's performance and help to ensure sustainable development. There are
different policies and legal documents both at the federal and regional as well as international levels that
regulate environmental management and performance. This section reviews and discuss relevant
international instruments, national policy, strategy, legislative and institutional framework.
The environmental performance component focuses on low/zero-carbon energy generation and
resource-efficient production in the industrial parks. The major thematic areas, which serves as a
parameter for industrial parks performance are pollution prevention, resource efficiency, cleaner
production, industrial symbiosis and synergies, water, waste and energy management.
The following diagram depicts prerequisites for environmental performance requirements for ideal
industrial parks.
Energy
management
Climate Water
resilience management
Environmental
Performance
Natural
environment
Waste and
material use
Environmental
management and
monitoring
Table 2.3: National Legal Basis for Environmental-based Regulatory Work

Environmental Issue Laws Key Points of Stipulation
Pollution prevention FDRE Constitution  It provides the overriding principles for all legislative frameworks in
 Art. 43, 44 and 92 the country.
 It enshrined the right to live in a clean and healthy environment.
Pollution prevention; Industrial Park  Industrial Park developer has an obligation to comply with
and Proclamation No. environmental legislations.
Climate change 886/2015,  Industrial Park Operator have the obligation to comply with applicable
mitigation and • Art. 6 (7), Art. 8 environmental laws.
adaptation (6), Art. 10 (4),  Industrial Park Enterprise have an obligation to comply with
Art. 24 (1) applicable environmental legislation.
 All the Federal and Regional States environmental legislations are
applicable laws in the Industrial Parks.
4

Pollution prevention; Industrial Parks  An Industrial Park developer should obtain a permission letter from a
and Regulation No. responsible government organ that indicates the undertaking of social
Climate change 417/2017, and environmental impact assessment for a project before
mitigation and  Art. 5 (8c) and Art. commencing construction.
adaptation 9 (2d)  One of the basic requirements for Industrial Park enterprise for the
issuance of investment permit is environmental impact Assessment.
Pollution prevention Determine Industrial  It was issued to enlist the category of industrial enterprises subject to
Enterprises Subject to Regulation No. 159/2008.
the Industrial  Accordingly, the regulation is applicable on textile, leather, chemical,
Pollution Prevention sugar, cement, metal, and food and beverage industrial enterprises.
and Control Directive
No. 02/2008
 Art. 2
Pollution prevention; Environmental Policy  Goal of the Environmental Policy of Ethiopia is to improve and
and Issued in 1997 enhance the health and quality of life of all Ethiopians and to promote
Resource efficiency sustainable social and economic development through sound
management of the environment and use of resources so as to meet the
needs of the present generation without compromising the ability of
future generations to meet their own needs.
Pollution prevention Approve  It was issued for the approval of environmental standards as per Art.
Environmental 6 of the Environmental Pollution Control Proc. No. 300/2002.
Standards Directive
No. 01/2008
Pollution prevention Environmental  It makes ESIAs mandatory for the implementation of major
Impact Assessment development projects, programs, and plans.
Proclamation  This Proclamation is a tool for harmonizing and integrating
299/2002 environmental, economic, cultural, and social considerations into
decision-making processes in a manner that promotes sustainable
development.
 The proclamation addresses: the need to prepare ESIA study, the
procedure to be followed in order to implement ESIA, the depth of the
ESIA study, projects that require full or partial or no ESIA study
reports and responsible organ to review and give approval for the
study.
Pollution prevention Environmental  It requires developmental activities to consider environmental impacts
Pollution Control before their establishment.
Proclamation  It requires ongoing activities to implement measures that reduce the
300/2002 degree of pollution to a set limit or quality standard.
 Ensure pollution control, through inspection, the compliance of
ongoing activities with the standards and regulations of the country
through an environmental audit.
Pollution prevention Prevention of  As a follow up to Proclamation 300/2002, this regulation to prevent
Industrial Pollution industrial pollution was developed by the Federal Environmental
Regulation Protection Authority to ensure compatibility of industrial development
Proclamation with environmental conservation.
159/2008  This Proclamation includes comprehensive industrial pollution
standards for a range of industrial and mining activities.
Pollution prevention; Solid Waste  Aims to promote community participation to prevent adverse impacts
and Management and enhance benefits resulting from solid waste management.
Resource efficiency Proclamation  It provides for the preparation of solid waste management action plans
513/2007 by local governments.
Pollution prevention; Waste Handling and  The Guidelines are meant to help industry and local authorities handle
and Disposal Guideline medical waste situation at the local level.
Resource efficiency Issued in 1997
5

Pollution prevention; Hazardous waste  It tries to create a system for environmentally sound management and
and management and disposal of hazardous waste.
Resource efficiency disposal control  It tries to regulate the prevention of damage on the human or animal
Proclamation No. health, and the environment, biodiversity and property due to the
1090/2018 mismanagement of hazardous waste.
 It propagates the cleaner production principles.
Resource efficiency National Energy  The policy was designed with the objectives of ensuring a reliable
Policy of Ethiopia supply of energy at the right time and at an affordable price
particularly to support the country’s industrial development; and
increase energy utilization efficiency and reduce energy wastage and
ensure that the development and utilization of energy is benign to the
environment.
Pollution prevention; Electrical and  The regulation employed a broader scope of application that
and Electronic Waste encompasses producers, distributors, retailers, importers, transporters,
Resource efficiency Management and collection centers, refurbishes, dismantlers, recyclers, and consumers.
Disposal Regulations  It followed the principle of extended producer responsibility.
No. 425/2018
Pollution prevention; Industry Chemical  It establishes a national system for registration and administration of
and Registration and industrial chemicals.
Resource efficiency Administration  It prevents and controls the adverse effects of chemicals on human and
Proclamation No. animal health as well as environmental safety that may occur in the
1075/2018 transaction of industrial chemicals.
Pollution prevention Medicinal Waste  It is applicable to (a) disposal of medicinal waste, but not to medical
Management and equipment or management of other healthcare waste generated by
Disposal Directive health institutions; and (b) all governmental, non-governmental and
Issued in 2011 private organizations involved in medicinal waste handling and
disposal.
 The Directive requires disposal firms to have secured an appropriate
disposal site depending on the Environmental Impact Assessment
conducted with the support of the Federal Environmental Protection
Authority.
 A disposal firm is required to have all the facility and practice
standards prescribed under this Directive.
Climate change Ethiopia’s Climate-  It enhances the adaptive capacity and reduces climate variability in the
mitigation and Resilient Green face of growing climate change threats that aims to protect the country
adaptation Economy, Green from the adverse effects of temperature rise, floods, and frequent
economy strategy A droughts.
Pathway to  Cutting down emissions using renewable sources of energy to expand
Prosperity (2021- electricity generation, energy-efficient technology application in the
2030) - Chapter 11 industrial sector.
Climate change Control of Ozone  The Environmental protection Authority has the power and duty to
mitigation and Layer Depleting formulate a periodic phasing out schedule and publish list of
adaptation; and Substances appliances and substances; grant, renew, suspend or cancel
Pollution prevention Proclamation No. authorizations and maintain a register, which contain the name and
716/2011, Art. 11 addresses of manufacturers…; design promotion and implementation
mechanisms; provide technical and financial supports… etc.
Resource efficiency Energy Proclamation  It used a holistic approach to define energy as electric power generated
No. 810/2013, from hydropower, solar, wind, geothermal or other sources.
 Art. 2(1) Part 6  It enshrined provisions to regulate energy efficiency and conservation.
Resource efficiency Ethiopian Water  It ensures that the water resources of the country are protected and
Resources utilized for the highest social and economic benefits of all citizens, to
Management
supervise that they are duly observed, and to ensure that harmful
Proclamation No.
197/2000 effects of water are prevented, and that management of water
resources is carried out properly.
6

 It clearly indicates requirements on water bank management and
prevention of harmful effects on water resources (articles 24 and 25).
 This Proclamation protects water bodies from improper disposal of
waste.
Source: EIPP
Ethiopia has ratified several international/multilateral environmental conventions and many of the
principles and provisions in those conventions have been well addressed in the national environmental
policies and regulations. Some of these conventions that are relevant in regulating industrial parks
development and management includes the following:
Table 2.4: Ratified International Instruments
International Instrument Ratified Legislation Environmental Issue
The Stockholm Convention on Persistent Organic The Stockholm Convention on Pollution prevention
Pollutants, adopted on the 22nd day of May, 2001. Persistent Organic Pollutants (Hazardous Waste)
Ratification No. 279/2002.
Bamako Convention on the Ban of The Import Bamako Convention Ratification Pollution prevention
into Africa and the Control of Transboundary Proclamation No. 355/2003. (Hazardous Waste)
Movement and Management of Hazardous
Wastes Within Africa, adopted on the 30th day of
January, 1991.
Basel Convention on the Control of the Basel Convention on the Control of the Pollution prevention
Transboundary Movements of Hazardous Wastes Transboundary Movements of (Hazardous Waste)
and their Disposal, adopted on the 22nd day of Hazardous Wastes and Their Disposal
March 1989. Ratification Proclamation No.
Basel Convention on the Control of 192/2000.
Transboundary Movements of Hazardous Wastes Basel Convention Amendment
and Their Disposal (Amendment), adopted on the Ratification Proclamation No.
22nd of September 1995. 356/2003.
The Cartagena Protocol on Biosafety to The Cartagena Protocol on Biosafety Biodiversity
Convention on Biological Diversity, adopted on Ratification Proclamation No.
the 29th of January 2000. 362/2003.
Kyoto Protocol to the on the Redaction of Kyoto Protocol Ratification Proc. No. Climate Change
Greenhouse Gases, adopted in December 1977. 439/2005.
Kyoto Protocol on the Redaction of Greenhouse Kyoto Protocol Amendement
Gases, adopted on the 8th day of December 2012. Ratification Proclamation No.
890/2015.
United Nations Framework Convention on Climate Change
Climate Change (1992).
The Vienna Convention for the Protection of the Pollution prevention
Ozone Layer (2001). (Air Pollution)
The Montreal Protocol on Substances that Pollution prevention
Deplete the Ozone Layer (2000). (Air Pollution)
Rotterdam Convention on the Prior Informed Pollution prevention
Consent Procedure for Certain Hazardous (Hazardous Waste)
Chemicals and Pesticides in International Trade
(2011 revised).
Protocol On Liability and Compensation for Pollution prevention
Damage Resulting from Transboundary (Hazardous Waste)
Movements of Hazardous Wastes and Their
Disposal.
Convention on Climate Change – Paris Climate Change
Agreement (2015).
Minamata Convention on Mercury (2013). Pollution prevention
(Solid Waste)
7
CHAPTER 3: IMPLEMENTING BODY FOR

INDUSTRIAL PARK REGULATORY WORK
Chapter 3 describes implementation bodies for Industrial Park (IP) regulatory work. The core of the
regulatory work is the IP Regulation Directorate, which belongs to the IP Division of EIC. Depending
on the regulatory work, branch offices at IPs may be suitable since they are engaged in daily interaction
with IP developers and IP enterprises. For regulatory work that requires expertise not found in EIC, EIC
may need to seek cooperation from external organizations such as the Ministry of Labor and Skills
(MoLS) and IPDC, or delegate authority over regulatory work to such external organizations. EIC needs
to select an appropriate regulatory body, secure staff in charge, educate those staff, and secure a budget
for project implementation based on this IP regulatory framework.
3.1 IP Regulation Directorate at EIC Head Office

IP Regulation directorate is mandated to carry out the regulatory work for all Industrial Parks. IP
Regulation director supervises the members of the directorate so that they could carry out the necessary
regulatory work.
3.2 Branch Office at Industrial Parks

One-stop shop (OSS) service centers are set up at each industrial park for providing services to IP
enterprises and developers. An EIC branch office manager of each IP is called as OSS Manger and
coordinates and leads all service providers of OSS service. It is expected EIC branch offices are involved
for regulatory work as well as OSS service, since they are stationed at IPs and can communicate with IP
enterprises on a daily basis.
However, EIC branch offices have following problems for performing the regulatory work.
 The establishment of the EIC branch office has been delayed while the number of industrial parks
is increasing. Therefore, there are some industrial parks where the EIC branch office has not been
set up yet.
 The existing EIC branch offices at IPs are operated by a small number of officers. Even the Bole
Lemi Industrial Park, one of the flagship industrial parks, has only three officers engaged for the
EIC branch office. It seems that EIC branch offices have no room for performing regulatory work
in addition to providing OSS services.
If EIC wants the branch office to take charge of some regulatory work for IP enterprises, the following
preparations are necessary.
(1) For the purpose of increasing branch offices, EIC trains the necessary officers and assign them for
establishment of new OSS service centers.
(2) The management of the EIC grants the necessary authority for regulatory work to the existing
branch managers so that the branch offices could perform regulatory work.
(3) EIC trains the officers for taking charge of regulatory work and assign them to the branch office so
that they could be engaged in the regulatory work.
3.3 External Organizations Depending on Required Expertise

EIC may need to seek cooperation from the following external organizations or delegate authority over
regulatory work to them.
(1) Ministry of Labor and Skills (MoLS) for social-based regulatory work.
(2) IPDC for environment-based regulatory work.
8
CHAPTER 4: CURRENT PROVISION OF INCENTIVES

TO INVESTORS IN INDUSTRIAL PARKS
As a regulator, EIC necessary to examine the effectiveness of the provided incentives to the investor in
industrial parks and review the relevant policy to improve the investment climate for economic
development of Ethiopia.
4.1 The Latest Incentive Package for Investors in Industrial Parks

It was confirmed that the incentive package issued by EIC under EIC Ref. No.02/2017, which is stored
in Annex-1of this report, is the latest information on investment incentives. According to EIC, updating
is necessary for some points of this incentive package.
The current incentive is consisting of the following:
1. Fiscal Incentives
a) Income tax exemption
b) Customs duty exemption
c) Ease of access to industrial park space at promotional rate
2. Non-Fiscal Incentives
a) One Stop Shop service
b) Customs facilitation
c) Expedited VISA procedure
d) Guarantee against expropriation
e) The right to own immovable property
f) Guarantee for remittance of funds
g) The right to open and operate foreign currency accounts
However, the provision and implementation of those especially on the non-fiscal incentives are facing
the challenges, which necessary to update based on the capability of the EIC, including the
coordination capability between relevant authorities. Moreover, the issue on foreign currency is not
comfortable for the investor compared with the competitor in the region, including East African
countries.
As of major EIC challenges is to determine the incentives which can create competitive investment
climate by balancing with the obligation of the investor to the Ethiopian economy, such as job
opportunities, industrial development and (indirect) taxes, and affects to the nature and social
environment by the manufacturing activities, such as pollution, unjust wages and bad working climate.
4.2 Current Status of Incentive Granting Authority

EIC faces the following challenges on the provision of incentives.
 Coordination and interaction among the government institutions such as EIC, Customs, IPDC and
other government offices, for simplification to obtain and implement the incentives.
9
 Expansion of the incentives for domestic market targeted manufacture or import substitution to
mitigate the investment attraction disadvantage under high logistic fee and reduce the utilization
of the foreign currency.
 Strengthen monitoring works to regulate the investor on tendency of abusing the incentives and
affects to both natural and social environmental.
According to EIC, the incentive provision system has reformed and is now handled by the Ministry of
Finance.
10
CHAPTER 5: ECONOMY-BASED REGULATORY WORK
5.1 Overview of Industrial Parks Regulatory Work

(1) Role of Regulatory Work at Industrial Parks
It is necessary to accelerate the economic transformation and development of the country through the
establishment of Industrial Parks (IPs) in strategic locations to promote and attract productive domestic
and foreign direct investment thereby upgrading industries and generate employment opportunities. EIC
required to provide One Stop Shop (OSS) service within the industrial parks, bring into line other
competent organs and coordinate their day-to-day functions (Industrial Park Proclamation, No.
886/2015).
The investment objective of Ethiopia is to improve the living standard of the people of Ethiopia by
realizing a rapid, inclusive and sustainable economic and social development (Article 5 of Investment
Proclamation, No. 1180/2020).
It is clearly stated that the followings are included in the purpose of investment.
 To enhance the competitiveness of national economy by promoting investments
 To create more and better employment opportunity for Ethiopians and advance the transfer of
knowledge, skills and technology required for the development of the country
 To increase foreign exchange earnings by encouraging the expansion in volume, variety and
quality of the country’s export products and services
 To save foreign exchange through local production of import substitute
 To increase the role of private sector in the country’s economic development
 To create an integrated economy by strengthening inter-sectoral and foreign-domestic linkages
 To encourage social and environmentally responsible investment
The role of regulatory work in IPs is to attract sound direct investment to IPs and enable them to operate
in accordance with the above two Proclamation and other laws. There is concern that the implementation
of regulatory work will be perceived by investors as the government interferes with corporate
management. Therefore, regulatory work needs to be done carefully with this in mind.
(2) Structure of Economic-based Regulatory Work
Figure 5.1 shows the structure of regulatory work for economic development.
1) Knowledge and skills transfer
Advancing the transfer of knowledge and skills is one of the economic-based regulatory work, as it is
included in the investment objectives. Current Ethiopian investment legislation requires FDI to transfer
knowledge and skills to Ethiopians using the non-fiscal incentive of prompt work permit issuance. This
regulatory work is considered to have the following three purposes.
 Ethiopians selected by FDI companies will have the opportunity of training to acquire the
knowledge and skills from FDI companies regarding manufacturing and production control.
 The knowledge and skills of FDI companies are transferred to the Ethiopian industry through
trained Ethiopian human resources.
 Ethiopians selected by the FDI companies have employment opportunities during the training and
subsequent periods.
11
Government of developing country often expects spillover effect from FDI companies that could
improve the industry of the host country through training of local human resources. Ethiopian
government may expect the same effect. To spread the spillover effect, trained Ethiopians need to be
given employment opportunities at the FDI companies or other companies either foreign or local
companies and utilize the knowledge and skills they have acquired.
2) Attraction of more investment
Economic development requires to attract more investment for creating more employment opportunities,
increasing foreign exchange earnings and enhancing the competitiveness of the national economy.
3) OSS service provision
In addition to investment promotion, improving the investment environment of IPs is necessary to
maintain and increase investment. For that purpose, EIC needs to implement a cycle of regulatory works
as follows.
 EIC provides OSS services within the industrial parks, in collaboration with other competent
organs and coordinate their day-to-day functions.
 EIC periodically monitors the progress and problems that IP enterprises are facing.
 EIC feeds back the monitoring and evaluation results to improve the OSS service.
Objectives of Regulatory Work Regulatory Work by EIC
Regulatory Work for Transfering Knowledge & Skills and Creating Employment
Advance transfer of Disseminate knowledge and Issue work permit in

knowledge, skills, and skills to Ethiopian industry accordance with laws
technology for through experience working
developing Ethiopia for foreign producers Facilitate the transfer of
knowledge and skills
Replace expat employees from expats to Ethiopian
Employment Creation with Ethiopians employees in IPs
Regulatory Work for Expanding Investment and Export

Monitor progress and
Increase foreign Facilitate the existing implementation of
exchange earnings by tenant companies at IPs investment projects
encouraging the export to increase exports
manufacturing industry Provide one-stop
Attract more tenant services to investors;
Enhance competitiveness companies to IPs to and Coordinate relevant
of the national economy increase exports Agencies and
by promoting investment synchronize their daily
in productive and functions.
enabling sectors
Carry out post-
investment support and
monitoring services
Source: EIPP
Figure 5.1: Regulatory Work for Economic Development of Ethiopia
12
5.2 Work Permit and Transfer of Knowledge and Skills

(1) Purpose of the Measure
The purpose of this measure is proposed as the following.
 Ethiopians’ employees will be trained by transferring the skills and knowledge of foreign
employees to them. This is expected to contribute to economic development through the
development of industrial human resources in Ethiopia in the long term.
 Trained Ethiopians’ employees will be appointed in place of expert or specialist. This is expected
to contribute to Ethiopian society by promoting the employment of Ethiopians.
Cooperation with foreign companies is indispensable because both purposes are premised on the
expansion of Foreign Direct Investment (FDI) and the sound management of foreign enterprises.
If this regulation succeeds in replacing a total of 1,000 experts with Ethiopians in the entire IPs in the
country, it would be considered a failure of regulatory work if it causes an enterprise that employs more
than 1,000 Ethiopians to withdraw investment from Ethiopia.
In addition, it is necessary to implement this measure while considering the circumstances of individual
enterprises, such as some enterprises having no choice but to continue to appoint foreigners because
they cannot find Ethiopian human resources.
When implementing this measure, not only routine work is required to issue work permits promptly, but
also careful judgment by high-level officials is required.
(2) Legal Requirement
In April 2021, EIC promulgated Directive No. 772/2021 to regulate the issuance of work permits to
experts and to implement knowledge and skill transfer from experts to Ethiopians. The following legal
requirements summarize the main points of this Directive. The details including exceptional rules of the
regulation are given by this directive.
1) Scope of Application (Article 3)
a. The directive shall regulate expert employees waged in investments whose administration fall
within the mandate of EIC.
a) Wholly foreign owned investment.
b) Joint investment between domestic and foreign investors.
c) Investment of foreign national, not Ethiopian by origin, who is treated as domestic investor
pursuant to the proclamation.
d) Investment made by a domestic investor in areas eligible for incentives and required to
obtain a business license from an appropriate federal organ.
Note: This Directive applies regardless of whether an investor that meets the above criteria is
inside the IP or outside the IPs. On the other hand, the investor covered by the Industrial Parks
Regulatory Framework (IPRF) is limited to the case where it is in IPs.
b. The Ministry of Labor and Skills (MoLS) shall continue to issue work permit for experts
employed by investment enterprises licensed by the pertinent government organs in pursuance
of power delegated from EIC and engaged in air transport services, electric power generation, or
transmission or distribution services, and communication services.
2) Issuance of Work Permit (Article 4)
13
Any investor who intends to employ foreigners for positions of higher management, as supervisors,
trainers, technical positions, and other related roles must obtain work permit from EIC.
3) Work Permit for Experts in Top Management Position (Article 5)
The work permit of top management members shall be issued and renewed annually based on
request submitted by employer without the need for complying with preconditions set for other
experts.
Top management members shall be the Chief Executive Officer (CEO) or General Manager,
Deputy General Manager, Chief Operating Officer (COO), Deputy Operating Officer, Chief
Finance Officer (CFO), Marketing Manager, and as appropriate, the Board Chairman during
implementation / operation phase. Top management members shall be Project Manager and Deputy
Project Manager during project construction phase.
4) Work Permit for Expert in Non-Management Position (Article 6)
At the implementation / operation phase, the number of experts employed in the enterprise
excluding management members shall not exceed 10% of the total number of Ethiopian
employees.
Enterprises that, at the time of the coming into force of this directive, have employed experts above
criteria shall prepare a clear action plan and conform with requirements of this Directive within one
year.
See Article 6 for other phases such as the project construction phase, the machinery installation
phase, commissioning phase, repair, maintenance, training and audit works.
5) Submission of Work Permit Application (Article 7)
Any employer may request to obtain work permit for expert employee by filling out the information
required in the application form annexed to this directive.
Article 7 of this directive contains other detailed cautions. If EIC receives a work permit application
and it is determined that these detailed cautions apply, EIC is required to instruct the applicant.
6) Necessary Document for Applying New Work Permit (Article 8)
Any foreign investor applying for new work permit shall submit the following documents:
a. Duly completed application form
b. Description of personal profile of the foreign employee
c. Academic credentials, professional license or certificate of competence and certificate of
service of the foreigner authenticated by a competent government body (original and copy)
d. Passport of the foreigner valid for not less than three months
e. Four passport size photographs of the foreigner
f. As appropriate, valid work visa (WV), or business visa (BV), or work permit
g. If the expert employee engages in health, education or similar sectors, certificate of
competence approved by the relevant government office; educational documents, professional
license and certificate of service authenticated by Ethiopian embassy abroad or the Ministry
of Foreign Affairs; and support letter
h. Employment contract between the expert and the enterprise
i. As appropriate, investment permit or business license
j. Receipt showing payment of service charge determined by law
k. Proof evidencing employment of Ethiopian replacement and assignment - to be
operationalized after hiring the expert
l. Training and knowledge transfer program organized by the enterprise - to be offered to
Ethiopian replacement employees
14
Note: In addition to the documents previously required for the work permit application procedure,
the documents listed in c, h, k and l are required.
7) Provision of Training to Ethiopian Replacements and Procedure for Replacement (Article 9)
a. Except for management and impermanent positions, an enterprise shall exercise it best
endeavor to explore the availability or otherwise of Ethiopians possessing similar professional
competence or experience required by the position or sector -prior to hiring any expert.
b. Without prejudice to the stipulation of sub-article 1 of this Article, an enterprise hiring experts
is obliged to set up and provide on-the-job training and replace experts with Ethiopians within
a defined period of time.
8) Type of Training and Supervision Procedure (Article 10)
a. The report and training program to be prepared by the enterprise on training and knowledge
transfer shall, as appropriate, consist of timeline for the replacement of expert employees,
nature and schedule of trainings, and quarterly performance report of trainings offered as per
the schedule.
b. The program description and report shall consist of the following details:
a) Full name and professional position of the foreigner
b) Full name, level of education, profession, and address of Ethiopians who shall receive on-
the-job training
c) Type of training and timeframe for its completion
d) Where replacement Ethiopian trainees failed to acquire knowledge and skills in required
level and within the stipulated timeframe, an explanation to such effect
c. The first-round training program prepared by the enterprise shall, at the latest, be presented
within one week from the date of employment of the expert.
d. The enterprise shall periodically submit detailed quarterly performance report after
commencement of training, knowledge and skills transfer program. The report shall be
submitted as per a detailed supervisory timeframe pre-arrangement and communicated by EIC.
e. EIC shall conduct field monitoring and supervision every three months to access the
implementation and effectiveness of on-the-job training offered to Ethiopians.
9) Validity of Work Permit (Article 11)
a. A work permit issued in relation to a particular position shall be valid for one year.
b. A work permit may be renewed annually for not more than three years taking into account the
actual measures undertaken by the enterprise to train Ethiopian replacements.
c. An enterprise cannot assign a new expert employee to such positions on which a foreigner had
previously served for three years; however, an enterprise may be allowed to do so when it is
unequivocally demonstrated through evidence that the transfer of knowledge and skill was not
properly implemented for reasons not attributable to the enterprise, or because the trained
Ethiopians left the enterprise through own will, or the contract of employment was terminated
through the fault of trainee employee.
10) Conditions for Renewal of Work Permit (Article 12)
An application for renewal of a work permit may be approved only if it is proven that enterprise
has executed the training of Ethiopian replacements appropriately.
11) Documents Required for Renewal of Work Permit (Article 13)
15
a. An employer shall submit its application for renewal of a work permit to EIC together with
the following documents within one month before the expiry of the permit:
a) Duly completed application of the expert
b) The expert’s passport valid at least three months
c) Work permit book issued by EIC or Ministry of Labor and Social Affairs before the
coming into enforce of this Directive
d) Residence permit where appropriate
e) A support letter issued by health, education, or related institutions if the expert engages
in health, education or other related professions
f) An employment contract concluded between the employee and employer
g) A complete annual performance report providing information on the condition of transfer
of knowledge to Ethiopian replacements
h) Receipt showing service fee charge
i) A renewed investment permit or business license, as appropriate
b. If the employer fails to renew the expert work permit in time, it shall pay 50% additional
penalty fee for the first month’s renewal after expiry of the work permit, 75% additional
penalty fee for the second month, and 100% additional penalty fee for the third month and
seek renewal of the work permit.
12) Expert Employee’s Obligation (Article 16)
Without prejudice to provision of the labor Proclamation No. 1156/2019, the expert employee shall
have the following obligations.
a. To appear at a workplace in possession of the issued work permit
b. To work only for the employer specified in the work permit
c. To engage only in the position/profession registered in the work permit
d. To transfer the standard knowledge and skill to Ethiopian replacements in accordance with the
pre-arranged schedule and procedure
e. To refrain from engaging in illegal and immoral activities
f. To comply with the EIC’s request for reporting
13) Appointment of Liaison Officer (Article 17)
a. An employer must appoint a liaison officer who facilitates services relating to work permit.
b. When a liaison officer assigned in line with this Article:
a) Is employee of the enterprise, he shall produce employment ID Card, in addition to a
power of attorney and Kebele ID Card/Passport (original and copy)
b) Is any other third party, he shall produce a power of attorney authenticated by the FDRE
Documents Authenticated and Registration Agency and Kebele ID Card/Passport
c. Notwithstanding the above stipulation, a general manager of an enterprise can process the
work permit request by himself, provided that he can adduce a letter providing his status in the
enterprise.
14) Monitoring and Supervision of Expert Employees (Article 18)
EIC shall engaging in monitoring and supervisory activities to ensure the enforcement of provision
on the Proclamation, Regulation, and Directives pertaining to expert employment.
(3) Foreigners Engaged in IPs
Table 5.4 shows the number of experts and Ethiopians engaged in each IP in July 2021. Data from this
period were used to avoid the effects of the security situation under the state of emergency. The names
of IPs where more than 100 experts work and the number of foreigners working there are 1,021 experts
16
at Eastern IP, followed by Hawassa IP (695), Bole Lemi IP (201), and Adama IP (163). However, since
there are many Ethiopians in these four IPs, the ratio of experts to Ethiopians is not very high, from
1.1% to 5.7%. Directive No. 772/2021 regulates that the ratio of expert employees to Ethiopian
employees for an enterprise needs to be less than 10% in general. The ratios for the four IPs are well
below this criterion.
The ratio of expert employees including manager levels to Ethiopians is higher than 10% in three IPs:
ICT Park (16.9%), Huajian IP (12.7%) and George Shoe IP (10.4%). In all cases, it may be difficult to
hire Ethiopians with the abilities required of skilled workers or engineers, as the IP is occupied by
enterprises in sectors other than the Garment & Textile sector.
Table 5.4: Number of Foreign and Ethiopian Employees (as of July 2021)
No. of Number of Employees Expert/
Name of IP Major Sector
Enterprise Expert Ethiopian Total Ethiopian
Adama Garment & Textile 5 163 7,179 7,342 2.3%
Bole Lemi Garment & Textile 11 201 17,726 17,927 1.1%
Eastern Mixed 125 1,021 18,013 19,034 5.7%
George Shoe Leather & L. Product 2 51 492 543 10.4%
Hawassa Garment & Textile 22 695 28,503 29,198 2.4%
Huajian Mixed 4 218 1,719 1,937 12.7%
Kombolcha Garment & Textile 4 42 3,551 3,593 1.2%
Mekelle Garment & Textile - - - - -
Velocity Garment & Textile - - - - --
DBL Garment & Textile - - - - -
Debre Brehan Garment & Textile 2 22 1,025 1,047 2.1%
Dire Dawa Mixed 4 47 1,207 1,254 3.9%
Bahir Dar Garment & Textile 1 18 876 894 2.1%
ICT Park ICT 1 62 366 428 16.9%
Bure Agro-IP Agro-processing 1 39 721 760 5.4%
Jimma Agro-processing 4 - 1,036 1,036 -
Kilinto Pharmaceutical NA NA NA NA NA
Subtotal (A) Garment & Textile 45 1,141 58,860 60,001 1.9%
Subtotal (B) Other Sectors 141 1,438 23,554 24,992 6.1%
Total (A)+(B) 186 2,579 82,414 84,993 3.1%
Source: EIPP based on the EIC’s data of July 2021
(4) Work Permits Issuance and Ethiopian Replacement Training

Upon renewal of the work permit for expert employees, the enterprises need to conduct the training for
Ethiopian replacement and report the performance of training conducted. For carrying out Ethiopian
replacement training, it is necessary to perform the tasks as shown in the workflow (Figure 5.3).
In parallel with this, the EIC side needs to carry out field monitoring once every three months to monitor
the performance of the training conducted by the enterprise for each Ethiopian replacement, as well as
daily contact for maintain a cooperative relationship with the liaison officers in charge of the work
permit of enterprises.
While the EIC promotes training for Ethiopian replacements under the law, it has to be emphasized that
enterprises have the right to make decisions regarding the replacement of expert employees with trained
Ethiopians.
17
Since such new tasks will increase the burden on EIC officers, EIC may require the hiring of new officers.
The following qualities are required of new EIC officers.
 Training of Ethiopian replacements may not be preferred by some enterprises. Therefore, that new
officer is necessary to have the qualities to be able to make friendly and careful contact with the
persons concerned on the enterprise side so that EIC could maintain a good relationship with
enterprise even when conducting the training. It is desirable that they are proper EIC employees to
give confidence to the company.
 A new EIC officer is preferably capable of data management to efficiently monitor the performance
of training for a lot of Ethiopian replacements.
 It will take several years for the training of Ethiopian replacements to be effective, so it is desirable
that the same EIC official continue to be in charge.
Enterprise EIC
Apoint a Liaison Officer to facilitate services relating to Work Register the Liaison Officer
Permit and notify EIC (Draft Form-1)
Submit application of new work permit with necessary Verify application of new work
document (Application Form prepared by EIC) permit with necessary document
Employ and assign an expat employee Issue new work permit

Within one week
Submit the first-round training program to EIC (Draft Form-3) Register the training program
Employ an Ethiopian replacement Register employed Ethiopian

Conduct training and notify EIC (Draft Form-2) trainees for eplacement
of Ethiopian
replacement
Submit quarterly perfomance Monitoring training for Ethiopian
report to EIC (Draft Form-3) replacement including conducting
field monitoring and supervision
every 3 months (Draft Report
Form-A1)
Decision to replace the expat Share monitoring

with the trained Ethiopian reports prepared
by EIC officials
Yes No
Verify application for renewal
Appoint the Submit application of renewing work work permit with necessary
trained Ethiopian permit using Application Form prepared document
to the position by EIC with necessary document
where the expat including the annual performance
were serving report of training (Draft Form-3) Issue renewal work permit
LEGEND Work flow of enterprise Work flow between enterprise & EIC Work flow of EIC
Source: Illustrated by EIPP under the Directive No. 772/2021
18
Note: Application form for work permit and other draft forms referred are annexed.
Figure 5.3: Workflow for Work Permits Issuance and Ethiopian Replacement Training
5.3 One-Stop Services Provision

(1) Purpose of Measure
1) OSS Service as Non-Fiscal Incentive for Industrial Park
Ethiopia's industrial parks have contributed to increased exports and job creation. In addition to the
development of industrial parks and infrastructure, non-fiscal incentives such as OSS services as
well as fiscal incentives for IP enterprises seem to have helped to attract foreign investors to IP.
2) Problems of OSS Service Provision
However, OSS services have the following problems. EIC is required to make efforts to solve them.
 Some IPs where the establishment of OSS service centers cannot keep up with the increase in
IPs. Therefore, some IP enterprises cannot provide OSS services.
 Work permit issuance methods may change to regulate the transfer of skills and knowledge. As
a result, it is necessary to hire and train new expert so that the issuance of work permits will not
be delayed for enterprises that comply with the law.
3) Measures to Solve problems
EIC needs measures to coordinate other OSS provider institutions and strengthen new OSS experts
to solve these issues.
(2) Legal Requirement
One-Stop Shop (OSS) services are legislated under Industrial Park Proclamation No. 886/2015 and
Industrial Parks Council of Ministers Regulation No. 417/2017 as shown below.
1) Necessity of OSS services
EIC needs to provide OSS services within industrial parks (IPs), bring into line other competent
organs and coordinate their day-to-day functions (Article 27 of Industrial Park Proclamation).
2) Access to OSS services at a park level
An IP developer, operator or enterprises needs to have access at a park level to OSS services listed
by sub-article 15-1 of Industrial Parks Council of Ministers Regulation.
3) OSS services by relevant government organs
All relevant government organs required to provide OSS services needs to have duty to provide
service either presence in the OSS or designate EIC or another appropriate institution to provide
such service on their behalf within a park (Sub-article 15-2 of Industrial Parks Council of Ministers
Regulation).
4) OSS services by IP developer or operator
As a part of OSS service within each IP, IP developer or operator needs to provide services related
to infrastructure either directly or through the instrumentality of a third person (Sub-article 15-3 of
Industrial Parks Council of Ministers Regulation).
5) Visa and residence permit
19
EIC facilitates the processing of visa and residence permit applications of foreign citizen who come
to Ethiopia I relation to investment and that of dependent family members (Article 16 of Industrial
Parks Council of Ministers Regulation).
6) Issuance of work permit
EIC needs to issue work permit to a foreign citizen to be employed by IP developer, operator or
enterprises (Article 17 of Industrial Parks Council of Ministers Regulation).
7) Customs control
All customs procedures must be completed in an industrial park. An industrial park is ether its
entirety or partly a customs-controlled area where customs have the power to control but deemed
to fall outside the customs territory. Customs procedure as concerns IP is stipulated in Article 19
and 20 of Industrial Parks Council of Ministers Regulation.
(3) Regulatory Work for OSS
OSS services play a role in maintaining the business environment of companies by providing services
directly to IP companies in the industrial zone. It is a non-fiscal incentive for FDI. EIC staff are staffing
branch offices within the IP, serving as service providers for OSS services and coordinating OSS.
In contrast to the regulatory work in the narrow sense that encourages companies in IP to comply with
the law, OSS services provide services to improve the business environment of companies in IP and are
called regulatory work in a broad sense.
The OSS services provided include not only the standardized ones stipulated by law as described above,
but also the atypical ones that occur depending on the daily operation status of IP. Diversity, speed, and
investor satisfaction are required for OSS operations, and it seems that the burden on staff is heavy.
Table 5.5 shows the possible issues and countermeasures for EIC related to OSS services.
Table 5.5 Possible Issues Related to OSS Services and Countermeasures
Possible Issues Countermeasures Proposed for the Issue
 There are some IPs that do not yet have an  EIC will hire and train new staff members who will be the
OSS center, and those IPs are not yet fully core of OSS, and then station them at IPs to start OSS
serviced. services. In addition, EIC will have the necessary institutions
provide services within the IP.
 It is necessary to quickly respond to the  It is suggested that each IP enterprise be regularly monitored
daily problems caused by the operation of and analyzed for operational status and issues. It is
the IP enterprise. Sometimes it takes time recommended that the results be shared with EIC executives
to respond. at the head office so that the executives and branch offices
can cooperatively work with each other to take immediate
action in the event of a problem.
 In the case of complaints related to  For cross-ministerial issues, it is recommended that EIC
multiple service providers, it is difficult to executives at the head office take the lead in creating
coordinate between service providers to opportunities to discuss responses with related organizations
resolve them. and jointly seek to resolve the issues.
 When new services and regulatory work  When the EIC branch office at IP level is assigned to take
are introduced at the IP level, it is charge of new services and regulatory work, it is
sometimes feared that the EIC branch recommended that the EIC head office prepares guidelines
office will have difficulty responding. for the new work so that the branch offices in various IPs
could take a common method.
 If new work requires training of existing staff or increase of
new staff, it is recommended that EIC head office prepare.
20
5.4 Monitoring and Evaluation for Economic Issue

It is proposed that the monitoring of the regulatory work for the economic issue be conducted once a
year in addition to that specific for work permits and transfer of knowledge and skills described in the
section 5.2. This survey will be conducted at the same time as the surveys for the social and
environmental issues. The specific survey contents and analysis methods is described in Chapter 8.
The following monitoring items are included for the economic issues.
(1) Basic information of the IP enterprise including:
 Name and country origin of the IP enterprise
 Business activities with Ethiopian Standard Industrial Classification (ESIC)
 Payment mode of export manufacturing (FOB or CMT)
 Kinds and supply country of raw materials
 Number of labor by position and number of expert and Ethiopian employees
(2) Operational issues for the IP enterprise including:
 Change in order
 Delays in import of raw materials
 Whether to open a foreign currency account
 Presence or absence of foreign currency shortage problem
 Customs delay issue
5.5 Way Forward to Further Economic Development

It is clear that economic development cannot be expected with the efforts of only regulatory work.
Investment promotion and the development of new industries are necessary for Ethiopia to achieve
further economic development. This section provides some suggestions on the development direction
of Ethiopia's manufacturing industry, regardless of the IP regulatory framework.
(1) Foreign-domestic linkages through intermediate goods transactions
Intermediate goods transactions between Ethiopian companies and FDI companies within IP are
often mentioned in Ethiopia. This commercial transaction needs basically left to the independence
of both companies. It is assumed that the matters required of both companies are as follows.
 For intermediate goods transactions, the FDI companies need to be able to determine their own
quality, price and deadline requirements for intermediate goods. The apparel industry is said to
be a buyer-driven industry under the global value chain, and it is often said that buyers take the
lead in determining intermediate goods. Ethiopia's intermediate goods manufacturing industry
needs to select FDI companies based on the judgment of whether the FDI company can be a
customer.
 The Ethiopian intermediate goods manufacturers need to be able to satisfy the quality, price, and
deadline for delivery set by FDI companies. These Ethiopian companies need to start by visiting
prominent FDI companies with their sample products.
(2) Strengthening capacity and expanding orders by overseas buyers for Ethiopian garment
companies
Overseas buyers provide education and training to strengthen the capabilities of local companies
with a certain level of ability, and when the company grows to a certain extent, the buyer may
place an order.
(3) Attracting broad-based industries to IPs and entering Ethiopian companies into them
21
The FDI companies in the current IP are industries with a narrow base, such as the textile/garment
industry and the leather/leather product manufacturing industry, where there are few possible
related companies. It is conceivable to attract FDI such as the electric and electronic industries,
which have a wide base and have many areas where local companies can join, to IPs and to attract
investment in fields where local companies can participate.
22
CHAPTER 6: SOCIAL-BASED REGULATORY WORK
6.1 Labor Affairs in the Industrial Parks

(1) Labor Contract
Labor Proclamation (the latest one No. 1156/2019) is applicable in any IPs. Without prejudice this
proclamation, labor contract may be negotiated between the employer and employee taking into account
the IP’s peculiar feature (Article 28 of Industrial Park Proclamation No. 886/2015).
(2) Tripartite Committee
A tripartite committee consisting of the Ministry of Labor and Skills (MoLS), the Ministry of Trade and
Industry (MoTI), industrial park developer, operator or enterprise and employees’ representatives needs
to be established in an IP (Article 35 of Industrial Parks Council of Ministers Regulation No. 417/2017).
Figure 6.1 illustrate the structure of the tripartite committee in an industrial park.
Source: EIPP
Figures 6.1: Tripartite Committee in Industrial Park

The tripartite committee is responsible for the followings:
1) Ensuring the rights and duties of workers are respected and creating conductive condition to prevent
conflict through continuous consultation and engagement
2) Ascertaining, in consultation with MoTI, that transfer of knowledge, skill and technology tasks
place and productivity increase
3) Carrying out other activities that help attain industrial peace
EIC’s has the following roles for the tripartite committee.
 To follow up and provide assistance for the tripartite committee to fulfill its entrusted responsibility
in consultation with MoTI.
23
 To regulate the activities of the tripartite committee.

(3) Organizing Technical and Vocational Training Program
MoTI needs to organize technical and vocational training program in collaboration with the concerned
government entities and IP developer (operator) whenever necessary (Article 28 of Industrial Park
Proclamation No. 886/2015).
(4) Facilitating Transfer of Knowledge and Skills
EIC needs to facilitate the transfer of knowledge and skills from experts to Ethiopians in compliance
with Directive No. 772/2021. This regulatory work is for both economic and social aspects.
Required activities of EIC are described in the section 5.2 in detail. Reports on training for the
knowledge and skills transfer to Ethiopians has been added to the necessary documents for work permit
renewal, which will significantly change the way EIC issues work permits and add quarterly monitoring
the progress of training.
(5) Introducing Minimum Wages
The purpose of minimum wages is to protect workers from excessively low wages. In compliance with
article 55 of Labor Proclamation No. 1156/2019, the wage board will periodically revise minimum
wages based on studies that take into account the Ethiopia’s economic development, labor market and
other considerations. The board comprises of representatives of the Government, employees, trade
unions formed by workers and other stakeholders. Since Ethiopia does not yet have a minimum wage
system, the board is conducting various studies for creating that system.
The minimum wage has a significant impact on the labor wages of the IP enterprise. It is likely that EIC
will be required to participate in some of the studies conducted by the wage board.
6.2 Monitoring and Evaluation for Social Issue

(1) Ongoing Employment Monitoring and Evaluation
Creating employment opportunity is one of the requirements for the purpose of investment to improve
the living standard of the people of Ethiopia. EIC has been monitoring the monthly employment trends
at IPs.
Figure 6.2 is a graph of monthly employment trends compiled by EIC. This figure shows that
employment induced by IP development is affected by socio-economic changes such as the COVID-19
pandemic and security issues in Tigray.
In July 2018, there were more than 56,000 employees in IPs. After that, the operation of new IPs was
started, the enterprise expanded its production activities, and the employment of existing IPs increased
steadily. As a result, employment within IP increased 1.6 times to just over 88,000 in March 2020.
However, employment was sluggish due to the large impact of the COVID-19 pandemic that occurred
in early 2020. In September 2020, the number temporarily decreased to 69,000. Moreover, in December
2020, security issues in Tigray caused the suspension of three IPs in Mekelle and the loss of employment.
On the other hand, it gradually recovered from the COVID-19 pandemic, and in September 2021, it
reached the level of 88,000 people before the start of the COVID-19 pandemic for the first time in 18
months.
However, employment growth did not last long. Employment began to decline again as the Kombolcha
IP went down due to security issues. With the withdrawal of PVH, the employment of Hawassa IP has
decreased by about 1,000, and the employment of IPs in December 2021 was less than 83,000.
24
The privilege of AGOA, which has promoted exports from Ethiopia to the United States, has been
removed since January 2022. It is feared that this will have an impact on employment in 2022.
Source: EIPP based on EIC’s data

Figures 6.2: Monthly Employment Trends at Industrial Parks
(2) Proposed Periodical Monitoring and Evaluation for Social Issue
Social problems include security and infectious disease pandemics that are difficult to prevent. These
problems are difficult to predict, but regulatory work can minimize the impact after they occur. For that
purpose, in addition to the above-mentioned employment trend monitoring conducted by EIC, it is also
required to carry out regulatory work through regular monitoring and result evaluation of selected items
of social issues.
It is proposed that EIC conduct surveys for the social issue of IP enterprises once a year at the same time
as that for the economic and environmental issues. The specific survey contents and analysis methods
is described in Chapter 8 for the economic, social and environmental aspects.
The following survey items are included for the social issues.
 Cause of high turnover rate
 Formation of trade unions (labor unions)
 Number of times worker strikes in the past
 Theft in the past
 Measure for infection disease during working in factory and commuting
 Provision of safety and health training
25
CHAPTER 7: ENVIRONMENTAL-BASED REGULATORY

WORK
7.1 Overview of Industrial Parks Regulatory Work

(1) Introduction
In the Ethiopian legal system, environment can be defined as: ‘the totality of all materials whether in
their natural state or modified or changed by human, their external aspects and the interactions which
affect their quality or quantity and the welfare of human or other living beings, including but not
restricted to land, atmosphere, weather and climate, water, living things, sound, odor, taste, social factors
and aesthetics’. Therefore, normative instruments can serve as a tool of environmental management,
which sets enforceable rules and principles that are designed to regulate and manage the activities of
both natural and juridical persons in the industrial sector.
The relevant authority in making appropriate decisions in the industrial sector specifically in the
Industrial Parks, required to refer and harmonize with the existing applicable legal framework of the
Ethiopian government.
(2) Environmental Indicators
Environmental indicators are basically used to evaluate environmental performance using the standards
that indicate the direction in which to regulate industrial sector from the environmental vantage point.
It is known that industry accounts for a significant portion of global emissions and has wide-reaching
environmental and community impacts. Industrial parks can make a significant contribution to reducing
greenhouse gas emissions to prevent air pollution, reducing soil and water pollution, effective resources
utilization thereby contributing toward the implementation of the UN Framework Convention on
Climate Change (UNFCCC). It is clear that industrial parks have the potential to play an indispensable
role in environmental protection, climate change mitigation and efficient resource utilization in the
manufacturing industry if they have designed and implemented sound environmental indicators using
legal instruments. Setting the different types of environmental indicators for industrial park or tenant
companies depends upon its relevance, clarity, and realistic cost of collection and its development will
help to realize zero pollutants clean and livable area.
Environmental indicators for industrial parks or tenant companies can be used for industrial
competitiveness, as a significant driver to increase business performance and sustainable growth. For an
industrial park to be economically successful and environmentally sound, it must be attractive to
investors and industries and offer resources and human capital. A key goal for industrial park developers
is to attract strategic investors and incentivize domestic and foreign direct investment. The clustering of
businesses at the park level enables added-value services to be offered at lower prices and efficient
management structures which minimize administrative overhead costs. These clustering approaches
creates densely populated industries in a given area contributing to an adverse effect on the natural
setting contributing that leads to environmental pollution. To minimize the adverse impacts of the
industry or the manufacturing sector on the environment within or outside the Industrial Park, having
implementable normative frameworks with a clear, measurable and achievable environmental indicators
and a strong institutional setup is mandatory.
There are different kinds of environmental indicators. These can be broadly categorized into followings:
a) Environmental performance indicators.
b) Environmental condition indicators.
Environmental performance encompasses the management and mitigation of potential environmental
impacts in the industrial parks as listed below:
26
a) Operational performance indicators, which related to the process and other operational activities of
the industrial park or tenant company that would typically address the issue of raw material
consumption, energy consumption, water consumption, quantities of wastewater generated, and
other solid wastes generated, and emission from the industrial park or tenant company.
b) Management performance indicators, which related to management efforts to influence the
environmental performance of the industrial park or tenant company.
The environmental condition means the presence in the environment, including the soil, groundwater,
surface water or ambient air, of any hazardous Material at a level which exceeds any applicable standard
or threshold under any Environmental Law or otherwise requires investigation or remediation (including,
without limitation, investigation, study, health or risk assessment, monitoring, removal, treatment or
transport) under any applicable Environmental Laws. It provides information about the environment of
a given area. These indicators provide information about the local, regional, national, and global
conditions of the environment. This information helps the industrial parks or individual tenant
companies to understand the environmental impacts of their activities and thus helps in making
knowledge-based decisions to improve the environmental performance.
7.2 Structure of the Regulatory Framework

(1) Relevant Authorities
The relevant government authorities that are in charge of regulating industrial parks and tenant
companies in the industrial parks are:
a) Environment protection Authority (Art. 59 of Proc. No. 1263/2021); and Ministry of

Planning and development has the mandate to administer or supervise the Environmental
Protection Authority (See Art. 89 (3) of Proc. No. 1263/2021);
b) Ethiopian Investment Board (Art. 30 of Proc. No. 1180/2020 and);
c) Ethiopian Investment Commission (Art. 36 of Proc. No. 1180/2020 and Art. 79 of Proc.
No. 1263/2021);
d) Industrial Parks Development Corporation (Reg. No. 326/2014);
Source: EIPP
Figures 7.1: Organizational Structure of Relevant Authorities
To regulate environmental management and related issues the new legislation that promulgates power
27
and duties of the executive organs, gives the mandate to the Environmental Protection Authority (Art.
59 of Proc. No. 1263/2021). In general, any authority has a mandate to; (a) control, stating standards
and ensuring its implementation according to the standards, (b) set standards in the given sector, (c)
control work based on standards, and (d) performs licensing and supervision in cases where licenses are
required (Art 11 of No. 1263/2021).
The Industrial Park Proclamation stated that the Environmental Protection Authority is duty-bound
to establish an office within each Industrial Park for the application, supervision, protection and
enforcement of environmental norms, standards, safeguards, management and mitigation plans (Art. 24
(2) of Proc. No. 886/2015). For this realization, One-Stop Service has been implemented in the Industrial
Parks to provide environmental impact assessment studies and issuance of the certificates.
The Ministry of Industry is mandate to provide support to the industry sector in general and to the
manufacturing industry in particular to ensure compliance with environmental protection requirements
(Art. 21 (1 and m) of Proc. No. 1263/2021).
(2) Environmental Performance Requirements
Environmental issues required to be managed strategically by each Industrial Park, with the following
considerations:
a) To avoid or minimize adverse impacts on the climate, human health, and the natural environment.
b) To promote the sustainable use of resources and circularity within IP physical boundaries and
surrounding areas.
c) To assist industrial parks to reduce costs, increase competitiveness, and enhance investor
attractiveness.
d) Enabling IPs to show environmental leadership with a view to promoting and improving
environmental performance in their respective sectors, regions and countries.
The checklist that will serve to gather baseline data, which will use for the design of environmental
performances for industrial parks and/or manufacturing companies are listed in the following table.
Table 7.1 Environmental Performance Requirements and Prerequisites
Topic Sub-Topic Description/Requirement Prerequisites/Evidence
Management Environmental The IP has appropriate, functioning The IPs management entity operates an
and and Energy EMS and EnMS systems (for environmental/energy management system in
monitoring Management example, ISO 14001 Environmental line with internationally certified standards,
Systems Management Standard and ISO 50001 monitoring park performance and supporting
(EMS and Energy Management Standard) in resident firms in the maintenance of their own
EnMS, place to set and achieve targets, and firm-level management systems. For this
respectively) covering key issues (for example, purpose, it records all relevant data, preferably
energy waste and material use; water; managed by a dedicated environmental
point-source emissions; carbon monitoring and recording unit/group.
footprint; and the natural
environment).
The IPs actively supports and The IPs management entity keeps updated
facilitates industrial synergies and records on energy, water, waste products, and
symbiosis. materials inefficiencies and needs at tenant firms
to provide a basis for industrial synergies
development.
Energy Energy Energy efficiency strategies are in Supporting programs (e.g. energy efficiency
efficiency place for the IPs management networks) are in place to improve the energy
infrastructure and major energy- efficiency of major energy-consuming
consuming resident firms. businesses in the IPs.
Energy A program/mechanism is in place to An industrial heat recovery strategy is in place
network and identify opportunities for common to investigate opportunities for heat and energy
waste heat energy and heat exchange networks to recovery for the major thermal energy-
recovery be established. The IPs management consuming firms in the IPs. (Typically, these are
28

will provide the required physical firms that individually use at least 10–20 percent
network and offers support programs of total firm level energy consumption).
to assist resident firms with
implementation.
The IPs management provides the physical
network for waste heat/energy exchange at park
level and assists firms to connect to the network.
A commonly accepted rewards system for waste
heat/energy provision/use is in place.
Water Water Water-saving and re-use plans are The IPs management entity has operational
supply and efficiency, important to reduce total water plans to increase water reuse in next five years.
wastewater reuse and consumption and manage water use. This would be achieved by either reuse of
recycling The industrial park may face industrial effluents, or by rainwater/storm water
challenges related to climate and non- collection.
climate related uncertainties that can The IPs management entity provides the
shock and/or stress a system (land use physical network for water reuse/cascading of
changes, demographics, shifts in water.
demand, etc). The IPs and firms
should have systems in place to
increase water savings and reuse.
Waste and Dangerous Tenant firms are obliged to make as Obeying the principles of good practices for the
material use and toxic little use as possible of hazardous management of hazardous materials and waste
material materials in their production process; as part of legally binding agreements.
to generate as little hazardous waste
as possible, and to seek alternative
materials.
Resource The IPs management and firms are Obeying the principles of circular economy is
conservation obliged to consider circular economy part of the IPs’s Code of Conduct, and any
principles and practices (e.g. circular legally binding agreement between tenant firms
products, using as little virgin raw and the IPs authority.
material as possible, reuse and
remanufacturing of components and
parts and making extensive use of
secondary/ recycled materials
generated in the IPs).
Treatment of Waste generated in the production A central park facility or other mechanism is in
waste process is recovered, as far as place to treat waste that cannot be processed by
possible, through sorting, cleaning, individual firms.
conditioning etc., so that it can be
used as raw material for other firms in
and outside of the IPs.
Disposal of Waste/secondary raw materials A monitoring system is in place that controls and
waste (including hazardous waste) leaving registers origin, type, mode and route of
the IPs is being monitored to check transport, and final destination of
that the material is either reused or waste/secondary raw material leaving the IPs.
further processed by authorized firms
outside of the IPs or disposed of
according to legal and environmental
standards.
Climate Air, GHG The IPs seeks to limit and mitigate A program is established with clear evidence of
change and emissions and pollution and GHG emissions, steps taken to monitor, mitigate and/or minimize
the natural pollution including air, waterway, and ground GHG emissions such as carbon dioxide (CO2),
environment prevention pollution. A set of measures at the IPs methane (CH4), and nitrogen oxides (NOx).
level is introduced (for instance, low- Reducing CO2 emissions is an integral part of
carbon technologies, energy the IPs’s code of conduct, which urges firms to
efficiency measures, circular reduce their carbon footprint. The IPs
economy practices, waste heat acknowledges actions in this regard through an
recovery) to reduce GHG emissions. awards and incentive system.
Environmental The industrial park demonstrates an The IPs management entity has a plan in place to
assessment understanding of the potential impact assess operational environmental impacts, and
and ecosystem of park activities on priority aims to limit these impacts on prioritized local
services ecosystem services in and around the ecosystem services.
29

vicinity of the IPs and takes needed The IPs management implements measures to
actions. protect biodiversity and protects or creates
natural/recreational areas in and surrounding the
IPs.
Source: EIPP
7.3 Environmental Performance Indicators

(1) Resource Efficiency
A resource efficiency in production can be defined as “efficient conversion of resource into value for
society”. It is a life cycle measure aimed at improving the input-output relation of material, water and
energy-consuming processes and at mitigating the adverse environmental impacts resulting from these
processes. The notion of resource efficiency in the manufacturing has a direct nexus to sustainability,
which promotes life cycle management i.e., the management of the entire product life cycles. The life
cycle a given resource has four major stages which consists of; (a) row material extraction, (b)
production, (c) use, and (d) end of life (recycling or disposal). Ideal sustainable manufacturing addresses
specifically the production stage of the product life cycle without neglecting the economic and
environmental consequences of activities in other life cycle stages.
Sustainability in manufacturing might be obtained using efficiency, effectiveness and sufficiency
strategies. These three general sustainability strategies are vital for the formulation of concrete resource
efficiency principles and performance indicators for the manufacturing industry.
The industrial park’s manager is duty-bound to promote resource efficiency through providing technical
support like giving advice on the topic and support the effort of companies to increase their resource
efficiency. To provide such kinds of technical support a comprehensive regulatory framework is a
prerequisite. However, there is no comprehensive applicable regulatory framework for the efficient use
of resources within the industrial parks.
(2) Pollution Prevention
Industries are one of the major pollutants of the environment and pollution-related health damage. On
the other hand, it is an industry that is generating solutions to these problems and putting them into
practice. Commonly, industrial areas consume land and bear risks of pollution on the land they used.
The effluent of industrial wastes pollutes the soil and subsequently the groundwater. The other sources
of pollution emanate from industries a solid waste or hazardous waste, airborne emissions like partials,
aerosols, gases and odors also noise and light.
To prevent industrial pollution the government of Ethiopia promulgates Proclamation No. 300/2002 for
pollution prevention and control, Regulation No. 159/2008 for setting environmental standards,
Proclamation No. 513/2007 for solid waste management, Proclamation No. 1090/2018 for Hazardous
waste management and disposal control, and Regulation No. 425/2018 for Electrical and Electronic
Waste Management and Disposal to serve as the cornerstone of environmental protection and means for
legal enforcement in Ethiopia. However, the existing legal instruments do not follow a comprehensive
approach and unable to cover all pollution types like particles, aerosols, odors, light and wastes or
effluents that pollute soil and groundwater.
(3) Climate Change Mitigation and Adaptation
The existing climate change become a threat to industrial development. The adverse impact of climate
change manifested in extreme weather like heat waves and intensified rainfall has been causing
enormous difficulties on the socio-environment and considerable losses to economies. This impact
might be escalated in the future due to the scarcity of water and energy resources caused by climate
change.
30
A study conducted by MoTI and IPDC (2019), identified that there is a seldom practice about the
necessity of climate change adaptation in Industrial Parks. Industrial Parks commonly give low
emphasis to environmental and climate considerations mainly due to lack of knowledge, skills and
financial resources to implement climate change adaptation measures in the Industrial Parks. For that
matter, the existing normative framework that regulates the new Industrial Parks development does not
consider climate risks. In addition, the existing applicable legislation does not yet provide a sufficient
framework for a climate change sensitive industrial development.
(4) Prevailing Challenges to Implement Environmental Regulatory Framework in IPs
The study conducted by MoTI and IPDC identified seven major challenges, which adversely affect the
implementation of environmental regulatory frameworks in the Industrial Parks as listed below:
a) Low level of concern for environmental issues.
b) Lack of awareness about the environmental legislations by stakeholders.
c) Low level of enforcement of the environmental regulations.
d) Lack of technical support to address environmental issues.
e) Low level of institutional capacity and ability to implement environmental protection standards.
f) Lack of institution(s) that provide technical service leading to certification of the environmental
management system.
g) Lack of mechanisms for green financing.
All these challenges are also envisaged in the Industrial Parks. Therefore, it needs special attention to
update the existing environmental regulatory framework to address the contemporary environmental
issues such as; (a) climate change adaptation and resource efficiency, (b) adopt a comprehensive
environmental regulatory framework with incentive mechanisms that will serve to govern specifically
industrial parks, (c) and create a sound institutional framework that will effectively implement
regulatory frameworks in the Industrial Parks.
Although there is no a comprehensive environmental regulatory framework, which governs
environmental issues in the industrial parks, the team proposed the following environmental
performance indicators using the international eco-industrial parks regulatory framework minimum
requirement as a benchmark.
The environmental regulatory framework through systematically categorizing environmental
performance issues into management and monitoring of; (a) energy, (b) water supply and wastewater,
(c) waste and material use, and (d) climate change and natural environment.
Table 7.1 Environmental Elements Performance Indicators
Topic Sub-Topic Description/Requirement Performance Indicator Unit [target value]
Management Environmenta Firms have functioning and fit-for- Proportion of a firm’s Percentage of
and l and Energy purpose EMS/EnMS systems. energy consumption that is energy consumption
monitoring Management Summary information from these covered by an energy by firms to be
Systems management systems is provided to management system. covered by an
(EMS and IPs management, who aggregate and energy management
EnMS, report on data at the IPs level. system [10%]
respectively)
Energy Energy The IPs has adequate metering and Proportion of the IPs Percentage of IPs
consumption monitoring systems in place to management and tenant facilities [100%]
measure thermal energy and firms that have a metering
electricity consumption at both the system in place.
IPs and firm levels. Proportion of firm-level Percentage firm-
energy consumption that is level energy
monitored. consumption
31

monitored [20%]
Renewable The IPs leverages available Total renewable energy National grid
and clean renewable energy with plans to use for electricity and heat emission factor15 ≥
energy increase its contribution for shared production in the IPs is the combined CO2
services (e.g. solar streetlamps). equal to or greater than the emissions
renewable energy share in intensity16 as per
the annual national unit of produced and
electricity mix in the grid. purchased heat and
electricity for use by
IP enterprises.
Energy Energy efficiency opportunities The equivalent of at least Percentage of CO2
efficiency should be identified at the IPs and 10% of the total CO2 emissions covered
firm levels to reduce energy use and emissions (Scope 1 and 2) by the firms with
associated greenhouse gas at IPs level is covered by energy management
emissions. IPs should identify and the percentage of firms certification [10%]
promote technological and process- that have a qualified
related interventions in their own energy efficiency
and resident business operations. certification (LEED,
Industry EDGE, DGNB or
ISO 50001 or their
national equivalent).
Water supply Water A mechanism is in place to monitor Total water demand from Percentage of water
and consumption water consumption across the IPs firms in IPs that does not demand [100%]
wastewater and establish demand management negatively impact local
practices in case of water stress. water sources or
Extraction from water sources (such communities.
as rivers and groundwater sources)
should take place at sustainable
levels.
Wastewater The IPs has provisions to treat, Proportion of industrial Percentage of
treatment recycle and reuse treated wastewater generated by wastewater treated/
wastewater. No effluents IPs and resident firms total wastewater
significantly impact potable water which is treated in [100%]
resources, or the health of local accordance with
communities or nearby ecosystems. appropriate environmental
standards.
Water The IPs and firms have systems in Proportion of total Percentage of water
efficiency, place to increase water savings and industrial wastewater from re-used or
reuse and reuse firms that is reused recycled/total water
recycling responsibly within or consumed [25%]
outside the industrial IPs.
Waste and Waste/by- A waste management plan with a Proportion of non- Percentage of solid
material use products re- program/mechanism in place to hazardous, solid industrial waste reused/ total
use and promote and encourage reuse and waste generated by firms waste [25%]
recycling recycling of materials by firms in the that is reused-recycled by
IPs (for example, raw materials for other firms, neighboring
process and non-process communities, or
applications). municipalities.
Dangerous Program/mechanism in place with Proportion of firms in IPs Percentage of firms
and toxic clear targets to reduce, and avoid the which appropriately with programs for
materials use of, dangerous and hazardous handle, store, transport handling and
materials by firms in the IPs. and dispose of toxic and disposing of
hazardous materials. hazardous materials
[100%]
32

Resource Circular economy practices (e.g. Proportion of Percentage of tenant
conservation Industrial Symbiosis Networks, manufacturing firms firms participating
Exchange Platforms for waste and adopting circular economy in CE practices
secondary raw materials, for reuse practices, including [20%
and recycling, etc.) are in place and engagement in Industrial
used by firms. Circular economy Symbiosis Networks in
practices consist of; (a) redesigning the IPs; or actively
products for ease of reuse, exchanging secondary raw
remanufacturing, disassembly and materials, or waste, or
recycling, (b) reuse of waste and/or other circular economy
byproduct within its own operations, practices.
(c) collecting back and
remanufacturing products or parts
and components of products.
Waste A waste management system with a Waste generated by firms Percentage of
disposal systematic approach to collection, in the IPs which is safely industrial waste
treatment, recycling and disposal of disposed of. Open burning without re-
waste, and which correctly manages of waste generated in IP is processing, reuse or
unusable waste materials (e.g. prohibited. recycling options
disposed of in proper landfills, that go to sound
burned in proper incinerator). disposal [100%]
Climate Flora and Native flora and fauna are important Proportion of open Percentage of open
change and fauna to maintain the proportion of natural space18 in the IPs for space [5%]
the natural areas. They are integrated within the native flora and fauna
environment IPs and natural ecosystem where
possible.
Air, GHG A mechanism is in place to avoid, Proportion of firms in IPs Percentage of firms
emissions and minimize, and/or mitigate which have pollution [50%]
pollution significant point-source pollution prevention and emission
prevention and GHG emissions. Covering GHG reduction strategies to
gases (CO2, methane (CH4), nitrous reduce the intensity and
oxide (N2O), and mass flow of
hydrofluorocarbons (HFCs)), local pollution/emission
particulate and air pollution releases which exceed
emissions such as PM 2.5, heavy national regulations.
metals (Hg, Cd, Pb and other Proportion of firms in IPs Percentage of firms
relevant heavy metals), selected which have a risk [30%]
unintentional toxic organic management framework
pollutants (dioxins, PCDD/Fs). in place that: (a) identifies
Program for on-site chemical activities which have an
management. impact on the
environment, and; (b)
assigns a level of
significance to each
activity, and; (c) have
appropriate mitigation
measures in place
Source: EIPP
33
CHAPTER 8: MONITORING AND EVALUATION OF

REGULATORY WORK
8.1 Overview of Monitoring and Evaluation

It is suggested to monitor the four kinds of performance and evaluate as summarized by Table 8.1 below.
Table 8.1: List of Monitoring and Evaluation Items
Monitoring Evaluation Items
Country-level FDI inflow  FDI inflow trend (total, IP, Non-IP)
 FDI inflow by major sectors
 FDI inflow by major countries
Export and Employment  Growth of export with reasons for increase or decrease in export
trend (IP level)  Growth of employment with reasons for increase or decrease in employment
Operational status of IP  No. of IP enterprises by industrial category using ESIC
enterprises  No. of IP enterprises by country origin
 No. of IP enterprises by market counties
 No. of IP enterprises by raw material source country
 Type of textile and garment exporting (CMT, FOB)
 No. of expert and Ethiopian employees by position of each IP enterprise
 IP enterprises satisfaction with the business environment
Training for knowledge  Percentage of “No. of trainings performed” to “No. of trainings required”
and skills transfer at IPs  Change in percentage of expert employees in each IP enterprise
Source: EIPP
8.2 Monitoring of Country-Level FDI Inflow

It is suggested that Foreign Direct Investment (FDI) inflow be monitored and reported so that potential
investors, policy makers and stakeholders could understand the investment situation. Since EIC has the
authority to issue investment licenses to foreign investors, it appears that EIC manages data on FDI.
Accordingly, EIC may be able to assess FDI inflows by compiling that data.
FDI inflow data is published by investment promotion agencies and central banks in many countries.
For example, the statistics department of Bangladesh Bank has published a report on FDI inflow to
Bangladesh. A part of the data is extracted and shown in Figure 8.1 below as a sample of the country-
level FDI inflow data.
34
Source: Survey Report on FDI in Bangladesh, Statistics Department of Bangladesh Bank

https://www.bb.org.bd/pub/halfyearly/fdisurvey/fdisurveyjanjun2019.pdf
Figure 8.1: Sample of FDI Flow Analysis in Bangladesh
8.3 Monitoring of Export and Employment Trends

Data for export and employment is quite important indication to show the performance of achieving the
investment objectives. It is good for policy makers and stakeholders can understand the investment
situation. This data has been monitored monthly by EIC.
Source: Export Gap Survey Report prepared by EIPP
Figure 8.2: Trend in Export and Employment
8.4 Suggested Survey on Operational Status of IP Enterprises

(1) Purpose of Survey
No systematic monitoring of IP enterprise operational status has been done so far, except for the export
and employment data monitoring mentioned above. As a result, EIC lacks the information needed to
support and regulate the operations of IP enterprises.
It is suggested that EIC periodically conduct surveys to understand economic, social, and environmental
issues as well as the operational status of industrial park (IP) enterprises for the following purposes.
a) To reflect the survey results in policy making to improve the business environment in IP based on
the actual situation of IP enterprises.
b) To respond promptly to operational problems of a specific IP enterprise based on the status
information obtained from the IP enterprise.
35
c) To prevent the affects to the natural and social environments by the manufacturing activities
towards sustainable economic development.
d) To use the survey results as a basis when follow-up is requested by stakeholders of the Tripartite
Committee due to regulatory work.
(2) Method of Survey
It is proposed to conduct the survey by the following method.
a) The survey is conducted once a year for each IP enterprise.
b) EIC officials visit the IP enterprises to conduct the survey for IP enterprise status monitoring using
the survey sheet, under coordination or cooperation with IPDC.
(3) Survey Sheet
EIPP prepared a survey sheet for conducting the survey as attached to Annex-3. EIC is recommended to
update it for own use.
The survey sheet prepared by EIPP summarizes the monitoring items examined in Chapters 5, 6, and 7,
respectively, for economic, social, and environmental aspects. A step-by-step guide to fill out the survey
sheet has also been prepared by the EIPP and included in Annex-3.
(4) Evaluation of Monitored Results
It is suggested to evaluate the monitored results as follows.
a) Systematic Evaluation: Evaluation is performed for each IP enterprise first, and then the data is
aggregated and evaluated for each IP. Furthermore, the results will be aggregated and evaluated
for the entire IPs in the country. It is recommended to systematically evaluate the monitoring
results in these steps.
b) Changes Over the years: Once the evaluated data is accumulated, it can be compared with the
past data. This makes it possible to recognize changes over the years.
c) Industrial Location: Industrial category in which the IP enterprise engages is researched using
the Ethiopian Standard Industrial Classification (ESIC). By aggregating these results, the
industrial location of each IP and the entire IP throughout the country can be analyzed.
d) Country Origin: Country of origin is researched for each IP enterprise. By aggregating these
results, the distribution of investing countries can be analyzed by IP and for all IPs throughout the
country.
e) Market Country: Market is researched for each IP enterprise. By aggregating this result, the
market of the enterprise can be analyzed by IP and for all IPs throughout the country.
f) Raw Materials Supplier Country: Raw materials supplier countries are researched for each IP
enterprise. By aggregating this result, it is possible to analyze the raw material supplier countries
of the IP enterprise by IP and for all IPs throughout the country.
g) CMT/FOB: The survey examines whether the business model is CMT or FOB for IP enterprises
engaged in the textile and garment industry. By aggregating this result, it is possible to analyze
the business model of the IP enterprise by IP and for all IPs in the country.
h) Expert Employees by Position: The survey examines the number of expert and Ethiopian
employees by position for IP Enterprises. From this result, it is possible to know whether the
percentage of expert employees to total number of employees for each IP enterprise follows the
law. By aggregating this result, the number of expert employees by position can be analyzed for
each IP and for all IPs in the country.
36
i) Business Environment Issue: Business environment issues are researched and analyzed
qualitatively for each IP enterprise. The results can be used as basic data for support and regulation
of the IP enterprise. Furthermore, if aggregated for each IP and for all IPs throughout the country,
problems in the business environment will be clarified.
8.5 Monitoring of Knowledge and Skills Transfer Training

(1) Field Monitoring for Confirming the Implementation of Training
Training for the transfer of knowledge and skills from expert employees to Ethiopians is stipulated in
various laws. IP enterprises are required to plan and report on the implementation of training. The
training progress report is one of the necessary documents for applying for work permit renewal.
It is required that EIC conduct field monitoring of the training every quarter to confirm the
implementation of the training for individual Ethiopian trainees. The method for field monitoring and
result evaluation for the training are described in detail in Chapter 5 with forms in Annex-2.
(2) Evaluation of Knowledge and Skills Transfer Training
The performance of this regulatory work for training is evaluated by the percentage of the number of
trainings performed to the number of trainings required. In addition, the performance of replacing
foreign employees with Ethiopians is evaluated by the change in the ratio of foreign employees in each
IP enterprise. Table 8.2 describes the performance indicators and their data acquisition methods.
Table 8.2: Evaluation of Knowledge and Skills Transfer Training
Performance Indicator How to acquire the performance indicator
Percentage of “No. of trainings (a) No. of trainings performed: Data is picked up from the training
performed” to “No. of trainings evidence of work permit renewal application documents and
required” aggregated by IP enterprise.
(b) No. of trainings required: For each IP enterprise, subtract the
number of manager class renewal applicants from the total number
of work permit renewal applicants.
(c) Calculate by dividing (a) by (b) and multiplying by 100.
Change in percentage of expert (a) Ratio of expert employees in each IP enterprise: Calculate by
employees in each IP enterprise dividing the no. of expert employees by the total number of
employees and multiplying by 100 in the monthly employment data
for the IP enterprises using EIC data.
(b) Change in percentage of expert employees: Compare the value of
(a) with the value of the past months to see the change.
Source: EIPP
37
Report on Export Gap Analysis
EIPP-JICA
Prepared by:
Ethiopian Industrial Promotion Project (EIPP)
Investment Promotion and Industrial Park Development-Second Phase
Japan International Cooperation Agency (JICA)
May 2022
Acknowledgment
We wish to extend our appreciation to the Japan International Cooperation Agency
(JICA), who provided funding for the successful implementation of the export gap
survey analysis.
We also wish to thank the Government of Ethiopia (GoE), Ethiopian Investment

Commission’s (EIC) senior management officials and senior staffs who participated in
the consultations and provided updated official data during the execution of the export
gap survey analysis.
Special thanks go to Ms. Lelise Neme, Commissioner; Mr. Daniel Teressa, Deputy
Commissioner; Mr. Mebrahtom; Mr. Fekadu, and other colleagues in EIC.
Last but not least, we would like to thank EIPP Project Team for their valuable support
contributions in data collections and report preparation.
i
Summary
By the end of 2019 export performance has been shrinking, and private sector investment was
affected negatively by various factors. For instance, the export value from IPs during
FY2018/19 was only USD 140.6 million. Similarly, the level of employment has also declined
overtime.
The study aims to explore the export performance of companies from all Industrial Parks (IPs)
and also investigate how companies from IPs have been affected by the global impact of the
COVID-19 pandemic. To do so, the study uses the responses of 53 companies in 8 Industrial
Parks, namely Adama IP, Bole Lemi IP, Dire Dawa IP, Eastern IP, George Shoe IP, Hawassa
IP, Huajian International Shoe City, and Kombolcha IP. In addition, some data has been
utilized from EIC such as actual and planned export values of companies and monthly export
value and employment level data that range from FY2019/20 to FY2020/21.
Accordingly, the study found that the overall export value from all IPs decreased following the
COVID-19 pandemic. Despite the sharp decrease in export performance during the period
where the pandemic has most severely affected the country (March 2020 to June 2020), it has
shown a slight recovery during July and August 2020. However, the slight recovery didn’t last
long; the overall export performance of all IPs dropped again since October 2020 due to the
continued effect of the pandemic and the conflict in Tigray region.
Looking at the export performance of the two flagship IPs in promoting government
industrialization agenda namely Hawassa IP and Bole Lemi IP; in Hawassa IP, the export
performance showed a declining trend from July 2019 to February 2021 and the gap further
widened between March 2020 to July 2020 when COVID-19 was at severe stage. Similarly, in
Bole Lemi IP, actual export value has fallen from USD 3.72 million in February 2020 to USD
3.44 million in February 2021. Moreover, trend in export and employment in other six IPs, i.e.,
Kombolcha IP, Adama IP, Dire Dawa IP, Eastern IP, George Shoe IP and Huajian International
Shoes City showed a steady fluctuation in employment level as well as export value.
The study recognizes that IPs are at different stages of addressing the weak export
performances, capturing both what IPs have started doing well and areas where additional
effort is required.
In this connection, the study identified the major reasons for weak export performances from
all IPs such as delayed supply of raw materials, order decrease, customs problem, insufficient
ii
shipping operation, infrastructure problem, labor problem, bank problem, foreign currency
shortage, and the impact of COVID-19.
Most importantly, the COVID-19 has hit Ethiopia in a period of tough economic adjustment,
just as the government was at the start of a program of fiscal consolidation to rebalance the
economy and reduce its exposure to shocks. While some firms in industrial parks have been
able to repurpose production towards personal protection equipment (PPE); majority of the
companies have experienced significant falls in export value. Consequently, it raised concerns
both for the exporting company’s capacity to drive future growth in Ethiopia, and for workers
who may face large scale layouts without appropriate support schemes.
The study also identified the main causes of the identified problems such as supply chain
problem, insufficient operation of lifting containers at Djibouti Port, international logistics
problems, lockdown of Djibouti, shortage of trucks, NBE’s new directive, complicated process
of custom clearances, labor shortage, high turnover rate and absenteeism, infrastructure
problems, security issues, insufficient support to indirect export and imports substitution
according to industrial promotion policy and etc.
Given the above, the finding shows that to improve and recover exports from IPs, some
measures needed to be taken by the government: solve institutional problems related to bank,
customs, labor, theft, and care for companies other than export processing type; address
infrastructure problems such as electricity, internet, water supply, and roads to Djibouti;
manage under private sector initiative for the problems of decrease in orders, delay in raw
material supply, delay in sea transportation, delay in inland transportation, labor and theft; and
solve security problems in Mekelle.
It also investigates the appropriateness of government measures to relax the new directive on
foreign currency retention and utilization based on the experience of other countries such as
Myanmar. It also suggests that EIC and NBE need to collaborate and give incentives for foreign
currency retention and utilization to companies in industrial parks.
The study assessed a validity of using “net export value” or “value added related indicators” as
an alternative indicator to be used in the export gap analysis. As a result of the verifications, it
is concluded that these indicators are not suitable to measure export performance of tenant
companies due to the difficulty in collecting reliable data. As for other countries’ experience,
only Thailand is utilizing this indicator in exchange of additional incentive to be given; in this
iii
case, tenants/investors provide the figure of value-added rate with sufficient back data such as
financial statements, etc.
Finally, the study suggests a way forward to increase exports from IPs in Ethiopia by as an
action shall be taken by EIC and Ethiopian Government as below:
Necessary Actions to be taken by EIC

1. Establishment of regulatory framework, initially to grasp the problems faced by the
investors and regulation shall came after sustainable investment was secured.
2. Coordination among relevant agencies;
a) to improve the performance of relevant manufacturing supporting works,
b) to secure the appropriate and sustainable economic development both from social,
environmental and financial aspects, and
c) to attract the FDI
Necessary Actions to be taken by the Government of Ethiopia
1. Utilization of domestic materials for domestic market to mitigate challenges of logistics
and foreign currency by expansion of import substitution.
2. Expansion of foreign business opportunities in the manufacturing sector through
cooperation/business matching with local enterprises.
In order to promote industrialization, it is important to collaborate with related organizations

not only in manufacturing, but also in logistics, finance, infrastructure, and other relevant
sectors to provide support, and to considerate social and environmental issues, such as workers
and pollution issues that are indispensable.
“The Key to Success” lies in the government's vision and strong leadership in response to the
current situation.
iv
Abbreviation
BLIP Bole Lemi Industrial Park
CO2 Carbon dioxide
CMT Cut, Make, and Trim
DICA Directorate of Investment and Company Administration
EFY Ethiopia Fiscal Year
EIPP Ethiopia Industrial Promotion Project
ESLSE Ethiopian Shipping and Logistics Service Enterprise
ESG Environmental, Social and Governance
EU European Union
FOB Free on Board
FY Fiscal Year
GoE Government of Ethiopia
IP Industrial Park
IPs Industrial Parks
JETRO Japan External Trade Organization
JICA Japan International Cooperation Agency
MOFA Ministry of Foreign Affairs
MOTI Ministry of Trade and Industry
OSS One-Stop Service
SEZ Special Economic Zone
USD United States Dollar
v
Table of Content
Acknowledgment .............................................................................................................. i
Summary ......................................................................................................................... ii
Abbreviation ................................................................................................................... v
Table of Content .............................................................................................................. vi
List of Tables .................................................................................................................viii
List of Figures ................................................................................................................ ix
Chapter 1: Introduction .................................................................................................. 1
1.1 Background ............................................................................................................ 1
1.2 Objective of the Study ............................................................................................. 2
1.3 Scope of the Study................................................................................................... 2
1.4 Methodology of the Export Gap Analysis ............................................................... 2
1.5 Structure of the Export Gap Survey ....................................................................... 3
Chapter 2: Analysis of Exports at IPs in Ethiopia ........................................................... 5
2.1 Analysis of Export Data from the Whole Industrial Parks ..................................... 5
2.2 Trend Analysis of Export Data ............................................................................... 5
2.3 Changes in Export and Share by Industrial Park ................................................... 6
2.4 Gap between Export Plan and Actual Export ......................................................... 6
2.5 Trend in Export and Employment .......................................................................... 7
Chapter 3: Trend in Exports from Bole Lemi Industrial Park (BLIP) ........................... 8
3.1 Export Gap before and during COVID-19 in BLIP ................................................ 8
3.2 Export Variations and Employment Level with and without COVID-19 ............... 9
3.3 Export Recovery Status of Companies in BLIP ...................................................... 9
3.4 Interview Survey to Companies in BLIP .............................................................. 10
3.5 Reasons for Export Gaps in BLIP......................................................................... 10
3.6 Companies with Observed Export Performance Issues ........................................ 12
3.7 Impact of COVID-19 in BLIP ............................................................................... 13
Chapter 4: Trend in Exports from Hawassa Industrial Park (HIP) .............................. 15
4.1 Export Gap before and during COVID-19 in HIP ................................................ 15
4.2 Export Variations and Employment Level with and without COVID-19 ............. 15
4.3 Export Recovery Status of Companies in HIP ...................................................... 16
4.4 Interview Survey to Companies in HIP................................................................. 16
4.5 Reasons for Export Gap in HIP ............................................................................ 17
4.6 Impact of COVID-19 in HIP ................................................................................. 20
Chapter 5: Trend in Exports from Other Industrial Parks ........................................... 22
vi
5.1 Export Gap before and during COVID-19 in 6 IPs............................................... 22
5.2 Export Variations and Employment Level at 6IPs with and without COVID-19 . 22
5.3 Export Recovery Status ........................................................................................ 23
5.4 Interview Survey to Companies in 6 IPs ............................................................... 24
5.5 Reasons for Export Gaps in 6 IPs ......................................................................... 25
5.6 Impact of COVID-19 in 6 IPs................................................................................ 28
Chapter 6: Cross-Cutting Issues of Export from Industrial Parks ................................ 30
6.1 Problems of Exporting from Industrial Parks and Supply Chain ......................... 30
6.2 Reason for Export Gap ......................................................................................... 31
6.3 Investigation and Analysis of Causes .................................................................... 32
6.4 Survey on Alternative Indicators for Export Gap Analysis .................................. 37
Chapter 7: Proposed Approach to Recover Exports from Industrial Parks.................. 40
7.1 Measures for Decrease in Order ........................................................................... 40
7.2 Measures for Delay in Supply of Raw Materials ................................................... 40
7.3 Measures for Labor .............................................................................................. 40
7.4 Measures for Infrastructure ................................................................................. 41
7.5 Measures for Transportation ................................................................................ 42
7.6 Measures for Customs .......................................................................................... 42
7.7 Measures for Bank ................................................................................................ 42
Chapter 8: A Way Forward towards Industrial Promotion ........................................ 44
8.1 Necessary Actions to be taken by EIC................................................................... 44
8.2 Necessary Actions to be taken by the Government of Ethiopia ............................. 46
References ..................................................................................................................... 48
Appendices .................................................................................................................... 49
Appendix-1: Company List .......................................................................................... 50
Appendix-2: Questionnaire form for Industrial Parks Export Gap Survey ................. 52
Appendix-3: Additional Survey on Value Added or Value Added Rate as an
Alternative Indicator ............................................................................... 54
vii
List of Tables
Table 1. EIPP’s interview survey result ...................................................................................... 3
Table 2. List of Companies Interviewed .................................................................................... 10
Table 3. Reasons for Export Gap Answered by Companies in BLIP ......................................... 13
Table 4. Impact of COVID-19 Answered by Companies in BLIP.............................................. 14
Table 5. List of Companies Interviewed .................................................................................... 17
Table 6. Reasons for Export Gap Answered by companies in HIP ........................................... 20
Table 7. Impact of COVID-19 Answered by Companies in HIP ............................................... 21
Table 8. List of Companies Interviewed ................................................................................... 24
Table 9. Reasons for Export Gap Answered by Companies in Adama IP ................................ 25
Table 10. Reasons for Export Gap Answered by Companies in Dire Dawa IP ......................... 25
Table 11. Reasons for Export Gap Answered by Companies in Kombolcha IP ........................ 26
Table 12. Reasons for Export Gap Answered by Companies in Huajian Shoes City IP............ 26
Table 13. Reasons for Export Gap Answered by Companies in Eastern IP .............................. 27
Table 14. Reasons for Export Gap Answered by Companies in George Shoe IP ...................... 27
Table 15. Summary of Reasons for Export gap by companies in 6 IPs ...................................... 28
Table 16. Impact of COVID-19 Answered by Companies in Adama IP ................................... 28
Table 17. Impact of COVID-19 Answered by Companies in Dire Dawa IP .............................. 28
Table 18. Impact of COVID-19 Answered by Companies in Kombolcha IP............................. 28
Table 19. Impact of COVID-19 Answered by Companies in Huajian Shoes City IP ................ 29
Table 20. Impact of COVID-19 Answered by Companies in Eastern IP................................... 29
Table 21. Impact of COVID-19 Answered by Companies in George Shoe IP ........................... 29
Table 22. Summary of Impact of COVID-19 in 6 IPs ................................................................ 29
Table 23. Reason for Export Gap in Each IPs .......................................................................... 32
Table 24. Change of NBE’s Directive on Foreign Currency Retention ..................................... 36
Table 25. Expected Impact by the New Directive ..................................................................... 36
Table 26. General risk of foreign currency shortage for IP companies ..................................... 37
Table 27. Summary of Problems and its Main Causes .............................................................. 37
viii
List of Figures
Figure 1. Export Performance of IPs in Ethiopia from July 2019 to February 2021 ................... 6
Figure 2. Changes in Export and Share by Industrial Park ........................................................ 6
Figure 3. Export Performance of IPs in Ethiopia from July 2019 to Feb 2021 ............................ 7
Figure 4. Trend in Export and Employment since July 2019 ...................................................... 7
Figure 5. Actual and Plan Exports Gap before and during COVID-19 Pandemic in BLIP ......... 8
Figure 6. Trend in Export and Employment since July 2019 in BLIP ......................................... 9
Figure 7. Export Recovery of BLIP........................................................................................... 10
Figure 8. Actual and Plan Exports Gap before and during COVID-19 Pandemic at HIP ......... 15
Figure 9. Trend in Export and Employment since July 2019 in HIP ......................................... 16
Figure 10. Export Recovery of HIP ........................................................................................... 16
Figure 11. Actual and Plan Exports Gap before and during COVID-19 Pandemic in 6 IPs ...... 22
Figure 12. Trend in Export and Employment since July 2019 in 6 IPs ...................................... 23
Figure 13. Export Recovery of 6 IPs ......................................................................................... 23
Figure 14. Problems of Export and Supply Chain ..................................................................... 31
ix
Chapter 1: Introduction
1.1 Background
Ethiopia’s economy is one of the fastest-growing economies in Africa for the last few decades.
This fastest economic growth was mainly driven by the expansion of the large-scale
government funded infrastructure projects.
Indeed, Industrial Parks (IPs) development is one of the key government priority and large-
scale infrastructure development in Ethiopia. Over the past few years, the IPs have been
attracting the attention of foreign investors to the country, making the best investment
destination in East Africa. Most importantly, the sector generates millions of dollars by
exporting industrial outputs, creating thousands of jobs, increasing skills of local workers and
technology transfers, and contributing to poverty reduction.
For instance, the export value from IPs for 2011 Ethiopia Fiscal Year (EFY) or FY2018/19 was
USD 140.6 million 1 and during 2012 EFY (FY2019/20), it reached USD 164.9 million 2, which
has increased by 17.3 percent compared to previous fiscal year. However, the export
performance sharply declined in 2013 EFY(FY2020/21), a total of USD 112.8 million was
earned within the first 8 months, from July 2020 to February 2021 3. It declined by 8.9 percent
from last fiscal year 8 months export performance, which was approximately USD 123.9
million (Ethiopia Investment Commission, 2021)4.
Similarly, the level of employment has changed overtime. In 2012 EFY (FY2019/20), about
962,452 total number of workers was employed in all ten operational Industrial Parks.
In Ethiopia, export and employment are important performance indicators for IPs. Employment
contributes not only to job creation for Ethiopian nationals but also to the government’s
acquisition of foreign currency. Likewise, large scale export helps to earn valuable foreign
exchange that can be utilized to pay imports and repayment of external loans. Also, it helps to
improve balance of payment, maintain good international relations, and earn goodwill in the
world markets due to quality exports of products and services.
1
Export value from nine IPs, i.e., Adama IP, Bole Lemi IP, Eastern IP, George shoes IP, Hawassa IP, Huajian
Shoes City IP, Kombolcha IP, Mekelle IP, and Velocity IP
2
Export value from 10 IPs, value from all the above nine IPs plus DBL IPs
3
Export value from 15 IPs, Bure Agro Processing IP, ICT Park, Bahir Dar IP, Dire Dawa IP, and Debre Birhan IP
are included in FY2020/21
4
EIC’s data, for FY2018/2019, FY2019/2020, and FY2020/2021.
1
However, recently the export performance in the IPs shows relatively weak. In this connection,
EIC requested Japan International Cooperation Agency (JICA) and its project EIPP to conduct
“The study on Export Gap Analysis”.
1.2 Objective of the Study

The major objective of this study is to assess the export performance of companies in Industrial
Parks, to investigate how industrial park firms have been affected by the COVID-19 pandemic
and to identify the main constraints preventing companies from maintaining planned export
levels.
This assessment is also expected to propose different approaches and suggest a way forward to
improve the export performance of companies in Industrial Parks of Ethiopia.
1.3 Scope of the Study

The scope of this study includes the followings: to assess the export performance of exporting
companies in IPs based on the official export and employment data of EIC; to conduct
interview survey to all exporting companies in IPs with the support of EIC; to identify problems
faced by individual companies from the results of interview survey; to analyze the problems
caused by COVID-19 and other factors; and finally, to propose the approach to solve the
problems.
1.4 Methodology of the Export Gap Analysis

The export gap survey adopted both primary and secondary data sources. The primary survey
data was collected through questionnaires. The questionnaires survey consists of both closed-
ended and open-ended questions and it was designed to all operational/exporting IPs.
The questionnaire used in this report was designed by EIPP in consultation with EIC. A draft
questionnaire was modified and finalized after the pilot interview survey was conducted. Since
the interview survey was conducted during the travel restrictions due to the COVID-19
pandemic, Japanese members of EIPP team remotely monitored the process and data collection
at all stages to ensure quality. The interview survey for the export gap was conducted by
Ethiopian members of EIPP from 4th December 2020 to 26th March 2021.
We interviewed 53 companies in 8 Industrial Parks, namely Adama IP, Bole Lemi IP, Dire
Dawa IP, Eastern IP, George Shoe IP, Hawassa IP, Huajian International Shoe City, and
Kombolcha IP. Jimma IP was excluded from this survey, since there is no exporting company
during the survey period. Mekelle IP, Velocity IP and DBL IP were also excluded from the
2
interview survey due to no operation companies during the survey period under the security
concerns in Mekelle.
The survey also gave due attention to Bole Lemi IP and Hawassa IP, flagship IPs in promoting
government industrialization agenda.
In respect to the nature of the questions, general information, export plan, reasons for export
gap, and COVID-19 impact have been properly captured.
Table 1. EIPP’s interview survey result

Industrial Park No. of Company
No. Name of Industrial Park
Developer Location Surveyed
1 Hawassa IP IPDC Hawassa 20
2 Bole Lemi IP IPDC Addis Ababa 9
3 Kombolcha IP IPDC Kombolcha 4
4 Adama IP IPDC Adama 4
5 Dire Dawa IP IPDC Dire Dawa 2
6 Mekelle IP IPDC Mekelle -
7 Eastern IP Private (China) Dukem 10
8 George Shoe IP Private (China) Modjo 1
9 Huajian International Shoe City Private (China) Addis Ababa 3
10 Velocity IP Private (Dubai) Mekelle -
11 DBL IP Private (BGD) Mekelle -
Total 53
Source: EIPP’s computation based on respondent survey results, 2021
The secondary data has been utilized from EIC, which was mainly related to monthly exports
and employment. The monthly export and employment data range from FY2019/20 to
FY2020/21.
Data related to planned and actual export of companies have also been collected from EIC.
1.5 Structure of the Export Gap Survey

The rest of this report consists of the followings; Chapter 2 examines the export gap from the
whole IPs, followed by a detail reviews of Bole Lemi IP and Hawassa IP in Chapter 3 and 4 of
this report respectively. Chapter 3 and 4 describe in details about the changes in export and
share by IPs, trend in export and employment, and gap between planned and actual exports
across different IPs. It also highlighted export recovery status of IPs, the impact of COVID-19
pandemic and the main reasons behind the export gap.
Chapter 5 explains a trend of other IPs in terms of exports and employment, export gap and its
main reason along with the impact of COVID-19 pandemic on the export performance of other
IPs.
3
Chapter 6 presents cross-cutting issues of export form IPs, which include main problems of
exporting from IPs and supply chain, reason for export gap, and cause analysis for problems.
Chapter 7 presents the proposed approach to increase export from IPs. It clearly highlighted
and discussed different problems along with its solutions. The main proposed approaches are
related to bank, customs, labor, theft, industrial, and infrastructure issues.
Finally, the report suggests a way forward to increase exports from IPs in Ethiopia, provide
new incentives (including regulatory by EIC) and improve logistics.
4
Chapter 2: Analysis of Exports at IPs in Ethiopia
Export and employment are important performance indicators for IPs in Ethiopia. However, the
export performance has declined following the outbreak of COVID-19 pandemic during the study
period. Particularly, the export value was dropped and severely affected by the outbreak of COVID-
19 pandemic between March and June 2020. Despite the sharp declining, it recovered slight in July
and August 2020, before it dropped again in October 2020. In addition to the impact of COVID-19
pandemic, the second wave of export reduction came due to the security concerns in Tigray Region
(no export from 3 IPs in Mekelle), Black Lives Movement in the US (no export in Huajian IP) and
business license issues (no export in Company 1-6, BLIP). In Ethiopia, employment contributes not
only to job creation for Ethiopian nationals but also to the government’s acquisition of foreign
currency. Total employment in IPs increased from 73,000 in July 2019 to 88,000 in March 2020, but
it dropped down to 69,000 in September 2020 due to COVID-19 pandemic; the number increased to
74,000 in February 2021, but it has not reached yet the one in March 2020.
2.1 Analysis of Export Data from the Whole Industrial Parks

The analysis of the export data from the whole industrial parks shows the exports performance
of eleven (11) IPs, including three (3) IPs in Mekelle. It shows the export trend, the change in
export and share, and gap between actual and planned export of companies in both government
and private IPs.
2.2 Trend Analysis of Export Data

The trend analysis of export data by eleven (11) industrial parks over the study period has
shown the decrease in export performance following COVID-19 pandemic which affected all
IPs. Following the sharp decrease in export performance during period where the pandemic has
most severely affected the country (from March to June 2020), the export performance has
shown a slight recovery of export performance in July and August 2020 with the contribution
of export from Huajian International Shoe City, Mekelle IP and DBL IP. Despite the slight
recovery, the continued effect of the pandemic, in parallel with security issues which resulted
in the suspension of export in three (3) IPs in Mekelle since October 2020, have caused the
drop in overall export performance of IPs.
5
Figure 1. Export Performance of IPs in Ethiopia from July 2019 to February 2021
2.3 Changes in Export and Share by Industrial Park
As it can be observed from the figure below, if exports from all IPs in February 2020 are set at
100%, it once dropped significantly due to COVID‐19 pandemic and after that it recovered to
102% in July 2020 but it dropped again to 81% in February 2021. The second wave of export
reduction seems to be caused by the problems company faced at HIP, BLIP, 3 IPs in Mekelle,
and Huajian International Shoe City.
HIP HIP HIP
BLIP BLIP BLIP
Figure 2. Changes in Export and Share by Industrial Park

2.4 Gap between Export Plan and Actual Export
Despite overvalued export plan set for IPs over the reviewed period, the actual export
performance of IPs has shown a declining trend with increasing gap from the planned
performance. Among others, unpredictable fiscal risks such as political instability and COVID-
19 are possible factors for the export gap observed in the period. Ambitious export target is
also a possible reason for under performance of IPs. The study recognized that such large gap
between actual exports and export plans cannot be resolved simply by regaining export prior
to COVID-19. It may require continued efforts in investment facilitation and promotions.
6
Figure 3. Export Performance of IPs in Ethiopia from July 2019 to Feb 2021
2.5 Trend in Export and Employment
Export and employment are important performance indicators for IPs in Ethiopia. Employment
contributes not only to job creation for Ethiopian nationals but also to the government’s
acquisition of foreign currency.
As shown in the figure below, employment of all IPs gradually increased from July 2019
(73,000) to March 2020 (88,000). However, from there it decreased to 69,000 workers in
September 2020 due to COVID‐19 and security problems in Mekelle. Since then, it has been
recovered and reached 74,000 in February 2021, which is a little higher than the level of July
2019.

Figure 4. Trend in Export and Employment since July 2019
7
Chapter 3: Trend in Exports from Bole Lemi Industrial Park
(BLIP)
In Bole Lemi IP, export drop by 7.5% from USD 3.72 million in February 2020 to USD 3.44 million
in February 2021. Likewise, employment slightly decreased after April 2020 due to COVID-19.
Employment changed from February 2020 (18,300) to August 2020 (14,600). The total number in
February 2021 were 16,600, which decreased by 1,700 compared to the number of works in
February 2020 (18,300), almost the same as the number of employees leaving Company 1-6 due to
termination of operations in August 2020. Like HIP where COVID-19 pandemic brought labor
shortage, there were a significant labor turnover and absenteeism in BLIP, which limited production
capacity of BLIP. In addition, customs and shipping related problems were intensified due to the
COVID-19 pandemic.
3.1 Export Gap before and during COVID-19 in BLIP

BLIP’s export plan seems to have been developed based on the previous year's actual export.
The export plan for FY2019/20 showed a slow increase. The export plan for FY2020/21 was
at a significantly reduced level. This is probably because Company 8-1 withdrew from BLIP
and some companies lowered the export plan on the assumption that the impact of COVID-19
would continue. The fall of the export plan in September 2020 may be due to the fact that
Company 1-1, BLIP's largest exporter, planned a short-term export cut for some reason.
In Bole Lemi IP, actual exports have fallen from USD 3.72 million in February 2020 to USD
3.44 million in February 2021.
Figure 5. Actual and Plan Exports Gap before and during COVID-19 Pandemic in
BLIP
8
3.2 Export Variations and Employment Level with and without COVID-19
As shown in the figure below, employment slightly decreased after April 2020 due to
COVID19. Hence, employment changed from February 2020 (18,300) to August 2020
(14,600). The total number of workers in February 2021 were 16,600, which decreased by
1,700 compared to the number of works in February 2020 (18,300) that is almost the same as
the number of employees leaving Company 1-6 due to termination of operations in August
2020.
Figure 6. Trend in Export and Employment since July 2019 in BLIP

3.3 Export Recovery Status of Companies in BLIP
With regard to export recovery status, only three (3) companies such as Company 1-1,
Company 1-7 and Company 1-8 are managed to recover the level of February 2020, i.e. USD
3.72 million. Looking at overall export recovery of BLIP, the export performance of February
2021 (USD 3.44 million) has declined by 7.5% from February 2020. The remaining companies
failed to recover the level of February 2020. Of which, two (2) companies (i.e. Company 1-6
and Company 8-1) have stop exporting and closed their operations.
9
Figure 7. Export Recovery of BLIP
3.4 Interview Survey to Companies in BLIP
In BLIP, 9 companies were interviewed. Most of the companies are Indian origin, followed by
South Korea and China. In terms of exported products, garment products are the dominate one.
Table 2. List of Companies Interviewed

Row Material
Company Country Product
Supply
Company 1-1 India Garment CMT
Company 1-2 South Korea Garment CMT
Company 1-3 India Garment FOB
Company 1-4 India Shoe CMT
Company 1-6 India Garment CMT
Company 1-7 China Garment CMT
Company 1-9 China Glove FOB
Note: [FOB] Free on Board, [CMT] Cut, Make, and Trim
Source: EIPP’s survey result
Companies in BLIP were asked about problems related to “reasons for export gap” and
“significant impact of COVID-19”. Details are shown in the next sections.
3.5 Reasons for Export Gaps in BLIP
(1) Decrease in Order
According to the survey result, all 9 companies interviewed indicated that decrease in order
from buyer is a critical problem which directly leads to the termination or suspension of
10
exports. This problem is greatly influenced by consumer trends regarding products. In this
regard, Company 1-9 changed exporting products from fashionable gloves to industrial
gloves since orders of previous one was cut off.
(2) Delay in Supply of Raw Materials
8 companies indicated that delay in supply of raw materials was one of major reasons for
export gap. In particular, supply of raw materials and accessories was delayed because of
suppliers’ side, export port and shipping schedule.
(3) Labor
a) Labor productivity
Labor problem was raised by 8 companies, particularly on the followings:
 High turnover rate and absenteeism even before COVID-19;

 Labor shortage to cover production increase after COVID-19;
 Increased costs for workers’ transportation.
b) Theft
Many companies in IPs pointed out that theft damage indirectly affect exports. This issue
is considered to have an aspect of labor issues, since some companies say that their
property has been stolen by their workers. There are less theft cases observed in BLIP
comparing with HIP, probably because of less worker reduction than HIP.
(4) Infrastructure
a) Power
6 companies indicated that power was one of major reasons for export gap.
b) Water
7 companies raised water as major problem for export gap.
c) Internet
6 companies said internet disruption interruption was major problem.
(5) Transportation
a) Inland Transportation
11
Inland transport was raised by 6 companies as the reason for export gap. Similar to HIP,
poor road condition between Addis Ababa and Djibouti as well as traffic congestion
around Djibouti Port and container shortage caused late delivery.
b) Shipping
Cancellation of shipment, long shipping time, high shipping costs are problems raised in
regard to shipping.
c) Air cargo
For air transport, there was missing cargo by Ethiopian Airline and the number of cargo
flights was limited.
(6) Customs
8 companies raised a problem of customs. Customer handling/procedure complication at

customs, poor service at customs for inspection of raw materials caused delay and extra
expenses for manufacturing; complicated system and misunderstanding of roles among
EIC and customs, are also raised by companies as problems in BLIP.
(7) Bank
In this category, no particular problem was raised by tenant companies.
3.6 Companies with Observed Export Performance Issues

Two (2) companies i.e., Company 8-1 and Company 1-6 which stopped exporting raised the
following reasons.
Company 8-1
 Their factory at BLIP lacked skilled workers to meet customer demands in quality for
products. Therefore, it was difficult for the company to continue a satisfactory operation
there.
 The company was developing its own industrial park in Modjo and establishing new
factories for shoe manufacturing and tanneries in the own industrial park.
Based on the above, Company 8-1 decided to stop the shoe manufacturing at the factory in
BLIP and to move production site to its own industrial park in Modjo.
According to the branch manager of Company 8-1 at BLIP, the company had problem with
human resource management at the factory in BLIP, which resulted in workers’ strike
12
continuously and this in turn led to order cancellation from buyers. The branch manager also
added that Company 8-1 at Modjo had not started manufacturing yet due to reconciliation issue
with the National Bank of Ethiopia, COVID-19 and foreign currency shortage.
It is suggested that EIC give guidance to Company 8-1 according to the local situation of Modjo
so that the similar problems like the above will not happen again after its relocation.
Company 1-6
Company 1-6 was affected by COVID-19 and finally stopped exporting for below reasons:
 Customers from the US and Canada decreased order after COVID-19;

 Delayed supply of raw materials and accessories because of the lockdown in China.
 Port of Djibouti was closed and this caused delay in shipping schedule for exporting.
 Business license was expired in July 2020. EIC requested Company 1-6 to increase the
capital to renew the business license. The company preferred to stop exporting rather than
increasing capital since it was difficult to increase capital without proper import and export
operations.
Besides that, Company 1-6 had a serious operational problem in the last five years. Since the
outbreak of COVID-19 pandemic, its operation was further deteriorated and finally the
company decided to stop production at BLIP, according to the EIC branch manager at BLIP.
Taking into account the difficult business situation due to the influence of COVID-19, it is
suggested that a capital increase should not be requested. EIPP also suggests that EIC allows
the tenant companies to manufacture for the domestic market at its request so that they can
survive under the influence of COVID-19.
Table 3. Reasons for Export Gap Answered by Companies in BLIP
Company Order R/Mate Shipping Inland/T Bank Customs Theft Labor Power Internet Water
Company 1-1 x x x x x x x x x
Company 1-6 x x x
Company 1-7 x x x x x x
Company 1-8 x
Total
Answers
9 8 7 6 0 8 3 8 6 6 7
3.7 Impact of COVID-19 in BLIP

Out of 10 interviewed companies at BLIP, 4 indicated shipping problem due to COVID-19,
while 3 companies pointed out that customs problem is the result of COVID-19. With regard
13
to supply of raw materials, delay in raw material is the recent significant impact of COVID-19
for Company 1-4. It was caused by supplier’s problem and other problems at the port of raw
material export. Conversely, Company 1-8 had enough stock of raw material during lockdown.
In terms of labor problem, there were high turnover rate and absenteeism even before COVID-
19. Like HIP where COVID-19 brings labor shortage, there is a labor shortage to cover the
workers for production increase in BLIP even after COVID-19.
Table 7 shows impact of COVID-19 answered by companies in BLIP.

Table 4. Impact of COVID-19 Answered by Companies in BLIP
Company 1-1 x
Company 1-2 x x
Company 1-3 x
Company 1-4 x
Company 1-5 x
Company 1-6
Company 1-7 x
Company 1-8
Company 1-9 x
Total
Answers
1 1 4 0 0 3 0 0 0 0 0
14
Chapter 4: Trend in Exports from Hawassa Industrial Park
(HIP)
The trend in export performance of HIP has shown that there was a significant gap in export value
(planned and actual export value) over the period between July 2019 and February 2021. The gap
further widened between March 2020 and July 2020 where COVID-19 was at severe stage.
Similarly, employment decreased slightly after exports decreased. In particular, employment
changed from 32,800 in February 2020 to 20,500 in August 2020, before it increased to 27,900 in
February 2021. For instance, Company 1-3, Company 2-6 and Company 2-13 have shown a
significant decrease in employment level. The reason for export gap in HIP were due to delays in
raw material supply, order decrease, insufficient shipping operation and customs problem,
infrastructure and utility related problem, shortage of labor, bank related problem and foreign
currency shortage. Among such issues, COVID-19 pandemic affected significantly the problem
related to order decrease, labor shortage and theft.
4.1 Export Gap before and during COVID-19 in HIP

The trend in export performance of HIP has shown that there is large export gap during the
period between July 2019 and February 2021. The gap widened between March 2020 and July
2020 where COVID-19 was at severe stage. Though the export plan is updated annually, the
export plan set for FY 2020/21 was more than twice as high as actual export, as it failed to
consider the impact of COVID-19 and resulted in a continued export gap.
Figure 8. Actual and Plan Exports Gap before and during COVID-19 Pandemic at HIP
4.2 Export Variations and Employment Level with and without COVID-19
As shown in Figure 6, employment decreased slightly after exports decreased: Employment
decreased from 32,800 in February 2020 to 20,500 in August 2020, though it increased to
27,900 in February 2021. In particular, Company 2-6, Company 2-13and Company 2-16 have
experienced a significant decrease in employment.
15
Note: Data of the employee for June 2020 is not available.
Figure 9. Trend in Export and Employment since July 2019 in HIP
4.3 Export Recovery Status of Companies in HIP
In terms of export recovery status, only three companies such as Company 2-8, Company 2-14
and Company 2-18 are managed to recover the level of February 2020 5. Looking at overall
export recovery of HIP, the export performance of February 2021 has declined by 13%
compared to February 2020.
3,000
2,500
Recovered the
level of Feb. '20
Exports in Feb. '21, '000 USD
2,000
Recent Export
1,500
1,000
Not yet
recovered the
500 level of Feb. '20
Export Recovery of HIP
0 USD 6.93 mil. (Feb. '20)
0 500 1,000 1,500 2,000 2,500 3,000 USD 6.03 mil. (Feb. '21)
Exports in Feb. '20, '000USD (13.0% lower than Feb. '20)
Export before COVID-19
Figure 10. Export Recovery of HIP
4.4 Interview Survey to Companies in HIP
In Hawassa Industrial Park, about 20 companies are interviewed. Most of the companies are
Chinese origin, followed by India and Sri Lanka. In terms of raw material supply, most of the
5
Level of export 2020 refers to the total exported value of 20 companies from HIP, which is equivalent to USD
6.93 million.
16
companies are following Free on Board (FOB) approach and other uses Cut, Make, and Trim
(CMT) approach. The most notable export products are apparel and garment (see Table 2).

Row Material
Company Country Product
Supply
Company 2-1 France Interlining (indirect export) FOB
Company 2-2 Hong Kong Denim Pants CMT
Company 2-3 Hong Kong Male’s full sleeve shirt FOB
Company 2-4 China Fabric (incl. indirect export) CMT
Company 2-5 China/Taiwan Apparel FOB
Company 2-6 China Garment FOB
Company 2-7 Ethiopia Garment FOB
Company 2-8 US & India Shirts FOB
Company 2-9 Sri Lanka Garment FOB
Company 2-10 Belgium Diaper (export & domestic) FOB
Company 2-11 S. Africa & UK Accessories/trim FOB
Company 2-12 Indonesia Shirts CMT
Company 2-13 India Apparel FOB
Company 2-14 India Apparel CMT
Company 2-15 China T-Shirts FOB
Company 2-16 India Denim Jeans FOB
Company 2-17 Singapore & Indonesia Apparel CMT
Company 2-18 Sri Lanka Panties CMT
Company 2-19 Sri Lanka Socks FOB
Company 2-20 China Apparel FOB
In the Export Gap Survey, companies were inquired about problems related to “reasons for
export gap" and “significant impact of COVID-19”. Details are described in the following
sections.
4.5 Reasons for Export Gap in HIP

As per the findings of the survey, the followings are the main reasons for export gap at HIP.
17 companies raised order decrease as one of major reasons for the export gap. This
problem directly led to the suspension or decrease of exports. Furthermore, this was greatly
influenced by consumer trends regarding products. For example, Company 2-13 which
was exporting suits to the United States and Canada faced cancellation of orders from
buyers. This is because businessmen have started working at home, particularly after
COVID-19, and the consumption of suits has fallen.
17
Delay in supply of raw material, particularly raw materials and accessories was raised as
the major reason for export gap by 18 of 20 companies. Such delay was caused by suppliers’
problem, problems at export port, and delays in shipping schedule, during the start of the
pandemic. In this regard, Company 2-20 requested IPDC to supply a rental shed for
warehouse to keep raw material inventory.
(3) Labor
Labor problem, including shortage and skill, is raised by 11 companies as one of the
reasons for export gap. High turnover rate, absenteeism and low productivity are among
the major problems identified under this category.
As an experience of one tenant company, the order from buyers decreased due to quality
problems of the products: buyers sent back to the tenant company a large number of
products which did not meet their quality standard. This brought about a negative impact
on the company’s financial conditions because of wasted materials and extra expenses for
transportation.
b) Theft
Theft and security are other huge problems in HIP where 15 companies indicated for the
export gap. Out of 15 companies, 5 indicated that COVID-19 had an impact on theft
problem.
(4) Infrastructure
a) Power
Some companies are greatly affected by power problem, but for some companies these
problems are not very serious issue.
b) Water
c) Internet
18
Some companies said they are greatly affected by internet interruptions, but for some
companies these problems are not very serious issue.
(5) Transportation
In regard to inland transport, 12 companies considered as major problems: increased price

of inland transportation, truck shortage, bad road condition to Djibouti and; insufficient
information from Ethiopian Shipping and Logistic Service Enterprise (ESLSE).
b) Shipping
Insufficient shipping operation at Djibouti Port; shortage of containers; high shipping price
and long shipping time and delay in shipping schedule are major problems raised by 15
companies.
c) Air cargo
(6) Customs
Long customs process, delay in customs electronic system, insufficient number of officers
at customs; lengthy inland dry port clearance; complicated customs process; insufficient
connection, coordination and communication between bank and customs; inadequate
customer handling at customs; biased service at customs; and inappropriate customs
process for accessory production that uses different kinds of raw materials from other
garment industries are among problems raised in customs service.
(7) Bank
There are several kinds of the problems related to the banking. Company 2-1 export
indirectly to the exporting companies within HIP and other IPs. Since there is no special
bank permit for indirect export, bank process took long time. Company 2-1 required
customs, banks and EIC to cooperate and encourage the indirect export to shorten the
process. Foreign currency shortage for importing raw materials is the problem raised by
Company 2-10, which produces diaper for export and local market (60% export and 40%
local market). The company purchase raw materials and accessories by itself. However, it
faced foreign currency shortage and temporarily stops production. Since the government
took their foreign currency privilege, it is hard to import raw materials. There is no raw
19
material to continue the production. To this end, Company 2-10 wanted EIC to give the
foreign currency privilege. Insufficient connection, coordination and communication
between bank and customs are also among problems mentioned by companies. Table 3
shows the reasons for export gap answered by companies in HIP.
Table 6. Reasons for Export Gap Answered by companies in HIP

Company 2-2 x x x x x
Company 2-3 x x x x x x x x
Company 2-8 x x x x
Company 2-9 x x x x x x x
Company 2-10 x x
Company 2-17 x x x x
Total 17 18 15 12 6 15 15 11 13 10 0
Answers
4.6 Impact of COVID-19 in HIP

EIPP inquired the companies which problems are currently having the most significant impact
of COVID-19. Table 4 shows the results. None of the companies answered “delay in supply of
raw materials” is a problem of significant impact by COVID-19. It is considered that it was a
serious problem when the COVID-19 pandemic started, but it recovered to a certain level for
the time being.
Out of 20 interviewed companies in HIP, 7 indicated that order decrease is a problem of

significant impact by COVID-19. Followed by theft, where 5 companies in HIP consider it as
the impact of COVID-19. Companies that significantly reduced employees from April to
September 2020 currently have problems of labor shortage. 2 companies told that many
workers did not come back after the pandemic.
Problem with bank (3 companies), customs (3 companies), inland transportation (2 companies),

shipping (1 company) and power (1 company) are also among problems due to the impact of
COVID -19.
20
Table 7. Impact of COVID-19 Answered by Companies in HIP
Company 2-1 x x x
Company 2-2 x
Company 2-3 x
Company 2-4 x x
Company 2-5
Company 2-6 x
Company 2-7
Company 2-8 x x x
Company 2-9
Company 2-10
Company 2-11 x
Company 2-12 x
Company 2-13 x x x
Company 2-14
Company 2-15
Company 2-16 x x x
Company 2-17
Company 2-18 x x
Company 2-19 x
Company 2-20 x x x
Total 7 1 1 2 3 3 5 2 1 0 0
Answers
21
Chapter 5: Trend in Exports from Other Industrial Parks
Exports and employment level were showing a monthly fluctuation in 6 IPs, i.e.: Kombolcha,
Adama, Dire Dawa, Eastern, George Shoe and Huajian International Shoe City. Exports value in
February 2021 reached USD 2.25million, slightly declined from USD 2.26 million in February
2020. The total number of employees of 6 IPs was 13,300 in February 2020 before COVID‐19, but
it decreased to 4,000 in June 2020 due to COVID‐19. After that, it recovered to 14,000 in February
2021, which exceeded the same month of the previous year. The export gap in 6 IPs were occurred
due to internet interruption, labor shortage, order decrease, power interruption, raw material and
problem of inland transportation. Most importantly, a decrease in order, delays in supply of raw
material, shipping problem, customs office related obstacles, labor shortage and bank related
problems are major challenges caused by the outbreak of COVID-19 pandemic.
5.1 Export Gap before and during COVID-19 in 6 IPs

The figure shows the actual exports and planned amount for 6 IPs in Kombolcha, Adama, Dire
Dawa, Eastern, George Shoe and Huajian International Shoe City. As it can be observed from
the figure below, there are some monthly fluctuations in exports. Exports in February 2021
(USD 2.25 mil.) have recovered to the same month of the previous year before COVID‐19.
Figure 11. Actual and Plan Exports Gap before and during COVID-19 Pandemic in 6
IPs
5.2 Export Variations and Employment Level at 6IPs with and without COVID-19
With regard to trend in export and employment in 6 IPs, there are some monthly fluctuations
in employment as well as exports. The total number of employees of 6 IPs was 13,300 in
February 2020 before COVID‐19, but it decreased to 4,000 in June 2020 due to the influence
of COVID‐19. After that, it recovered to 14,000 in February 2021, which exceeded the same
month of the previous year.
22
Figure 12. Trend in Export and Employment since July 2019 in 6 IPs
5.3 Export Recovery Status
In terms of export recovery status by the 6 IPS; Adama IP, Kombolcha IP and Dire Dawa IP
have almost recovered the level of February 2020. Conversely Eastern IP, George Shoe IP and
Huajian International Shoe City not yet recovered the level of February 2020. Huajian
International Shoe City even stops exporting. With regard to the overall export recovery of the
6 IPs, their export performance before COVID-19 i.e. February 2020 was USD 2.26 million
which was almost recovered to USD 2.25 million in February 2021.
Figure 13. Export Recovery of 6 IPs
23
5.4 Interview Survey to Companies in 6 IPs
Other than Bole Lemi Industrial Park and Hawassa Industrial Park, as stated in Chapter 3 and
Chapter 4, 24 companies were interviewed in 6 industrial parks, as shown in Table 8.
Raw Material
IPs Company Country Product
Supply
Company 3-1 China Linen FOB
Adama
Company 3-3 China Wole CMT
Company 3-4 China Textile CMT
Company 4-1 China Cotton yarn CMT
Dire Dawa
Company 4-2 Sri Lanka Basic textile chemicals FOB
Company 5-1 South Korea Bags CMT
Company 5-2 Italy Greige fabric FOB
Kombolcha
Company 5-3 China and USA Garment FOB
Company 5-4 China Socks CMT
Huajian Company 6-1 China Garment n/a
International Company 6-2 China Shoe n/a
Shoe City Company 6-3 China Shoe n/a
Company 7-1 Philippines Garment FOB
Company 7-3 China Fiber n/a
Company 7-4 India Textile FOB
Company 7-5 China Textile FOB
Eastern Paper and paper related
Company 7-6 Hong Kong FOB
materials
Company 7-7 China Ceramics FOB
Company 7-8 Europe Labelling and printing FOB
Company 7-9 China Glove FOB
Company 7-10 China Hard board MDF FOB
Shoe manufacturing and
George Shoe Company 8-1 Taiwan FOB
Tanneries
7-3 procures materials from local market. Three companies in Huajian International Shoe City are
unknown.
Major problems raised during interview with companies in 6 IPs were categorized into 11. The
categorization is similar to the one used in HIP and BLIP, except that problems of bank and
water are included. Accordingly, the table below shows problems raised by companies in 6 IPs.
As there are more than 20 companies in IPs grouped in this section, for simplicity purpose, the
table below shows only the number of companies who raised the stated problems related to
“reasons for export gap” and “significant impact of COVID-19”.
24
5.5 Reasons for Export Gaps in 6 IPs
(1) Adama IP
In Adama IP, problem of theft, power, water, internet, and inland transport 6 were reported
by 5 companies, and 4 of them mentioned as a major problem. Customs and labor problem
are also reported by three companies. Moreover, wastewater line doesn’t work properly in
Adama IP.
Table 9. Reasons for Export Gap Answered by Companies in Adama IP

Total 2 1 0 4 0 3 4 3 4 4 4
Answers
(2) Dire Dawa IP
Power, internet, water, customs, shipping, and inland transport are the major notable
problem in Dire Dawa IP, which was reported by Company 4-1 and Company 4-2. In
particular, regarding shipping, insufficient operation at Djibouti Port, long shipping times,
and high shipping price were raised by both companies.
Moreover, poor access road from Dire Dawa IP to Dire Dawa City was also mentioned as
problem.
Table 10. Reasons for Export Gap Answered by Companies in Dire Dawa IP
Total 1 1 2 2 0 2 0 0 2 2 2
Answers
(3) Kombolcha IP
According to the survey results, all of 4 companies interviewed indicated that high
turnover rate, absenteeism and low productivity were the major problem, followed by
order 7, internet interruption, delayed supply of raw materials, and inland transport problem.
6
Inland transport related to expensive and fully booked train transportation, high freight transport cost
7
Order of buyers decreased because of many of their customers and mother company were in lockdown and
that results in the decrease of many orders. In addition, customers demand for their products was fallen.
25
Lack of power line and problem related to clear bank process and service are other
problems mentioned by companies in Kombolcha IP.
Table 11. Reasons for Export Gap Answered by Companies in Kombolcha IP

Total 3 4 1 3 0 2 0 4 2 3 0
Answers
(4) Huajian International Shoe City
According to the survey result, all of 3 companies interviewed indicated that decrease in
order, delayed supply of raw materials and accessories, customs problems, lack of skilled
manpower, and power and internet interruption reported as the major problem in Company
6-2. In relation to decreased order, buyers from the US stopped receiving products because
of the Black Lives Matter (BLM) movements. The buyers are white people and black
people were the major customers. Against this background, they stopped buying products
from Huajian. There was also workers’ strike and many workers stopped working at
Company 6-2.
Table 12. Reasons for Export Gap Answered by Companies in Huajian Shoes City IP
Total 3 3 0 0 0 3 0 3 3 3 0
Answers
(5) Eastern IP
Customs problem was a major reason for export gap, raised by all 9 companies in Eastern
IP. Regarding order problem, order of buyers decreased due to the suspension or decrease
of exports. However, orders from buyers didn’t decrease in the case of Company 7-10.
26
Table 13. Reasons for Export Gap Answered by Companies in Eastern IP
Company 7-3 x x
Company 7-4 x x x x
Company 7-6 x x x
Company 7-8 x x x
Company 7-10 x x x x
Total 7 6 5 4 0 9 2 5 4 6 3
Answers
(6) George Shoe IP
At George Shoe IP, problem related to shipping, customs, labor, power, and internet were
raised as a major problem. Regarding customs, customs process takes long time and
customs electronic system sometimes delayed. Regarding shipping, shortage of container,
high shipping price, and long shipping time and delay in shipping schedule were raised by
Company 8-1. Clearance process also takes long time at National Bank of Ethiopia.
Table 14. Reasons for Export Gap Answered by Companies in George Shoe IP
Total 0 0 1 0 0 1 0 1 1 1 0
Answers
(7) Summary of 6 IPs
The survey results with 24 companies at the 6 IPs indicated that there is critical problem
at customs office, where 20 companies raised as a reason for export gap. Internet
interruption (19 companies), labor problems (18 companies), decrease in order (17
companies), power interruption (16 companies), supply of raw material (14 companies)
and problems in inland transportation (13 companies) are major problems raised by more
than half of interviewed companies. Problems of shipping, water, theft and bank are also
among issues raised for the export gap at IPs.
27
Table 15. Summary of Reasons for Export gap by companies in 6 IPs
Reason for Export Gap No of Companies

Customs 20
Internet 19
Labor 18
Order 17
Power Interruption 16
Raw Material 14
Inland Transport 13
Shipping 9
Water 9
Theft 7
Bank 6
5.6 Impact of COVID-19 in 6 IPs

Out of total 24 companies, 14 indicated that decrease in order is a problem of significant impact
of COVID‐19, followed by problem in supply of raw material (8 companies) and shipping (4
companies). Problem of customs office, problems of labor and banks are raised by one
company respectively as the significant impact of COVID-19. A summary of problems caused
by COVID-19 pandemic is described in tables 16 to 22.
Table 16. Impact of COVID-19 Answered by Companies in Adama IP

Company 3-1
Company 3-2 x
Company 3-3
Company 3-4 x
Total Answers 2 0 0 0 0 0 0 0 0 0 0
Source: EIPP’s survey results
Table 17. Impact of COVID-19 Answered by Companies in Dire Dawa IP

Company 4-1
Company 4-2 x x x
Total 1 1 0 0 0 1 0 0 0 0 0
Answers
Table 18. Impact of COVID-19 Answered by Companies in Kombolcha IP

Company 5-1 x x
Company 5-2 x x
Company 5-3 x
Company 5-4
Total 3 2 0 0 0 0 0 0 0 0 0
Answers
28
Table 19. Impact of COVID-19 Answered by Companies in Huajian Shoes City IP
Company 6-1 x
Company 6-2
Company 6-3 x
Total 2 0 0 0 0 0 0 0 0 0 0
Answers
Table 20. Impact of COVID-19 Answered by Companies in Eastern IP

Company 7-1 x x
Company 7-2 x
Company 7-3
Company 7-4
Company 7-5 x x x
Company 7-6 x x
Company 7-7 x
Company 7-8 x
Company 7-9 x x
Company 7-10 x
Total 6 5 2 0 0 0 0 0 0 0 0
Answers
Table 21. Impact of COVID-19 Answered by Companies in George Shoe IP

Company x x X
8-1
Total 1 0 1 0 0 0 0 0 0 0 0
Answers
Table 22. Summary of Impact of COVID-19 in 6 IPs
Significant impact of COVID‐19 No of Companies

Decrease Order 14
Raw Materials 8
Shipping 4
Customs 1
Labor 1
Bank 1
29
Chapter 6: Cross-Cutting Issues of Export from Industrial Parks
This chapter provides cross-cutting issues related to the export performance of IPs. They are
grouped according to shared characteristics. The main identified problems of exporting
companies in industrial parks are supply chain, market and logistics. This chapter also explains
the causes of the identified problems.
6.1 Problems of Exporting from Industrial Parks and Supply Chain

Of total 7 grouped major problems which was breakdown to the 11 problems raised by
companies, except for issues related with industrial promotion and security issue (in Mekelle),
all problems are related with manufacturing activities. Problems at any stage of supply chain
cut across various concerns in industrial parks which affect their final export performance.
From procurement of raw materials until final destination of the product to buyers, there are
several channels where problems are arising from.
1. Problems on pre-manufacturing process (supply of raw materials) are: (1) long

transportation distance (long time and high price) to import materials; (2) customs process,
and; (3) banking, especially in terms of the restriction of foreign currency retention.
2. Problems on manufacturing process are: (1) theft; (2) labor productivity, and: (3)
infrastructure (power, water and internet).
3. Problems on post-manufacturing process are: (1) long transportation distance (long time
and high price) to export product; (2) customs process; (3) banking; and (4) decrease in
market demand decrease.
In addition to the above problems, Mekelle face the industrial promotion and security issues.
30
Figure 14. Problems of Export and Supply Chain

6.2 Reason for Export Gap
Though several reasons are mentioned for the export gap in IPs, most common problems are
identified based on the number of companies where the problem is highly observed. There are
four (4) common problems; i.e. customs, labor, power and internet which are identified in 8
IPs. In terms of customs, lengthy process, electronic system, insufficient officers, and
insufficient connection with bank are the major reasons for the export gap faced by 43
companies in 8 IPs. Then labor related problems follow: i.e. labor shortage, high turnover rate
and absenteeism (37 companies). Power and internet interruption are also among common
problems in IPs, where 35 companies faced.
In addition to common problems, theft (25 companies), water supply (17 companies) and bank
problem (12 companies) are reported as reasons for export gap in some IPs.
 Bank issue: Hawassa, Kombolcha, Eastern, and George Shoe IPs.
 Theft issue: Hawassa, Bole Lemi, Adama, Dire Dawa, and Eastern IPs
 Water Supply: Bole Lemi, Adama, Dire Dawa, and Eastern IPs
In terms of marketing and logistics related problems, decrease in order from buyers (43
companies), delay in supply of raw material and accessories (40 companies), logistics problems
31
such as long shipping time and high shipping costs (32 companies) are problems mainly caused
by COVID-19. The poor road condition to Djibouti is among the reason for problems of lengthy
and high costs for inland transportation.
Table 23. Reason for Export Gap in Each IPs

Reasons for Problems of market and logistics Problem at IPs in Ethiopia
Export Gap
Problems No, Order R/Mate. Shipping Inland/T Bank Customs Theft Labor Power Internet Water
Com.*
Hawassa IP 20 17 18 15 12 6 15 15 11 13 10 1
Bole Lemi IP 9 8 8 7 5 8 3 6 6 6 7
Kobolcha IP 4 3 3 1 3 2 2 4 2 3
Adama IP 4 2 1 4 3 4 3 4 4 4
Dire Dawa IP 2 1 1 2 2 2 1 2 2 2 2
Eastern IP 10 7 6 5 4 3 9 2 5 4 6 3
George Shoe 1 1 1 1 1 1 1 1
IP
Huajian 3 3 3 3 3 3 3
Shoes IP
Total 53 42 40 31 30 12 43 25 35 35 35 17
Note: Number of companies include two companies in BLIP that have already closed.
More than half of companies cited the re for the export gap.
6.3 Investigation and Analysis of Causes

As it is stated in the previous discussions, common problems for IPs that exist are identified
based on the numbers of companies facing the problem. Some of the problems have same root
causes, COVID-19 or other problem that existed even before the pandemic due to varies causes
depending on the type of problems. The root causes of each problem are analyzed in the
following section.
Decrease in order is among major problems for IPs, in relation to consumer trends. The
change in lifestyle which caused COVID-19 pandemic is one of the reasons for decrease
in order. However, the degree of order decrease seems to vary depending on the type of
products. In this regard, apparel-focused monoculture IPs seems to be vulnerable to the
COVID-19 crisis. Though EIC allowed companies to sell the products at domestic market
to support the companies during the pandemic, most of the companies did not use this
opportunity because of low domestic price and additional custom tax.
Regarding the supply chain problem, delay in raw material supply is the major one caused
by COVID-19. In this connection, shut down of the factories; lack of raw material; labor
32
shortage, and lockdown of the city are problems with suppliers. There are also problems
at port of export such as lockdown, congestion, port labor shortage, and delay in shipping
schedule, which all caused delay in supply of raw materials.
(3) Labor
Shortage of labor, high turnover, and absentees are major problems for IPs. Labor shortage
is also recognized as a problem by several companies in HIP. Labor shortage occurs when
workers were dismissed due to COVID-19, but are not returning to their workplaces. A
shortage of workers is also observed in Company 1-1 at BLIP, whose exports increased
even during COVID-19. For this company, the labor shortage was caused by the growth
of exports. The high turnover rate and the large number of absentees had been problems
even before COVID-19. When the labor shortage becomes a problem, it will be refocused
as a cause affecting exports.
b) Theft
In regard to security problem, theft is a serious problem, particularly in HIP. Thieves are
very organized and difficult to stop. The companies report to the police every time they
have theft damage, but the cause of the crime is unknown and there seems to be no other
way than arresting the criminals.
(4) Infrastructure
Power interruption, internet disruption and water problem are infrastructure issues that
have been existing even before COVID-19.
a) Power
Power interruption existed even before the COVID-19 pandemic occurred. The cause lies
in the power transmission and distribution network of the electric power company and the
substation and distribution network in IPs. The impact of this problem is different for each
IP, and it also varies depending on the company.
b) Water
Problem of water supply also existed even before COVID-19. The cause is the
maintenance and operation of the water supply facility. The impact of a problem depends
on the company as well.
33
c) Internet
Internet disruption existed even before the COVID-19 problem occurred. This is caused
by the maintenance and operation of internet facilities and the interruption by the
government order. The impact of a problem depends on the company.
(5) Transportation
Inland transportation is a common problem with landlocked country. Because of being a

landlocked country, inland transportation costs account for a large proportion of the cost
from IPs to the export destination port. As per the data surveyed by Japan External Trade
Organization (JETRO) during December 2020 to February 2021, transportation cost for
exporting cargo (40 feet container) from Addis Ababa to Mersin (Turkey) via Modjo dry
port and Djibouti port is USD 4,400 including USD 2,600 (59%) for inland transport cost.
The cost from Addis Ababa to Yokohama (Japan) at the same condition is USD 4,200
including USD 2,600 (62%) for inland transport cost. Shortage of trucks due to temporary
increase in cargo, poor road condition to Djibouti, road congestion around Djibouti port
caused by inadequate port operation, and in some cases, insufficient information from
shipping companies are among the root causes for problems of inland transportation.
b) Shipping
As for international logistics, there are problems in IPs in terms of lengthy and high price
of shipping. One of the root causes of the above problems is insufficient operation of lifting
containers at Djibouti Port. Cargo activity of containers has slowdown to the lowest level
at Djibouti port, because of the impact of sluggish international trade and the activity of
lifting container, according to Ethiopian Shipping and Logistics Service Enterprise
(ESLSE) 8. Furthermore, after COVID-19 pandemic, Djibouti was locked down in March-
May 2020. It has also caused shortage of port workers and truck drivers, which resulted in
inland containers not returning smoothly to the port. In China where there is a container
shortage, containers are being collected from outside the US, and this caused a shortage of
containers at global level. As a result, fare of 40ft container from Hong Kong to Los
Angeles (as of March 31, 2021) has soared to USD 5,576, 3.5 times the same period last
year 9.
8
Capital, 4th April 2021.
9
JETRO, 8th April 2021.
34
c) Air Cargo
Luggage lost is the only problem was faced, under the Ethiopian Airways operation.
(6) Customs
Customs issue is a long-standing problem at IPs. Complicated process of custom clearance,

electronic system, insufficient capacity of customs officers in terms of both quality and
quantity; lack of connection, coordination, and communication among customs, bank and
EIC are the general causes for custom-related problems faced by IP companies.
(7) Bank
With regard to bank problems, foreign currency is a major source of complains from IPs.
Frequent changes in NBE’s directive on foreign currency management has been
considered by some companies as an administrative risk. The latest NBE’s directive for
“Amendment of Retention and Utilization of Export Earnings and Inward Remittance”
(Directives No. FXD/79/2022) allows IP companies to retain only 20% of the export
earnings and inward remittance in foreign currency, with the remaining 80% only available
in Birr. There may be a shortage of foreign currency required for companies to import raw
materials, machinery/equipment and spare parts. In connection with this, EIC has taken
this matter to NBE with a request for distinctions between industrial manufacturers and
exporters of unprocessed materials, arguing that it would be hard for industries to operate
under such circumstances.
35
Table 24. Change of NBE’s Directive on Foreign Currency Retention
Previous NBE’s Directives New NBE’s Directive
FXD/66/2020 (enter into force FXD/70/2021(enter into FXD/73/2021(enter into force as of

as of September 16, 2020) force as of March 9 2021) September 01, 2021)
30% 70% 30% Surrender 50% Surrender

Account A Account B Requirement ETB Retention Requirement ETB
Foreign Up to 28 Account
Currency days: Foreign 70% x 0.45 70% 40 % 10 %
for indefinite Currency F/Currency x F/Currency ETB
period of After 28 days: Retention 0.55 Retention
time ETB Account ETB Account
Utilization of Foreign Exchange Retention Accounts
Foreign currency in a retention account shall be used for Foreign currency in a retention
import of goods and services payment without restriction account shall be used for import of
provided that the account holder has the required business goods and services payment without
license to do so. any restriction.
Source: EIPP based on NBE
Table 25. Expected Impact by the New Directive

Previous Directives New Impact by New Directive
Directive
Up to 28 days: 0 % 68.5% 60 % National Bank side

After 28 days: 0% -
70% of export (30% + (50%  Ensuring foreign currency acquisition that is
earnings and inward 70% x +10%) currently uncertain.
remittance 0.55)
 If exports are reduced, foreign currency
acquisition will decrease.
Up to 28 days: 31.5 % 40% Exporting company side

100 %
After 28 days: within (70% x  Serious problems for importing necessary goods
30% of export 0.45) such as raw materials, machinery and the spare
earnings and inward parts.
remittance
Source; EIPP based on NBE
36
Table 26. General risk of foreign currency shortage for IP companies
Type of Manufacturing Export Earning of F/C Utilization of F/C Risk of F/C

Shortage
100% Export [CMT] Medium Small Low

100% Export [FOB] Large Large Medium
Mixture of Export & Domestic [FOB] Small or Medium Large High
Source; EIPP based on NBE
Table 27. Summary of Problems and its Main Causes

Problem Causes
Decrease in order Consumer trends; lifestyle changes; vary depending on the type of product
Decrease in raw Supply chain problem: Supplier’s problem such as shut down of the factory, lack
materials supply of raw material, labor shortage, and lockdown of the city;
problem of port of export and ship schedule
Long and high price of Insufficient operation of lifting containers at Djibouti Port; lockdown of Djibouti;
shipping international logistic problems such as shortage of container and delay in ship sche
dule
Inland transportation Shortage of trucks due to temporary increase in cargo; Road to Djibouti is
bottleneck; road congestion around Djibouti Port; In some case, insufficient inform
ation from shipping companies
Bank National bank directives on foreign currency retention and utilization; bank process
takes too long
Customs Complicated process of custom clearance; electronic system; insufficient capacity
of customs officers in terms of both quality and quantity; lack of connection,
coordination, and communication among customs, bank and EIC
Theft Thieves are very organized and difficult to stop. The companies report to the police
every time they have damage caused by theft, but the cause of the crime is
unknown
Labor shortage, Workers are not returning; labour shortage is caused by the growth of exports for
turnover, absentees some companies;
high turnover rate and large number of absentees have been problems even before
COVID‐19.
Power, Internet, Infrastructure problems existed even before the COVID-
water supply 19 problem occurred. The cause is the maintenance and operation of infrastructure.
Industry promotion Capital increase is requested to renew the business license of IP companies.
issues Insufficient support to indirect export and imports substitution according to
industrial promotion policy
Stop exporting from IP National security issue
s in Mekelle
6.4 Survey on Alternative Indicators for Export Gap Analysis

Apart from the above-mentioned operational issues of tenant companies, this section examines
an alternative indicator for export value that is used in the export gap analysis.
37
(1) Verification of the Possibility of Using Net Export Value as an Alternative Indicator
Most garment manufacturers in Ethiopia import raw materials for the products to be
exported. For this type of industry, an increase in export value due to activation of
production activities is always accompanied by an increase in import value of raw
materials.
EIPP interviewed 53 tenant companies about import values at the time of the export gap
survey. As a result, import value data was obtained from 10 tenant companies, but data
from 6 tenant companies seemed unreliable. After all, the data suitable for valuation was
limited to those collected from 4 out of 53 tenant companies.
Since import data is difficult to obtain, it is not recommended to use net export value (i.e.
import value minus export value) for the export gap survey.
(2) Verification of the Possibility of Using Value Added or Value Added Rate as an
Alternative Indicator
As previously mentioned, it revealed that net export value cannot be used as an indicator
for export gap analysis. Instead, value added or value-added rate were assessed as
alternative indicators for export gap analysis. In this context, additional survey was
conducted to validate a possibility of using value added or value-added rate. 10
An additional survey was conducted with eight (8) tenant companies in Bole Lemi IP to
verify the possibility of using “value added” or “value added rate” as an alternative
indicator (see Appendix-3 for the details of the survey).
The results of the additional survey highlighted the difficulty in collecting financial data
to calculate value added or value-added rate. Financial data could only be collected from
2 out of 8 tenant companies.
It was also found that the value-added rate has a large difference between the case where
the production is done under the CMT (Cut, Make, Trim) contract and the case where the
production is done under the FOB (Free-On-Board) contract.
These results lead to the conclusion that it is not appropriate to use value added or value-
added rate as an alternative indicator for export gap analysis, due to the following reasons:
10
“Value added” refers to the value that is newly generated during the production activities by an enterprise.
It is calculated by subtracting “input value from outside (purchasing costs of goods and services from
outside)” from “the value of production (Ex-factory production value)”. “value-added rate” is the ratio of
“value added” to “value of production”.
38
 No published data is available for the analysis
 Many tenant companies are not willing to disclose their financial data for
confidentiality
 Information and data individually collected from manufacturers is unreliable
39
Chapter 7: Proposed Approach to Recover Exports from
Industrial Parks
For recovering exports from industrial parks, the approaches will be proposed for each major
problem.
7.1 Measures for Decrease in Order

Implementation of marketing promotion seminar, attending expo, one-on-one meeting with
potential firm was conducted before COVID-19 to grasp the investor and open the market in a
foreign country. However, the decrease after COVID-19 is not caused by the Ethiopian
(manufacturing) side only, but majorly was caused by the followings:
 Reduced purchasing desire due to the global economic downturn, and;

 Changes on the working and life-styles.
Since the solution to this problem is not something that can be addressed at the company or
individual country level, the following approaches are proposed:
 If products are to be manufactured as before, suggest the possibility of supplying familiar

domestic markets for a period of time until the needs of existing markets recover.
 If the products to be manufactured can be modified to meet the needs of the existing market,
provide the support required for the company to respond.
7.2 Measures for Delay in Supply of Raw Materials

This problem consists of chronic issues that existed before COVID-19, and new issues that
have arisen after COVID-19.
Regarding the chronic challenges, many of them stem from customs and banking procedures,
which require continued improvement with strong commitment of the Ethiopian government.
While, the extended logistics time and the accompanying higher prices that occurred after
COVID-19 is require industrial development support to promote domestic procurement of
materials, as Ethiopia is a landlocked country and cannot shorten transportation distances as
long as it relies on imports.
7.3 Measures for Labor

With regard to worker issues, in addition to the improvement in productivity indices desired
by companies, improvements in impressions and treatment of the labor are required to secure
and sustain employment in the labor force, respectively.
40
(1) Improvement of productivity index
Since most factory workers are recruited from suburban and/or rural areas, it is necessary
to educate them on habits, including attitudes toward rule-based work styles and time
awareness. As an example from Japan, the 5S (Seiri, Seiton, Seiso, Seiketsu, Shitsuke) are
the foundation necessary to improve productivity in all manufacturing industries.
 Seiri: Discard unnecessary items.

 Seiton: To arrange and display things in an easy-to-use manner.
 Seiso: Clean and inspect while sweeping.
 Seiketsu: Maintaining cleanliness.
 Shitsuke: A habit to use things in a clean manner.
(2) Improvement of the image of factory work
It is necessary to create a good impression of factory work from the pre-requitement stage
of employment, which not limited to the person self but also their family, Therefore, as a
common practice was taken by the industrialized countries, school-based programs
proposed to be implemented to help employees get rid of the image of factory work, as
well as incorporate the necessity and importance of the industrialization for national
economic development into elementary and/or secondary school curriculum is
recommended.
(3) Improvement of worker’s living standard
The major concern of factory worker’s is that there is no standard of minimum wage.
Furthermore, if wages alone are not enough to secure the living standard which should be
better than existing level in the rural or suburban area, as countermeasure was taken by the
other countries during the industrialization period, minimum food and shelter required to
be provided separately, thus, all wages can be used for consumption other than minimum
living expenses.
As for the problem of theft, as the popularity of factory work increases with improved
employment conditions, it is inevitable that people will stop stealing at the risk of
unemployment.
7.4 Measures for Infrastructure
This issue was commonly faced by the developing countries on the way for the industrialization,
and most of the countries given priority to provide infrastructure to the industry instead of the
domestic and commercial user. Therefore, it is required governmental strong commitment on
41
the industrialization policy by instructing the relevant infrastructure service providers through
law and regulation.
7.5 Measures for Transportation
Since no physical measures can be found to offset the time and costs associated with the
distance of goods transported, general measures were taken by the country faced similar
problems are; (1) to shortening transport distances through local production for local
consumption, and (2) developing industries that are less susceptible to the effects of transport.
Under these circumstances, measures to minimize the impact by simplifying logistics-related

procedures and improving the efficiency of logistics systems, including the development of
centers and HUBs, are desirable.
Moreover, improvement of basic skill on the cargo handling to not create any delay on the
process is must condition to grasp the trust of the manufacturing sector, such as elimination of
lost luggage.
7.6 Measures for Customs
Ethiopian government was proceeded to establish electronic Single Window (eSW) connects
the 16 major cross-border regulatory agencies aims to significantly reducing the time and cost
to trade.
Further challenge is to coordinate the customs and banking system under one-stop-services
which provided by EIC. Moreover, to reduce tax as a one of major burden on the cost issue,
establishment or participant of bilateral and regional trading agreements is indispensable.
7.7 Measures for Bank
Issues on the banking problem are on the procedure and the restriction on foreign currency
retention, in which the procedure hopes to be improved under current government actions on
the organizational restructuring which including the privatization.
The National Bank of Ethiopia (NBE) issued a new directive in September 2021 to limit more
which inhibits existing FDI activities and decline attractiveness of investment climate for FDI.
Only strong government leadership and action can solve this problem, since it cannot be solved
at the relevant ministry level.
42
International Experience: Myanmar Case
Until 2011, the Myanmar government had adopted an export-first policy due to its low
foreign exchange reserves. In principle, this policy allowed imports only within the range
of foreign currency earned from exports. The policy has already been abolished and
currently allows imports of all items except contraband, even if they do not hold the
foreign currency earned from exports.
In Myanmar, foreign companies are not allowed to carry out so-called trading businesses
such as import/export/retail wholesale in principle due to unwritten and invisible
regulations, etc., and uncertainty about entering Myanmar has been amplified. However, in
the case of the manufacturing industry including CMT, foreign companies have
traditionally been allowed to import raw materials. Import and export restrictions have
been gradually relaxed in recent years as a whole.
The Central Bank of Myanmar is in charge of foreign currency regulation, and the Ministry
of Commerce is in charge of import/export regulation. The Directorate of Investment and
Company Administration (DICA) under Ministry of Planning, Finance and Industry has
been actively working with the Ministry of Commerce and the Central Bank of Myanmar
to reach out to foreign investors. This seems to have contributed to the gradual
deregulation.
In addition, a special economic zone system has been introduced in Myanmar. The Special
Economic Zone Law was amended in January 2014, and the Thilawa Special Economic
Zone was established based on it. Articles 57 and 58 of this law stipulate that:
57. The business which is operated in foreign currency in the Special Economic Zone shall
have the right to open foreign currency account with any bank of foreign banking in
Myanmar and carry out the matters of receipt and payment with the foreign currency in
accordance with the stipulations.
58. The developer and the investor are entitled to exchange and remit their own foreign
currency within the Special Economic Zone or abroad in accordance with the stipulations.
In addition, the Thilawa Special Economic Zone Management Committee issued a
notification in May 2015, allowing foreign companies to import and sell only this SEZ
company under certain conditions. Deregulation is being implemented ahead of companies
outside the SEZ.
Recommendation to Ethiopia: since the legal system and economic situation are different
between Ethiopia and Myanmar, it seems impossible to apply the example of Myanmar to
Ethiopia as it is. Especially for special economic zones, it took about five years to enact
legislation in Myanmar, and it took four to five years to develop the system after that, so it
is not possible to immediately comply with Ethiopia.
Therefore, in Ethiopia context, there is a need to relax the new directives on foreign
currency retention and utilization, limited to companies in industrial parks.
43
Chapter 8: A Way Forward towards Industrial Promotion
This chapter describes a way forward or necessary actions to be taken, including engagement
of decision-making level in improvement of investment climate to prevent problems faced by
tenants/investors.
8.1 Necessary Actions to be taken by EIC

(1) Establishment of regulatory framework
Since EIC is the authority that issues the investment license together with incentives, it is
necessary for EIC as the regulatory body to monitor and validate the efficiency of licensing
and incentives. Such mechanism is necessary to be established as a regulatory framework
for smooth implementation, including coordination with other relevant agencies.
a) Contents of the regulatory framework
The regulatory framework is proposed to be implemented from the point of (1) economic,
(2) social, and (3) environmental aspects. This framework is designed that pursing the
export value target (economic) does not cause negative impact on social (labor) and
environmental (pollution).
b) Sustainable implementation
For implementation of the regulatory work, a periodical survey needs to be conducted to

grasp the current condition, including problems faced by investors/tenant companies. The
results of the survey will be used as a basis to validate an efficiency of incentives and to
determine necessary actions to increase the export value of the existing tenant companies,
and to attract more investors.
Items for the above survey need to be simplified as much as possible to maintain the
sustainability of its implementation. The indicators to measure the investment efficiency
should also be simple and easy for both data collection and calculation. For example, the
value-added rate is difficult to collect data and calculate since it require financial statement,
which is confidential and thus no investor is willing to disclose. Since EIC is collecting
the “export amount” and “number of employees” on monthly basis, and the factory floor
area is also available, “export value per employee” and “export value per floor area” are
recommended. As for other countries’ experience, only Thailand is utilizing the value-
added rate in exchange of additional incentives to be given; in this case, tenants/investors
44
provide the figure of value-added rate with sufficient back data such as financial statements,
etc.
c) Implementation sequence
In implementing the regulatory framework, it needs to ensure that the existing investors
do not move out of Ethiopia by being imposed with excessive burden, and that new FDI
come to invest in Ethiopia.
Given that Ethiopia does not manage to attract many investors, especially in the
manufacturing sector, it is recommended just to monitor the current conditions, instead of
regulating manufacturers, or to regulate together with additional incentives to balance the
carrot and the stick policy.
(2) Coordination among relevant agencies
Most of the problems faced by tenant companies are difficult to solve by EIC alone.
Therefore, (1) timely reporting of the problems to responsible agencies for immediate
action, and (2) information sharing of the results of periodic status survey to solve chronic
problems and to prevent potential problems, are recommended. EIC needs to coordinate
with relevant agencies, particularly on the problems as follows:
 Labor: Ministry of Labor and Skills, and Labor Union

 Infrastructure: Ethiopia Electric Utility Company, Water and Sewage Authority, and
Internet Service Provider
 Custom: Ethiopian Customs Commission
 Banking: National Bank of Ethiopia
In addition to the above, EIC is required to coordinate with the following agencies during
the implementation of the regulatory works:
 Implementation of the periodic status survey: IP operator, such as Industrial Parks

Development Corporation (IPDC) and other private firms
 Consideration on incentives: Ministry of Finance, Ethiopian Customs Commission,
Prime Minister Office
 Overseas marketing and promotion: Ministry of Foreign and Affairs, as well as donor
agencies and embassies of target country
45
8.2 Necessary Actions to be taken by the Government of Ethiopia
(1) Investment Climate in Ethiopia
Not only COVID-19 pandemic has forced manufacturing sector to change their business
model, outbreak of Ukraine-Russia conflict in February 2022 also had a large impact on
the fuel and material supply, as well as reduced purchasing desire due to the global
economic downturn.
a) Ethiopian investment climate
Chronic potential challenges faced by the Ethiopian investment climate are as below:
 Challenges on logistics: (1) as a land-locked country, Ethiopia faced disadvantage

compared with other maritime countries both on the required time and cost, (2) exit
from AGOA lost business opportunities with the US as a trading partner, and (3)
inefficient customs procedure which takes longer and unpredicted delivery time.
 Restrictions on foreign currency retention: limited to hold the foreign currency which
affects the material purchase and profit remittance to the headquarters/parent company.
 Basic Infrastructure: insufficient infrastructure, especially electricity, water and
internet, which limits manufacturing activities.
b) Market changes due to the COVID-19
The impact of COVID-19 on the global economy caused changes in living and working
styles which make a conversion of the required goods:
 Conversion from corporate to house/private consumption due to the telecommuting

and restrictions on traveling and eating-out.
 Promotion of local production for local consumption due to a problem of logistics
problems; it takes time and cost by the limited number of workers at the port and truck
drivers.
c) Fuel and materials challenge due to Ukraine-Russia conflict
The impact of Ukraine-Russia conflict is not limited to fuel and materials (such as flour
and rare metal), but it increased overall prices and caused global economic downturn.
Especially the rapid increase of fuel price created a serious problem for Ethiopia, as a
landlocked country with long transport distances it became a big disadvantage for export-
oriented manufacturing sector.
46
(2) Necessity for Improving the Investment Climate
Given the global economic changes as stated as above, the attractiveness of the investment
climate in Ethiopia has been declining. In order to attract FDI it is essential to improve the
investment climate in response to the global economic changes. Therefore, in addition to
addressing the existing problems faced by tenant companies, it is necessary to review
relevant policies on promotion of investment and industrialization, including the
incentives and regulations, as proposed below:
1. Utilization of domestic materials for domestic market to mitigate challenges of

logistics and foreign currency by expansion of import substitution, which can further
promote to surrounding countries for surplus products. Considering the challenges of
FDI to invest in Ethiopia, it is also important to promote industrialization by fostering
local manufactures.
As a case in Asia, such as Taiwan, South Korea, Malaysia, Thailand, etc.,

industrialization started from import substitution of consumer goods, and gradually
moved to export of light industrial products, import substitution of machinery and
industrial materials, and finally to export of high-tech products.
2. Expansion of foreign business opportunities in the manufacturing sector through

cooperation/business matching with local enterprises, e.g.: franchise contract to
develop local capability and reduce foreign investors’ risk.
In order to promote industrialization, it is important to collaborate with related

organizations not only in manufacturing, but also in logistics, finance, infrastructure, and
other related sectors to provide support, as well as to consideration on social and
environmental issues, including workers and pollution issues are indispensable. Therefore,
the key to success lies in the government's vision and strong leadership in line with the
current situation.
47
References
Capital News Letter, Published 4th of April 2021
EIC’s Export and employment data for the Fiscal Year 2018/19, 2019/20, and 2020/21
Ethiopia’s “Ten Years Development Plan (2021-2030)”

Fortune News Letter, Published April 15th, 2021
JETRO News Letter, Published 15th of May 2020 and 8th of April 2021
National Bank of Ethiopia, Directive No. FXD/66/2020 for Amendment of Retention and Utilization
of Export Earnings and Inward Remittances
National Bank of Ethiopia, Directives No. FXD/70/2021for Amendment of Retention and Utilization
of Export Earnings and Inward Remittances
48
APPENDICES
49
Appendix-1: Company List
Company name Survey (interview) date
Bole Lemi Industrial Park
1.1. Jay Jay 4/12/2020
1.2. Shints 4/12/2020
1.3. Arvind Lifestyle Apparel 9/12/2020
1.4. Ashton Apparel Manufacturing 9/12/2020
1.5. KEI Engineering Constancy 9/12/2020
1.6. New Wide Garment 24/12/2020
1.7. Sumec Ethiopia Textile and Garment 24/12/2020
1.8. Evertop Sportswear 29/12/2020
1.9. LYU Shoutao Factory 5/1/2021
Hawassa Industrial Park
2.1 Chargeurs Fashion Tec. 9/2/2021
2.2 EPIC 9/2/2021
2.3 TAL Garment 9/2/2021
2.4 JP Textile Ethiopia 10/2/2021
2.5 Everest Apparel 10/2/2021
2.6 KGG Garment 10/2/2021
2.7 Nasa Garment 11/2/2021
2.8 PVH Arvind Manufacturing 11/2/2021
2.9 Hidarmani 12/2/2021
2.10 Ontex Hyginec Disposable 12/2/2021
2.11 ITL Intelligent Label Solution 13/2/2021
2.12 Century Garments 13/2/2021
2.13 Silver Spark 13/2/2021
2.14 Best International 15/2/2021
2.15 JP Garment 15/2/2021
2.16 Arvind Lifestyle 16/2/2021
2.17 Sumbiri Intimate Apparel 16/2/2021
2.18 Hela Indochine 17/2/2021
2.19 Isabella 17/2/2021
2.20 Indochine 18/2/2021
Adama Industrial Park
3.1 Kingdom Linen 28/1/2021
3.2 Newbridge Garment 28/1/2021
3.3 Sunshine Ethiopia 28/1/2021
3.4 Antex Textile 29/1/2021
Dire Dawa Industrial Park
4.1 WUXI 11/3/2021
4.2 S&D Chemical Manufacturing 10/3/2021
Kombolcha Industrial Park
5.1 Pungkook Ethiopia 23/2/2021
5.2 Carvico 24/2/2021
5.3 Trybus Bridgetex Ethiopia 25/2/2021
5.4 Fuanlai 26/2/2021
Huajian International Shoe City
6.1 Chan Hange 21/1/2021
6.2 Huajian International Shoe City 21/1/2021
6.3 Yoebang 21/1/2021
Eastern Industrial Park
7.1 Linde Ethiopia Garment 22/3/2021
7.2 Lonto Garment 23/3/2021
7.3 Baisheng Fiber 23/3/2021
7.4 Shuaijie 23/3/2021
7.5 Dong Fang Spinning 24/3/2021
50
Company name Survey (interview) date
7.6 Nexgen Packaging 24/3/2021
7.7 Di Yuan Ceramics 25/3/2021
7.8 Beconnected 25/3/2021
7.9 Wu Zhen Miao 26/3/2021
7.10 TY Woods 26/3/2021
George Shoe Industrial Park
8.1 George Shoe 8/2/2021
51
Appendix-2: Questionnaire form for Industrial Parks Export
Gap Survey
52
53
Appendix-3: Additional Survey on Value Added or Value Added
Rate as an Alternative Indicator
54
55
56
Report on Current Status Evaluation
of One-Stop Shop Service
at Bole Lemi Industrial Park
EIPP
January 2022
Table of Contents
Acronyms.................................................................................................................................................. iii
List of Tables ............................................................................................................................................ iv
List of Figures .......................................................................................................................................... iv
1. Introduction....................................................................................................................................... 1
Part I: OSS Service Provision at BLIP .................................................................................................... 2
2. Current Operation of OSS Service Providers ................................................................................. 2
3. Stopped Service Provision within BLIP .......................................................................................... 3
4. Additional OSS Services at BLIP ..................................................................................................... 4
5. Challenges of EIC Branch Office at BLIP ...................................................................................... 5
6. Pictures of EIC Offices at BLIP ....................................................................................................... 5
7. Conclusion ......................................................................................................................................... 6
Part II: OSS Office Layout in BLIP-II Administration Building and BLIP-II Master Plan .............. 7
8. Evaluation on the Implementation of BLIP-II Administration Building ...................................... 7
8.1 General Information ................................................................................................................... 7
8.2 Green and Smart Building Concept Proposed by EIPP ........................................................... 7
8.3 Status Evaluation of Green and Smart Building Concept........................................................ 8
8.4 OSS Office Layout Proposed by EIPP ..................................................................................... 10
8.5 Evaluation of OSS Office Layout ............................................................................................. 12
9. Evaluation on the Implementation of BLIP-II Master Plan ........................................................ 15
9.1 General Background ................................................................................................................. 15
9.2 Land Use of BLIP-II Master Plan ............................................................................................ 16
9.3 Status Evaluation of BLIP-II Master Plan .............................................................................. 16
9.4 Mixed Residential Area Development ...................................................................................... 18
9.5 Evaluation and Implementation Challenges ........................................................................... 19
9.6 A way Forward for Further Implementation of the Plans at BLIP ....................................... 20
Annex: 3D Design Result for OSS Office Layout in the BLIP-II Administration Building ...... 22
Acronyms
BKPM Badan Koordinasi Penanaman Modal

BLSIC Bole Lemi Smart Industrial City
CBE Commercial Bank of Ethiopia
CJC Competitiveness and Job Creation
ECC Ethiopian Custom Commission
EEU Ethiopian Electric Utility
FOREX The Foreign Exchange
ICT Information Communication Technology
IP Industrial Park
IT Information Technology
JAFZ Jebel Ali Free Zone
MOF Ministry of Finance
MOLSA Ministry of Labour and Social Affairs
OSS One Stop Service
VIP Very Important Person
WWTP Wastewater Treatment Plant
List of Tables
Table 1. Current Status of OSS Service Providers at BLIP (as of December 10, 2021) ....................... 2
Table 2. Stopped Service Provision within BLIP ..................................................................................... 4
Table 3. Additional OSS Services at BLIP ............................................................................................... 4
Table 4. General Description of the New Administration Area.............................................................. 7
Table 5. Technical Proposal of Green Building Concept for Administration Building ....................... 8
Table 6. Technical Proposal of Smart Building Concept for Administration Building ....................... 8
Table 7. The Implementation Status of Green and Smart Building....................................................... 9
List of Figures
Figure 1. Location of BLIP-II Administration Building ......................................................................... 7

Figure 2. Layout on the Ground Floor and the First Floor of BLIP-II Administration Building..... 11
Figure 3. Revised Ground Floor Space Arrangement ........................................................................... 12
Figure 4. Revised First Floor Space Arrangement ................................................................................ 13
Figure 5. Revised Third and Fourth Ground Floor Space Arrangement ............................................ 14
Figure 6. Bole Lemi Industrial Park - II ................................................................................................. 15
Figure 7. BLIP-II Land Use ..................................................................................................................... 16
Figure 8. Tenant Companies Located in BLIP-II Site ........................................................................... 17
Figure 9. Wastewater Treatment Plant at BLIP-II................................................................................ 18
Figure 10. Water Reservoir at BLIP-II ................................................................................................... 18
Figure 11. Mixed Residential Area Development................................................................................... 19
1. Introduction
The construction of Bole Lemi Industrial Park (BLIP)-II was scheduled to be completed in September 2019.
Based on that, Phase 2 of Ethiopia Industrial Promotion Project (EIPP) was started with the assumption that the
operation of BLIP-II and the new administration building will start immediately after the start of Phase 2. EIPP
planned to support Ethiopian Investment Commission (EIC) and Industrial Park Development Corporation
(IPDC) for One-Stop Shop (OSS) service provision at BLIP-II administration building.
However, even now, more than two years after the scheduled completion of BLIP-II, BLIP-II is still in the
process of being handed over from the contractor to IPDC, and OSS support cannot be provided as planned.
Therefore, the contents of the OSS support at BLIP were a little changed from (1) to (3) below to match the
current situation.
(1) To understand change of OSS service provision from the end of EIPP Phase-1. Since EIC branch office
providing OSS services may be strongly involved in activities for regulating investors in IPs and IP
operators, it is quite important to understand the current situation of providing OSS service for
supporting EIC’s regulatory work as well.
(2) To investigate the layout of OSS offices to be installed in the BLIP-II administration building. Since this
building is in process of being handed over from the contractor to IPDC, as a support on the
establishment of OSS office effectively.
(3) To evaluate construction of BLIP-II based on the master plan. Successful handing over of BLIP-II is the
premise of support on BLIP-II operation management and it will be confirmed based on the prepared
Standard Operation Procedures.
Regarding the item (1) above, EIPP investigates the current state of OSS service provision through interviews
with the OSS Manager (i.e., EIC Branch Manager), etc., and the results are described in Part I of this report.
IPDC, as the developer of BLIP-II, has authority over the items (2) and (3) above. Through interviews with the
Park Managers (i.e., IPDC Branch Manager and Deputy Branch Manager) and reviews of materials such as the
master plan of the project, EIPP evaluates the layout plan of BLIP-II administration building and the
infrastructure development. The results are described in Part-II of this report.
1
Part I: OSS Service Provision at BLIP
The EIPP team conducted an interview survey with OSS service providers at BLIP, in particular the EIPP team
interviewed the Branch Manager of EIC at BLIP, the Branch Manager of IPDC at BLIP, and the Deputy Branch
Manager of IPDC at BLIP. The main objective of the fact-finding survey is to understand the current operation
of OSS services and to assess the implementation of EIPP’s recommendations suggested for a successful and a
full-fledged operation of the BLIP. The survey was conducted during the period from November 22 to December
10, 2021.
2. Current Operation of OSS Service Providers
Eleven offices are offering OSS services to tenant companies at BLIP. Four of them are public institutions such
as EIC, Ethiopian Custom Commission (ECC), Commercial Bank of Ethiopia (CBE), and IPDC. The other
seven offices are private companies including two banks and five logistic service companies. Table 1 shows the
number of staff, service activities and location of offices for all 11 OSS service providers at BLIP as of December
10, 2021.
Table 1. Current Status of OSS Service Providers at BLIP (as of December 10, 2021)
Name Service Public Private No. of Service Activities Location

Provider Staff
EIC x 3  Registration of foreign capital Old administration
 Providing custom duty exemption (EIC is building
only verifying application, and approval is
done by MoF)
 Issuance / renewal of work permit
 Transfer of capital goods within IP
CBE x 20  Bank permit for export of goods Old administration

 Bank permit for import of goods building
 Bank guarantee
 Less price packaging services
 National bank delegation service including
approval of CMT
 Other services such as finance service,
ATM and internet banking services
Awash Bank* x 8  Just opening (Account opening to New administration

customers, approaching potential building, ground
customers, mobilizing capital) floor
Cooperative x NA  NA New administration

Bank of building, ground
Oromia* floor
ECC x 40  Import procedure Old administration
 Export procedure building
 Custom duty free and pay duty services
 Reconciliation of voucher
2
Name Service Public Private No. of Service Activities Location
Provider Staff
IPDC x 24 IP Operation including: New administration
 After care services building, first floor
 Operation and maintenance of water plant
wastewater treatment, internal road,
factory sheds, administration building, etc.
Pave x 9 Logistic services Old administration

Logistics building
CLS Logistic x 1 Logistic services Old administration
building
Maccfa x 1 Logistic services Old administration
Freight building
Logistic
DHL x 2 Logistic services Old administration
Ethiopian building
Airlines
Logistics
Service
Mearistc all x 1 Logistic services Old administration
freighters building
Source: EIPP
Note: *Awash Bank and Cooperative Bank of Oromia are just opening, not started OSS operation yet.
3. Stopped Service Provision within BLIP
EIC has announced an OSS window service center that would be installed at the industrial parks, including
BLIP after the enactment of Industrial Park Proclamation No. 886/2015. Among others, customs, banking,
electricity, telecom, water and other services providers were planned to be integrated into the OSS to save money
and time of the investors inside the Industrial Parks (IP). As per the initial plan, various service providers were
planned to operate at BLIP.
However, Bureau of Labor in Addis Ababa City Government (Addis Labor Bureau), Ethiopian Electric Utility
(EEU), Ethio-Telecom, Attorney General, and Ministry of Labor and Social Affairs (MOLSA) were withdrawn
from OSS at BLIP for various reasons as shown on Table 2.
In addition, EIC has stopped providing service for income tax holiday since 2021, since the authority of duty-
fee privilege and tax exemption was transferred to the Ministry of Finance (MOF).
3
Table 2. Stopped Service Provision within BLIP
Name of Stopped service provision within Reason for stop service How service is provided
Service BLIP provision after stopping service
Provider provision
EIC  Providing income tax holiday  No longer have  MOF is the only
authority for tax provider of duty-free
holiday privilege and tax
exemption
Addis Labor Withdrew from BLIP  No major issues at the  Most of the services are
Bureau  Handling of complaints and resolving moment providing by IPDC and
disputes EIC in collaboration
 Safety and health training with MOLSA
EEU Withdrew from BLIP  There are no routine  Providing the services
 Connection of electricity and frequent from outside of BLIP
 Handling of complaints activities at BLIP
 Collections of electricity charges
Ethio-telecom Withdrew from BLIP  No major activities that  Providing the services
 Connection of telecommunication are undertaken at BLIP from outside of BLIP
 Handling of complaints at the moment
 Collections of telecom-charges
Attorney Withdrew from BLIP  No major problems to  Services are providing
General  Safeguarding everyone at the park be handled by the from nearby Woreda Sub
from violent criminals attorney general during City
 Provide legal advice their stay at the park
 Enforces federal laws
 Resolves disputes
MOLSA Withdrew from BLIP  No replacement after a  Providing the services
 Securing durable industrial peace senior staff retired from outside of BLIP
 Settlement of labor disputes
Source: EIPP
4. Additional OSS Services at BLIP
The following are the additional services providing at BLIP by EIC, CBE and IPDC (see Table 3).
Table 3. Additional OSS Services at BLIP
Name Service Additional OSS Services

Provider
EIC  Providing raw material guarantee and access: EIC allows tenant companies to access raw
materials for their production; gives bank guarantee to import raw materials and accessories; give
permission to replace unsuitable or failed raw material; and allows raw material replacement when
it found incompetent or failure.
 Providing bank guarantee: EIC provides bank guarantee letter for importing raw materials and
accessors.
 The Foreign Exchange (FOREX) registration (both in cash and in kind): EIC provides service
for tenant companies to register all FOREX transactions.
 Allowing machinery repair abroad and parts importation: EIC allows exporters to repair their
machinery abroad with exemption from tax and duty.
 Providing permission for accessory importation: EIC allows the accessory imports without
imposing tax and duty.
4
Name Service Additional OSS Services
Provider
CBE  Credit facility: CBE provides loan for the purchasing raw materials, processing and converting
into finished goods, warehousing, packing, and transporting the goods.
IPDC  Revenue generation: IPDC generates revenue by selling ground water, renting rooms, providing
wastewater treatment and waste disposal services, and others.
 Providing training: IPDC provides fire prevention and emergency evacuation training to
employees and employers of tenant companies at the BLIP.
 Utility services: IPDC provides utility services including ground water and wastewater treatment.
 Making green and greener: IPDC keeps the compound clean, green and smart.
 Overall administration: IPDC provides overall administration in BLIP, including maintaining
safety and security.
Source: EIPP
5. Challenges of EIC Branch Office at BLIP
The notable challenges to provide OSS services are shortage of staffs, problems with organization structure of
EIC, and lack of office equipment as shown below.
(1) Lack of human resources: The EIC branch office needs more trained and experienced staffs. Shortage
of staffs affects the daily operation of branch office activities to provide their services effectively and
efficiently.
(2) Problems with organization structure: The current EIC organizational structure creates slow decision
making and makes the branch manager office inflexible in daily operation. The EIC branch manager at BLIP
and the director at the EIC head office has the same status in the government organizational structure.
However, the branch manager has a number of responsibility and duty at the industrial park and needs to deal
with many issues. Hence, the branch manager needs to be empowered enough to make the necessary decisions
without waiting decisions from the head office.
(3) Lack of office equipment: The EIC branch office is still lacking the necessary office equipment,
especially Information Technology (IT) equipment.
6. Pictures of EIC Offices at BLIP
EIC branch manager manages OSS Coordination Office and Peaceful Industrial Relation Directorate. Number
of EIC staffs are three consisting of one branch manager, one OSS coordination officer and one peaceful
industrial relation director. The following pictures show the working places of these EIC staff in the old
administration building.
5
Source: EIPP
EIC Branch Manager Office
Source: EIPP Source: EIPP
OSS Coordination Office, EIC Peaceful Industrial Relation Directorate, EIC
7. Conclusion
OSS is still on the way for its fully establishment as planned before by EIPP. However, since digital
transformation also required for entire EIC’s works by the Ethiopian Government, including OSS, the proposed
OSS plan by EIPP also necessary to be updated based on this movement and changes was faced on the
investment climate of Ethiopia.
6
Part II: OSS Office Layout in BLIP-II Administration Building and BLIP-II
Master Plan
8. Evaluation on the Implementation of BLIP-II Administration Building
8.1 General Information
BLIP-II Administration Building is located in the western part of the Bole Lemi Industrial Park (BLIP). The
total plot area is 2.6 ha and building footprint is 0.39 ha (15% of the total area).
Figure 1. Location of BLIP-II Administration Building
Table 4. General Description of the New Administration Area

Land Use Area (ha) %
Total Plot Area 2.60 100.0
Building footprint 0.39 15.0
Greenspace 1.24 47.6
Source: EIPP
The administration building is in the process of being handed over from a contractor to IPDC. On the other hand,
the BLIP Branch Manager of IPDC tries to implement some modification in accordance with the design and
recommendations on the administration building proposed by EIPP with due regard to financial constraints.
8.2 Green and Smart Building Concept Proposed by EIPP
The green and smart building concept was proposed by the EIPP team for the BLIP-II administration building.
7
It requires a few additional works as intrinsic elements of the building to create a green and smart pleasant to
workers and investors, environmentally friendly, safe, and aesthetically good working environment or building.
The recommendations can be systematically grouped into:
(1) Green wall and roof: These include the construction of wire mesh on the façade of the building, planting
climber plants, drilling vertical hooks on the main wall, putting flowerpots on the roof and inside the
building, developing rooftop cafeteria and develop rainwater harvest system.
Table 5. Technical Proposal of Green Building Concept for Administration Building

Wall
No. Activity Description
1 Construct a wire mesh on the façade of the building 1m*18.2m in every 1m interval
2 Planting climber plants 30cm distance in each plant
3 Drilling vertical hooks on the main wall in every 120cm distance
Roof
1 Putting flowerpots on the roof and inside the building Throughout the perimeter and on selected places
2 Develop rooftop cafeteria 1,024.45 sqm
3 Rainwater harvest 10,000-liter water tanker for drip irrigation
Source: EIPP
(2) Smart building: This includes the construction of display screen plasma on the first floor visible
from the lobby and installation of modern IT system to monitor activities in the building and
control displayed items.
Table 6. Technical Proposal of Smart Building Concept for Administration Building
No. Activity Description
1 Construct plasma screen 120cm*120cm
2 Installation of modern IT system Security camera
Source: EIPP
8.3 Status Evaluation of Green and Smart Building Concept
IPDC is in the process of being handed over the administration building from a contractor. During this process,
the BLIP Branch Manager of IPDC follows up the recommendations from EIPP for finishing works, installation
of smart technology, etc.
The detailed evaluation results of the Green and Smart Building Concept implementation status are presented
in the following Table 7.
8
Table 7. The Implementation Status of Green and Smart Building
Green Building Development
Wall
No. Activity Status Image
1 Construct a wire mesh on

the façade of the building
2 Planting climber plants
Not implemented
3 Drilling vertical hooks on

the main wall
Roof
The pots are purchased and the
1 Putting flowerpots on the flowering (finishing the last floor
roof and inside the building and the roof potting) on progress
The following works are carried

out:
- Plastering work
2 Develop rooftop cafeteria - Installation of assisting lights to
use the area during nighttime
- Planning to transfer the rooftop
to the third-party service
provider through a bid process
3 Rainwater harvest Not implemented

Smart Building
1 Construct plasma screen Not implemented
As per the recommendation, the
following works are carried out:
- A dedicated room is well-
furnished for surveillance and
security function
- CCTV camera is installed on
each floor
2 Installation of modern IT - Motion sensor smart tracking-
system based lighting systems are in
place
- Automatic battery-based
emergency light systems are in
place
Source: EIPP
9
8.4 OSS Office Layout Proposed by EIPP
In reply to request from IPDC, EIPP team estimated the number of officers to be engaged in OSS services in
the - new administration building in consultation with EIC and IPDC. The EIC team used the Jebel Ali Free
Zone (JAFZ) in Dubai and Indonesian Badan Koordinasi Penanaman Modal (BKPM) industrial parks as a
benchmark to propose an OSS office layout.
(1) Estimation of Number of Employees based on EIC's Request on OSS Office
The OSS office layout expected by EIC was that with a front office and a back office modeled on the Hawassa
Industrial Park (HIP).
The number of officers working in front and back offices was estimated for each OSS service provider. This
estimation was made separately for the service provider who provided the OSS service in BLIP-I and the service
provider who is expected to add it for BLIP-II. The estimated number of officers was used as a basic requirement
for the OSS office space (see Table 8).
Table 8: Basic Requirement of OSS Office Space

Name of Service Provider Front Office Back Office Remarks
(Services)
No. of No. of No. of
Officers waiting Officers
seats
Existing providers to relocated to New Building
1. EIC 5 3 1 3 counters are needed.
2. IPDC 1 1 43
3. Custom 0 0 0 15 officers of ERCA are expected to
work in a separate building near the
gate.
4. Commercial Bank of Ethiopia 26 - 0 CBE work in a compartment in the
Administration Building.
5. Addis Ababa Labor Office 4 1 0
New providers (future space for possible new providers)
6. Ethiopian Electric Utility 1 1 17
7. Ethio-Telecom 1 1 3
8. Immigration Office 2 1 0
9. Ethiopian Textile Industry 1 1 0
Development Institute
10. Addis Ababa City 1 1 0
Administration
11. Ethiopian Shipping and Logistic 2 1 12
Service Enterprise
Common waiting seats at Front Office 5 -
Source: No. of OSS officers are estimated based on data at HIP obtained from EIC IP OSS Coordination Directorate
(2) Proposal of OSS Office Layout by EIPP
The OSS office layout proposed by EIPP places the offices of OSS service providers other than IPDC on the
10
ground floor and the office of IPDC on the first floor. As a result, the offices located on the ground floor and the
first floor are as follows.
a) Ground Floor: It was planned to place a main part of OSS service providers, CBE and spaces for non-
OSS function such as daycare center, cafeteria, surveillance, security, and supermarket.
b) First Floor: Units of the floor were proposed for park manager office, insurance and transit office,
technical service, pool office, meeting rooms, etc.
(b) Ground Floor (a) First Floor
Figure 2. Layout on the Ground Floor and the First Floor of BLIP-II Administration Building
(3) IPDC's View of the Proposed OSS Office Layout
EIPP explained to IPDC the above proposal regarding the OSS office layout in the BLIP-II administration
building. IPDC's view of that layout was as follows.
 IPDC is almost satisfied with the EIPP proposal.

 IPDC feels that the estimated number of officers to be engaged in OSS services is a little too high.
 HPI's OSS office model may be better than other IPs, but IPDC believes it is not perfect. IPDC wants to
set up OSS offices suitable for the situation where BLIP is placed.
 IPDC wants to avoid installing partitions as much as possible, and if partitioning is necessary, use a glass
partition with a height of about 1.5m to free up ceiling space.
 IPDC wants to set up a room with a function to display videos and presentation materials so that it can
be used for meetings with companies interested in investing in BLIP.
 Since the World Bank Competitiveness and Job Creation (CJC) project is in charge of procuring
equipment for the BLIP-II administration building, IPDC will contact the World Bank staff.
 IPDC will formally contact EIC to discuss the OSS office layout.
11
8.5 Evaluation of OSS Office Layout
(1) Current Status of OSS Office Layout Finalization
Before handing over of BLIP-II administration building, IPDC made a final evaluation of the OSS office layout
and revised the layout. IPDC has reached the following conclusions from the final evaluation of the OSS office
layout so far.
 New service providers were expected to have officers stationed in BLIP-II. However, they have not yet had
officers stationed to provide services within BLIP to date.
 Currently a total of 68 officers are stationed at BLIP from three organizations i.e., EIC, IPDC, and ECC.
Among these 58.8% or 40 officers are from ECC followed by IPDC (35.2% or 24 officers).
 Due to financial constraints, IPDC has decided to lend a portion of the ground floor to private banks.
(2) Details about OSS Office Layout Changes
a) Ground Floor:
Based on the site visit and an interview with the BLIP Branch Manager of IPDC, EIPP realized that all the
proposed OSS office layout will be finalized in accordance with the EIPP’s recommendation, except a part
of the ground floor where OSS service providers such as EIC and ECC were planned to be placed by the
EIPP’s recommendation. Location of offices for such OSS service providers will be changed to the first
floor, and to the space on the ground floor two private banks namely, Awash Bank and Oromia Cooperative
Bank will be placed (see Figure 3 and 3D drawing in the Annex).
Revised area
Figure 3. Revised Ground Floor Space Arrangement
12
b) First Floor
Partition, plastering, and other finishing works had been finalized on the first floor, for the Park Manager
(BLIP Branch Manager of IPDC) Office, technical service rooms, and meeting rooms.
The first-floor layout was rearranged to accommodate all the OSS service providers on the first floor (see
Figure 4 and 3D drawing in the Annex).
The followings are the revised functional and layout modifications:
 Next to ‘Think Tank Group Room’, there is a ‘Conference Hall’ with two conference table
arrangements. The room was rearranged to have only one long table, instead of two tables.
 The ‘Technical Service Room’ redesigned to serve as ‘the Park D/Manager Office’. Next to the Deputy Manager
Office, there is a room, and this room is allotted to serve as ‘Technical Service Room’.
 The ‘Display Room’ was additionally placed at the right side of the lobby. It will have two plasma screens or
Flat Screen TVs and a 3D model of the BLIP.
 An area designated to ‘Transit and Insurance Office’ was redesigned to allocate for a main OSS room that
consists of EIC and Custom.
c) Display room
d) Main OSS room
b) D/Manager Office &

Technical service
a) Conference hall
Figure 4. Revised First Floor Space Arrangement
13
c) Third and Fourth Floor
Third and a part of the fourth floors are given to the Korean fashion design company i.e., Gyeongbuk
Technopark.
Figure 5. Revised Third and Fourth Ground Floor Space Arrangement
(3) Evaluation
Relocation of the OSS room from proposed ground floor to first floor is not reasonable for the end-user (e.g.
tenant company/locator and investor). However, concerning the limitation of the space in ground floor, if the
OSS will be fully implemented manually, not digitalize, the current location is more flexible for its space
expansion. However, if the digitalization of the service will be implemented, relocation of OSS room to the
current “reserved area” is recommended.
14
9. Evaluation on the Implementation of BLIP-II Master Plan
In this chapter, the project implementation status of Bole Lemi Industrial Park (BLIP)-II is evaluated based on
the master plan of Bole Lemi Smart Industrial City (BLSIC) that EIPP developed as a comprehensive master
plan for BLIP-I, BLIP-II, the International Business Park (I and II), and the High-Tech Industry and Information
Communication Technology (ICT) Park.
9.1 General Background
BLIP-II has a total area of 174.8ha. BLIP-II includes plot areas allotted for textile and garment factory purposes
as well as the Wastewater Treatment Plant (WWTP). Functional based clustered areas, which were enshrined in
the Master Plan as High-Rise residence, International Business Park I and II, and High-Tech Industry does not
include in BLIP-II. Therefore, this section covers only BLIP-II.
Figure 6. Bole Lemi Industrial Park - II
15
9.2 Land Use of BLIP-II Master Plan
Land Use Area (Ha) %
Factory plot 109 62%

Infrastructure 37.1 21.22
Road 24.1 13.79
Water supply tower, etc. 1.9 1.09
Sewage treatment plant 7.2 4.12
Administration center 2.4 1.37
Green 30.2 17.28
Playground - -
Buffer green 30.2 17.28
Reserve - -
Total 174.8 100.00
Figure 7. BLIP-II Land Use
9.3 Status Evaluation of BLIP-II Master Plan
(1) Current Status of BLIP-II Site
The status of BLIP-II sites as of November 2021 is as follows.
 IPDC is in the process of being handed over the site.

 All the road layout is constructed in accordance with the master plan.
 Of the total 109ha factory plot, 21.3ha or 19.54% has been transferred to investors.
 With the exception of one company Soflet which is engaged in the agro-processing sector, the other two
companies are engaged in the textile and garment sector as proposed in the Master Plan.
 There is still unsettled land acquisition issue in the southern part of the Bole Lemi II boundary adjacent
to the Beshale and Adaki rivers. People or farmers are still living and some quarry sites is also functional
in the area.
16
(2) Detail Evaluation of BLIP-II Site
Figure 8 shows the location of factories that have been already invested in BLIP-II.
Shungtex Company LR Company
Total Area – 10ha Total Area – 1.5ha
Sector – Textile and garment Sector – Textile and garment
Soflet Company
Total Area – 9.8ha
Sector – Agro-processing
Figure 8. Tenant Companies Located in BLIP-II Site
There is a WWTP at the BLIP-II site, which is at the decommissioning stage. The construction of WWTP is
completed; however, IPDC does not takeover before checking the functionality of the plant. The functionality
check of WWTP needs electric power. The contractor is waiting for electric power so that it could test the
functionality of WWTP and hand over it to IPDC.
17
Figure 9. Wastewater Treatment Plant at BLIP-II
Construction of the water reservoir on the BLIP-II site has been completed and is in operation.
Figure 10. Water Reservoir at BLIP-II
9.4 Mixed Residential Area Development
The Master Plan proposed to use the northern part of the park for mixed use residential houses and dormitories.
So far there is no development in the area for mixed-use residential or dormitory purposes. However, an
interview with the BLIP representative revealed that there is an ongoing discussion at the top management level
to develop Very Important Person (VIP) residential houses in the area, specifically in the proposed landmark
tower area.
18
Figure 11. Mixed Residential Area Development
9.5 Evaluation and Implementation Challenges
IPDC targeted to develop the park into a suitable environment for investors and workers in the compound. The
main objective of this mini project was a mere observation rather than an evaluation and it is in no way to show
IPDC’s performance on the implementation of the green building or the masterplan. Despite many roadblocks
and obstacles, the management team had faced, they have done a commendable job in their pursuit to follow
the master plan accordingly.
Major improvements have been observed while conducting the survey. All plots and major roads are completed
and on the process of being handed over to the IPDC. Three companies have already been assigned plots of
which two have already began production. Supporting infrastructure such as wastewater treatment plant is
completed and waiting for the testing process. On the other hand, water tank has been finished and started
providing service for tenants according to their needs. Discussion with IPDC management reveled near future
development on residential area for VIP stuffs are on process. The overall observation regarding the
implementation of the masterplan has shown no deviation in terms of land use in IPDC’s side.
On the contrary, a modification on the OSS design implementation has been observed by the team. In its
direction to generate sustainable income, IPDC found it feasible and profitable to change the plan to assign the
ground floor for OSS service and in return to rent it out for commercial banks with good price. Instead IPDC
adopted the same layout to be constructed on the first floor accordingly. Additionally, IPDC has been preparing
19
the above floors for a south Korean company which has been allocated the space to use for the contract period.
Finally, clear obstacles in the form of financial shortage, unsettled land ownership issues, delayed handover of
constructed projects has resulted in the stretching from the expected timeline of the projects. The next section
shows recommended steps to be followed on the implementation of the plans to achieve good result from the
projects.
9.6 A way Forward for Further Implementation of the Plans at BLIP
 In the master plan of BLIP-II, the timeframe for finalization of all the necessary infrastructure and
making the park ready for tenants was September 2019; however, the Park is yet under the process of
handing over basic infrastructure from the contracture. This has an adverse effect on the financial
viability and sustainability of the park. Therefore, IPDC and/or the BLIP manager should make pressure
to the extent of taking legal/administrative measures for the finalization of all necessary infrastructures
and making the park ready for tenants or investors.
 One of the very crucial infrastructures for eco-industrial parks i.e., wastewater treatment plant is not yet
operational. IPDC should give special attention and work with a sense of urgency through giving priority
to the finalization of this plant.
 Up until now, only a few tenant companies entered into BLIP-II. This makes nearly one-fourth (1/4) of
the available leasable factory land have been transferred for tenants. Therefore, IPDC should give special
emphasis to attracting investors.
 In the BLIP-II master plan, the plot areas are designated for factory sheds with the intention of making
the area specialized in garment and textile by taking into consideration the necessary infrastructures like
wastewater treatment plant; however, there is a practice mixing agro-processing factory in this area. This
might cause an adverse effect on the already designed infrastructures and will cost IPDC to make the
infrastructures to meet the newly emerging demands.
 The master plan of BLIP timeframe also indicated that constructed residential houses should become
functional starting from January 2020. However, there is no significant work undertaken to make
residential houses available for tenants and workers. To make the park more livable, preferable by tenants
and workers, IPDC should design flexible and dynamic real estate development scheme, such as working
with public real estate developers like Federal Housing Corporation, working with financial institutions,
inviting private real estate developers with sound incentives schemes etc.
 With regards to making Green - Smart Administration Building, the initiatives and some works that have
been taken by IPDC or the Park manager is in line with the recommendations given by EIPP. Since the
building is under the process of handing over to IPDC from the contractor, still a number of works have
been left to make the building green and smart. Therefore, IPDC should give special emphasis and search
finance to make the Administration building aesthetically nice, environmentally friendly, safe, inclusive,
20
conducive for both clients and workers through making the building green and smart.
 The EIPP team put priority for clients who seek OSS services using accessibility, functional integration
and inclusiveness while making the layouts of the ground floor and first floor of the Administration
Building. However, there are slight modifications on the layouts of the two floors by addressing the
financial needs of the park and functional integration. This might have an adverse effect on customers
satisfaction in the long run. To make the main OSS services accessible and the building become inclusive
to all, the receptionists should cover the basic works electronically on the ground floor and the elevator
should work 24/7 as well as there should be one dedicated elevator for the person with a disability.
 As for entire direction of IPDC’s tasks, it is necessary to put more efforts on the tenant attraction rather
than IP development, which is necessary to consider local tenant in addition to FDI, as well as hybrid
development as for residential area or satellite city for the IPs which are located far from the existing
city center.
The trend to start from industrialization and to move into industrial city development is not rarely found
around the world, which is Japan also have similar movement as below:
1974-2004 Japan Regional Development Corp. (JRDC)

Similar to IPDC, which was established to develop IP for the regional economic
development.
1955-2004 Japan Housing Development Corp. (JHDC)

It is similar to Addis Ababa Housing Agency (AAHA) but nationwide, and was established
to develop affordable housing for the low-income people.
In 1981, it was transformed to Housing and Urban Development Corp. (HUDC). It aims
to develop the township (city/urban), which consists of housing, infrastructures and other
necessary functions such as commercial.
2004-now Urban Renaissance Agency

JRDC and HUDC were merged, aiming to restructure the developed IP and Township
based on the social trend (e.g. age of citizen, economic trend which was moved from
manufacturing to services).
21
Annex: 3D Design Result for OSS Office Layout in the BLIP-II Administration Building
a) BLIP-II Administration Building Appearance Image
Main Entrance
22
b) Ground Floor
Oromia Cooperative Bank
Daycare Center
Awash Bank
Logistics
Security system
Commercial Bank of Ethiopia
Supermarket
Cafeteria
23
c) First Floor
D/Manager
Main OSS Offices
Finance Department
Infrastructure Department
D/Manager Custom Office
EIC Office
Park Manager
Display Room
Conference Hall
Think Thank Group Room
24
Ethiopia Industrial Promotion Project
(Investment Promotion and Industrial Park Development)
Second Phase
Final Report
April 2022
JAPAN INTERNATIONAL COOPERATION AGENCY

(JICA)
NIPPON KOEI CO., LTD.

MINTECH CONSULTANTS INC.
JIN CORPORATION
Table of Contents
1 EXECUTIVE SUMMARY...................................................................................................1
1.1 Support to IPDC for Improved Operational and Technical Skills ...................................................... 1
1.2 Support to EIC for Improved Operational and Technical Skills .........................................................1
1.3 Issues on Project Implementation ...................................................................................................1
1.3.1 Issues on Support for EIC ...........................................................................................................1
1.3.2 Issues on Support for IPDC ........................................................................................................ 2
2 OVERVIEW ......................................................................................................................... 3
3 WORK PROGRESS FROM OCTOBER 2019 TO MARCH 2022 ............................. 5

3.1 Inception Report Preparation and Explanation ............................................................................... 5
3.2 Support to IPDC for Improved Operational and Technical Skills ...................................................... 5
3.2.1 Technical support to Bole Lemi Industrial Park (BLIP) Development Plan ................................ 5
3.2.2 Support to financial sustainability through effective use of IPDC’s existing assets .................. 6
3.2.3 Recommendation on profit-generating business for BLIP ........................................................ 8
3.3 Support to EIC for Improved Operational and Technical Skills .........................................................9
3.3.1 Support on the Regulatory Framework for Industrial Parks (IPs) ..............................................9
3.3.2 Support on the Export Gap Analysis in Industrial Parks (IPs) .................................................... 9
3.4 Support to One Stop Service (OSS) Operations at BLIP ..................................................................10
4 ISSUES ON PROJECT IMPLEMENTATION ............................................................... 11

4.1 Issues on Support for EIC ...............................................................................................................11
4.2 Issues on Support for IPDC ............................................................................................................ 12
4.3 Impact of COVID-19 on Project Implementation ........................................................................... 12
4.4 Impact of National Security on Project Implementation ............................................................... 13
Attachments
1. Minutes of Meetings
・ 1.1. Online meeting with EIC (Deputy Commissioner, Principal Advisor of Commissioner, Chief of
Staff) and JICA (HQ/Ethiopia Office)
・ 1.2 Online meeting with EIC (Commissioner, Principal Advisor to Commissioner, Chief of Staff), JICA
(HQ/Ethiopia Office) and Policy Dialogue Project
・ 1.3 Online meeting with IPDC (CEO, Special Advisor to CEO) and JICA (HQ/Ethiopia Office)
・ 1.4 Online meeting with IPDC (Chief of Staff)
・ 1.5 Online meeting with EIC (Deputy Commissioner, Chief of Staff)
2. Others
・ 2-1: Inception Report
・ 2-2: Mixed Residential Area Design Guideline for Bole Lemi Smart Industrial City
・ 2-3: Green-Smart Building
・ 2-4: ICT Park Development Guideline

・ 2-5: To Transfer E-waste Management Facility from CRTC to IPDC
・ 2-6: The Role of the ICT Park in Digital Transformation Strategic Framework and Implementation
Roadmap
・ 2-7: Industrial Park Oriented Entertainment Center
・ 2-8: “Welosefer” High-density Mixed-Use Building Project, A Technical Proposal
・ 2-9: Center of Excellence for Eco Industrial Development
・ 2-10: Road-Map to Set-up Center of Excellence
・ 2-11: Local Companies: Challenges and Supporting Framework For The Industrial Parks
・ 2-12: Preliminary Study on Suitable Site Identification for Logistic Parks
・ 2-13: ICT Park Land and Property Valuation
・ 2-14: Regulatory Framework for Industrial Parks
・ 2-15 Report on Export Gap Analysis
・ 2-16: Report On Fact-Finding Survey on OSS Service Providers at BLIP

Abbreviations
BLSIC Bole Lemi Smart Industrial City
CoE Center of Excellence
COVID-19 Coronavirus
CRTC Computer Refurbishing and Training Center
DMF De-manufacturing Facility
HQ Headquarters
ICT Information and Communication Technology
IP Industrial Park
IPS Industrial Project Services
JCC Joint Coordinating Committee
JICA Japan International Cooperation Agency
MINT Ministry of Innovation and Technology
NDA Non-disclosure Agreement
O&M Operation and Management
OSS One-Stop Service
1 Executive Summary
EIPP has been conducted since February 2017 until May 2019 for Phase-1 and
continued for Phase-2 from October 2019 until May 2022. The activities for
Phase-2 are summarized below.
1.1 Support to IPDC for Improved Operational and Technical Skills
As continuous support to IPDC in Phase 1, EIPP conducted the following activities.
（1） Technical support to Bole Lemi Industrial Park (BLIP) Development Plan
a) Finalization of Bole Lemi Smart Industrial City (BLSIC) Development
Plan
b) Formulation of development standards, etc. related to ICT Park
c) Examination and proposal of the role that ICT Park will play toward the
realization of Digital Ethiopia 2025
（2） Support in the area of financial sustainability through effective use of IPDC’s
existing assets
a) Support to IPDC on drafting of business plan for use of existing assets
through private sector
Asset Utilization of Gaizo Area
Utilization of Administration offices BLIP-1
b) Support for processes and procedures of solicitation for private sector
initiatives (preparation of application/tender documents for public use of
public land)
c) Formulation of Logistics Park Implementation Strategy
（3） Recommendation on profit-generating business for BLIP
a) Confirmation of profit-and-loss balance and recommendation to BLIP
（4） Support to One Stop Service (OSS) Operations at BLIP
1.2 Support to EIC for Improved Operational and Technical Skills
Based on the request from EIC and discussion with EIC in August 2020, EIPP engaged
in the following tasks.
（1） Support on the Regulatory Framework for Industrial Parks (IPs)
（2） Support using Export Gap Analysis in Industrial Parks (IPs)
1.3 Issues on Project Implementation
1.3.1 Issues on Support for EIC
At the JCC meeting held just prior to the end of the previous phase, EIC side
stated that in considering the request for the next phase, it was necessary to
1
check the results and achievement to the project inputs (including monetary
amount) and evaluate the performance. Therefore, since the start of this phase,
support to EIC was temporarily suspended until the replacement of EIC
Commissioner in June 2020.
Since the global outbreak of COVID-19 in early 2020, JICA project personnel
had been restricted from traveling to Ethiopia and work had to be conducted
remotely. In August 2020, EIC, JICA, and EIPP discussed and agreed on the
details of support to EIC, and EIPP resumed its support activities to EIC.
However, travel restrictions had been long lasted due to the general election in
August 2021 and the security concerns in the country later that year; this
affected the efficiency of work, but EIPP conducted operations through the use
of online tools and national staff. In August 2021, a new request for assistance
was made by EIC, but in addition to the difficulties in local coordination due to
travel restrictions as mentioned above, a state of emergency was declared
throughout Ethiopia in early November of the same year, causing all JICA
personnel to evacuate the country. This affected responses and actions by EIPP
and JICA, since it was quite difficult to consult and coordinate with EIC on the
ground.
1.3.2 Issues on Support for IPDC

In the initial stage, IPDC followed a similar cooperation structure to that in
Phase-1 which was output-based. However, they requested dispatch of experts
under the direct management of IPDC. Such cooperation structure did not
match with JICA’s scheme, and the support to IPDC became limited.
In addition to the above issues, COVID-19 and security concerns at national level had
great impact on project implementation, particularly regarding travel restriction to
Ethiopia. Although the Project is making best efforts to use different modes of
communication such as online meeting tools (e.g. MS-Teams, zoom, etc.), e-mails,
skype, etc., it was not as effective as face-to-face discussion with counterpart officials
from remote areas, particularly on technical issues, etc.
2
2 Overview
At the last Joint Coordinating Committee (JCC) meeting of the previous phase
in March 2019, EIC Deputy Commissioner mentioned that EIC will first assess
EIPP’s performance (including monetary amount) before considering its
request for the second Phase. For this reason, the second Phase was launched in
October 2020 with main support to IPDC, while waiting for EIC’s decisions.
Soon after the year 2020 started, COVID-19 spread globally. In March 2020,
JICA announced the suspension of travel by JICA related persons, and the
Japanese experts of EIPP had to conduct activities remotely in close
communication with their national staff. The Activity plan also had to be
reviewed with consideration of the impact that COVID-19 had.
In mid-2020, due to change in top management of both EIC and IPDC, EIPP
reopened official communication with EIC and IPDC. EIPP supported Export
gap analysis and Industrial Park regulatory framework to EIC based on their
request, while it continued supports to IPDC.
(1) EIC
EIPP arranged the first online meeting with EIC and JICA (HQ/Ethiopia
Office) on 4 August 2020. At the kick-off meeting, areas for support were
requested by EIC (refer to Attachment 1-1 for meeting minutes). Based on
the requests, EIPP consulted JICA on the proposed scope of support for
EIC. The Project also coordinated with another JICA project: i.e. Policy
Dialogue, so the support by two projects do not overlap. Through a series
of consultations with JICA and follow-up with EIC by EIPP national staff
on the ground, the second online meeting was organized with EIC, JICA
(HQ/Ethiopia Office) and Policy Dialogue team on 11 November 2020,
and it was agreed that EIPP would supports EIC on regulatory framework
for industrial parks and export gap analysis in industrial parks (refer to
Attachment 1-2 for meeting minutes).
(2) IPDC
EIPP organized the online meeting with IPDC and JICA (HQ/Ethiopia
Office) on 11 August 2020 (refer to Attachment 1-3 for meeting minutes).
At the first introductory meeting with the new CEO, IPDC expressed
areas of needs for support by EIPP. EIPP consulted JICA on IPDC’s
requests, and some follow-up was made by EIPP national staff on the
ground. After a series of consultations with JICA, EIPP compiled the
proposed areas for collaborations, and it was submitted to IPDC on 9
November 2020. The proposed collaboration areas include the followings:
3
 Development Plan: Bole Lemi Smart Industrial City (BLSIC), ICT
Park, environmental and green frameworks for industrial parks,
residential and commercial area within BLSIC;
 Business Development: recommendations to IPDC on effective use
of IPDC’s existing asset (lands) and profit-oriented business plan
through land valuation and price setting, presentation to potential
tenants on ICT Park;
 Capacity Building for IPDC staff: Recommendation on plan to
establish a training center (Center of Excellence: CoE), by using old
administration building in BLIP.
EIPP undertook the tasks for EIC soon after the above areas of support were
agreed. As for IPDC, there have been some challenges in project operations,
and in January 2021, it was decided that EIPP’s support to IPDC would be
suspended except for ongoing tasks as mentioned above. Details on this issue
will be explained in 4.2.
4
3 Work Progress from October 2019 to March 2022
3.1 Inception Report Preparation and Explanation
Inception Report was prepared and submitted to JICA-HQ, JICA Ethiopia
Office for approval. On 24 October 2019, EIPP presented it to IPDC and
explained the planned activities during the Phase-2 (refer to Attachment 2-1).
3.2 Support to IPDC for Improved Operational and Technical Skills

3.2.1 Technical support to Bole Lemi Industrial Park (BLIP) Development Plan
a) Finalization of Bole Lemi Smart Industrial City (BLSIC) Development
Plan
Bole Lemi Smart Industrial City (BLSIC) Master Plan was finalized,
printed and submitted to IPDC. Later EIPP revised the document with more
clarification on construction cost of ICT Park, and reflected it in the
Executive Summary.
Originally the above BLSIC addressed a plan for sustainable development
of housing units in BLIP, but IPDC was also willing to apply this idea to
other industrial parks in the country. Therefore, EIPP supported IPDC in
making a housing development guideline with more focus on process and
procedures at design and building stages, in light of COVID-19 situation.
Draft report was submitted to IPDC in August 2020, and after reflecting
comments from relevant departments such as Housing Department and
Master Plan Department, the document of “Mixed Residential Area Design
Guideline for Bole Lemi Smart Industrial City (Housing Guideline)” was
finalized and submitted to IPDC in August, 2021 (refer to Attachment 2-2).
In addition, it took into consideration the environmental friendly,
introduction of a green-smart building also recommended for the
administration building (refer to Attachment 2-3).
b) Formulation of development standards, etc. related to ICT Park
Formally known as “Ethio ICT Village”, ICT Park was established in 2010
with the intention of making Ethiopia a premier ICT hub in Africa. It was
originally under the Ministry of Innovation and Technology (MINT)1, but
was transferred to IPDC. EIPP supported IPDC in documentation of ICT
Park Strategic Plan and its implementation guideline. EIPP visited ICT
Park and discussed with ICT Park Manager, and submitted ICT
Development Guideline (refer to Attachment 2-4). During the data
collection, the Project team faced some challenges in obtaining information
from relevant stakeholders due to confidentiality issues, etc. After
1
Former Ministry of Communication and Information Technology (MCIT)
5
conducting a literature review, EIPP considered business schemes for ICT.
stakeholder analysis from the viewpoint of ICT Park operation. At that time
the government was engaged in developing “Digital Ethiopia 2025” under
the initiative of Prime Minister’s office, and different institutions were
involved; e.g. MINT, EIC, Ethio-telecom, etc. Therefore, EIPP tried to
align the ICT Park Strategic Plan with “Digital Ethiopia 2025”, as well as
“Home Grown Economic Reform Agenda”, in close coordination with the
relevant organizations.
Regarding ICT-related issue, EIPP studied pros and cons of integrating
Computer Refurbishing and Training Center (CRTC) into IPDC’s mandate.
CRTC is a government-owned center and had been under different
government agencies. EIPP first studied the current status of CRTC-DMF
(De-manufacturing Facility), and its potential, contribution and prospects
for e-waste management in Ethiopia, in particular at industrial parks. EIPP
team then made comparative analysis of formal e-waste management for
environmental benefits, and identified the financial benefits of e-waste
recycling industry. Results of the above were compiled and submitted To
Transfer E-waste Management Facility from CRTC to IPDC (refer to
Attachment 2-5).
c) Examination and proposal of the role that ICT Park will play toward the
realization of Digital Ethiopia 2025
For the purpose of promoting the realization of ICT parks, EIPP reviewed
“Digital Ethiopia 2025” and considered the proposed role of ICT Park in its
implementation. As a result of the review, EIPP suggested that the ICT
Park should particularly play the roles described in Pathways 2 and 3
among the following four pillars listed in Digital Ethiopia 2025.
Pathway 1: Unleashing Value from Agriculture
Pathway 2: The Next Version of Global Value Chains in Manufacturing
Pathway 3: Building the IT Enabled Services Sector
Pathway 4: Digital as the Driver of Tourism Competitiveness
Upon request from IPDC, EIPP prepared ICT Park Strategic Plan, which
identifies focus areas for ICT Park-related business. The team coordinated
with EIC and MINT to merge their document and align with goals,
objectives, and action plans. EIPP finalized and submitted to IPDC “the
Role of the ICT Park in Digital Transformation (ICT Park Strategic Plan)”
in April 2021 (refer to Attachment 2-6).
3.2.2 Support to financial sustainability through effective use of IPDC’s existing

assets
a) Support to IPDC on drafting of business plan for use of existing assets
through private sector
6
Asset Utilization of Gaizo Area
IPDC sought to make optimal use of their land which is not fully utilized,
so as to generate revenue and create linkage with the industry. IPDC
requested EIPP to conduct a feasibility study on Gaizo area which is
located around Addisu Gebeya, northern part of Addis Ababa. EIPP drafted
a business plan which contains (1) appropriate land use to optimize revenue
for IPDC; (2) viable project/business activities that meet both private
investors’ and IPDC’s interests; (3) proposed business model for
development and implementation of identified projects, and; (4) proposed
lifestyle-based commercial area to attract local population in neighborhood.
The presentation on GAIZO2 Project was made on 25 October 2019 and it
was approved by IPDC senior officials. The document was drafted and
submitted to IPDC in December 2019. The document was discussed among
the working group and presented to IPDC management board for their
approval several times, and it was completed by October 2020 (refer to
Attachment 2-7).
Although this business plan is particularly for Gaizo area, IPDC had the
intention to apply this to its other assets by adjusting it to each case.
Regarding the project area, there is an issue of title deed and IPDC was in
the process of securing the land under its entitlement. In addition to the
Gaizo area project, EIPP also compiled preliminary proposal for
“Welosefer” High-density Mixed-Use Building Project (refer to
Attachment 2-8).
Utilization of Administration offices BLIP-1
The new administration office building was constructed in BLIP, and IPDC
considered the use of current administration offices at BLIP-1 once the new
office is operational. EIPP supported IPDC formulating business plan for
Training Center in BLIP-13. With ultimate goal to accelerate
industrialization in Ethiopia, Center of Excellence (CoE) was designed with
the objective of training program development, infrastructure design,
human resource development and revenue generation for IPDC. EIPP
submitted to IPDC the Center of Excellence for Eco Industrial
Development report in January 2020 (refer to Attachment 2-9), and “Road-
map to set up Center of Excellence” in March 2021 (refer to Attachment 2-
10). The Project team also worked on the component of training program
with IPDC and Industrial Project Services (IPS), which is mandated to
provide training programs under IPDC.
Support Framework for Local Tenant Companies in Industrial Parks
2
It was later renamed to “Industrial Park Oriented Entertainment Center” upon request from IPDC.
3
It was later renamed to “Center of Excellence (CoE) Project” upon request from IPDC.
7
D/CEO of IPDC (IP Operation and Management) requested EIPP to
propose how to support private local companies in industrial parks, by
introducing international good practices. Upon his request, EIPP conducted
interviews with local private companies in Kilinto, Adama industrial parks
in April 2021, followed by in Addis Industry Village in September 2021 to
identify challenges faced in their operation. Based on the results of the
interviews, EIPP assessed major challenges and compiled
recommendations for support framework for local tenant companies. After
having a series of consultations with and receiving comments from IPDC,
EIPP finalized and submitted to IPDC the document of “Local Companies:
Challenges and Supporting Framework for Industrial Parks” in November
2021 (refer to Attachment 2-11).
b) Support for processes and procedures of solicitation for private sector
initiatives (preparation of application/tender documents for public use of
public land)
EIPP is supposed to continue its support to develop necessary bidding
document on Gaizo project as soon as the land ownership issue in Gaizo
area is solved. Meanwhile, information on similar projects regarding
information on private use of public land was collected as for the reference.
As of this report, the status of the land ownership issue is not yet confirmed.
c) Formulation of Logistics Park Implementation Strategy
EIPP studied potential areas for logistics parks along the Eastern corridor
toward Djibouti. Among the candidate areas identified by IPDC, EIPP
reported on five potential places (i.e. Sebeta, Indode, Modjo, Adama and
Dire Dawa) (refer to Attachment 2-12).
3.2.3 Recommendation on profit-generating business for BLIP

a) Confirmation of profit-and-loss balance and recommendation to BLIP
EIPP drafted an Excel-based estimation tool for forecasting future income
and expenditure of BLIP I and II. The draft format was presented to Deputy
CEO for IP Operation and Management, and it was generally approved.
Non-Disclosure Agreement (NDA) was signed between IPDC and EIPP for
access to classified information. The Project team obtained necessary
information such as recent annual financial report, agreement on rental
factory, construction costs, etc.
Meanwhile, IPDC was in urgent need of land valuation and pricing strategy,
particularly for ICT Park in BLIP area. Therefore, EIPP conducted site
visits to assess land value of existing infrastructure, and collected necessary
data such as costs of infrastructure, construction and operation, to analyze
the cash flow of IPDC. EIPP created and submitted to IPDC the document
8
of “ICT Park Land and Property Valuation” in April 2021. EIPP made a
presentation to IPDC in May 2021 and received additional comments from
IPDC. The team incorporated them and submitted the updated document in
June 2021 (refer to Attachment 2-13). As follow-ups of this document,
EIPP had a briefing session to IPDC team in July 2021 on how to use the
excel format for cash flow analysis, which is attached to the document. The
Project also made presentations to ICT Park managers and staff in October,
and to ICT Park companies in November 2021.
3.3 Support to EIC for Improved Operational and Technical Skills

3.3.1 Support on the Regulatory Framework for Industrial Parks (IPs)
For EIC as the regulator of industrial parks, it is an urgent task to establish and
strengthen the implementation structure of unified regulatory oversight into
public and private industrial parks in Ethiopia. Besides, capacity development
of EIC staff and information sharing on regulatory oversight are other urgent
issues. Given this, during the online meeting between EIC, JICA and EIPP in
August 2020, EIC requested EIPP to assess the current status of regulatory
oversight and make recommendations for improvement, from the economic
(production, export), social (employment, productivity) and environmental
(water and sanitation, solid waste management) viewpoints.
EIPP presented to EIC the draft of contents in August 2021 and both sides
discussed the way forward. The framework was proposed based on the result
of export gap analysis (Attachment 2-14).
3.3.2 Support on the Export Gap Analysis in Industrial Parks (IPs)
Under the influence of COVID-19, export value of public and private industrial
parks in Ethiopia has been lower than the policy target set by the government.
In this context, EIC requested EIPP to conduct a survey to find root causes of
the export gap and recommend how to address such challenges faced by tenant
companies. The export gap between target value and actual value was
recognized even before outbreak of COVID-19. Therefore, EIPP analyzed
challenges both before and after COVID-19, and compiled recommendations.
EIPP created questionnaires for tenant companies and finalized them after
incorporating inputs from EIC. Between end December 2020 and March 2021,
the Project conducted interviews to tenant companies in Bole Lemi Industrial
Park, Hawassa Industrial Parks, Kombolcha Industrial Park, George Shoe
Industrial Park, Dire Dawa Industrial Park, Eastern Industrial Park. During the
interview survey, EIPP faced challenges in that some meetings had to be
rearranged due to the schedule of tenant companies. Once the interviews were
completed, EIPP compiled the results and presented the progress and outcomes
of the analysis to EIC Deputy Commissioner (Industrial Parks). EIPP team also
discussed this issue with JICA (HQ/Ethiopia Office) and the Policy Dialogue
9
team, including the way forward. After the above consultations, EIPP produced
a report and submitted the final document to EIC (Attachment 2-15).
3.4 Support to One Stop Service (OSS) Operations at BLIP

At the early stage of the project implementation, EIPP confirmed with BLIP
Manager of BLIP the status of operation and management (O&M) at BLIP and
how the service is delivered to tenant companies. It was observed that BLIP
branch office was coordinating with relevant OSS-related officials to quickly
address tenants’ complaints, yet the report line and mode of communication
were more on an individual basis than through systematized approach.
In June 2020 EIPP confirmed the updated implementation status of OSS
services, and estimated that full-scale operation may not start very soon at
BLIP-II given the development progress of the area. EIPP finalized and
submitted to EIC the “Report On Fact-Finding Survey on OSS Service
Providers at BLIP” (refer to Attachment 2-16).
10
4 Issues on Project Implementation
There are some issues for implementing this project as follows.
4.1 Issues on Support for EIC

In the export gap analysis, EIPP identified the causes of lower export value
against the policy target and challenges faced by the tenant companies, to make
recommendations to EIC on the countermeasures. Among common challenges
indicated by tenant companies during the interview, foreign currency, customs
and logistics are long-lasting problems for the companies even before COVID-
19 pandemic. These issues are very much related to Ethiopia’s industrial policy,
which requires discussion and review at policy-making level, not merely
addressed by EIC. During this survey, EIC made additional request to include
value-added rate in the analysis. Government of Ethiopia imposes 30% of
value-added rate, and EIC thought it necessary to verify if this figure is
appropriate. EIPP’s view on this is that the value-added rate is unfit for the
purpose of analyzing export gap, for two reasons: (1) acquiring data from
companies is highly difficult since it includes classified information such as
financial data, and; (2) even such information was obtained, it is difficult to
assure its credibility.
Regarding regulatory framework for industrial parks, as partly stated on export
gap analysis, monthly monitoring of export value and frequent request for
financial information to calculate the value-added rate may put pressure or
burden to tenant companies. Currently in Ethiopia, policies on industrial parks
focus on export-oriented garment and textile industry. However, Ethiopia as
landlocked country has less advantage in logistics than other countries with
ports, and COVID-19 pandemic had severe impact on domestic manufacturing
due to suspended orders from Europe and the United States. Given this, it is
necessary to put more efforts on import-substitution manufacturing in response
to domestic demands or market needs in neighboring countries. This cannot be
solved at industrial park level; this would rather require a review of industrial
policy by the Ethiopian government.
For project operation, there were some communication/coordination issues
with EIC due to long-lasting travel restriction against Japanese experts. As
commonly seen in export gap analysis and regulatory frameworks for industrial
parks, it took time to set up a meeting with EIC to report progress of activities,
and to receive comments from EIC on reports. This is also partly caused by the
fact that EIC officials are too busy to be reached.
In August 2021, EIC sent request for additional support. EIPP presented its
opinion to JICA on 11 September, and consulted JICA (HQ/Ethiopia Office)
on 22 September. It took time to arrange the schedule of both sides, but EIPP
11
finally explained the response to EIC’s Deputy Commissioner for Industrial
Parks on 9 November, and the written form was attached to the November
monthly report (refer to Attachment 2-17).
4.2 Issues on Support for IPDC

At the inception of Phase-2, EIPP’s main counterpart had been IPDC. After the
CEO of IPDC was replaced in July 2020, JICA, IPDC and EIPP held an online
meeting on 11 August, and it was agreed that EIPP would continue its support
to IPDC. Then upon request by IPDC, EIPP made a list of possible support
actions in consultation with JICA, and submitted it to IPDC.
Under the new direction made by the CEO, however, IPDC’s request has been
shifted from technical assistance to transfer of EIPP’s national staff to IPDC. A
transformation team was formed within IPDC soon after the new CEO came
into office. This team was intended to consider strategic direction of IPDC
business, and IPDC requested EIPP to dispatch its national staff and
consultants to the team. Under the project scheme of JICA’s technical support,
EIPP is responsible for quality assurance of deliverables to the Ethiopian
counterpart. For this reason, it is difficult to transfer its national staff to IPDC
unlike other development partners that provide financial support for human
resources, in the context of scope of work, responsibility and quality control.
On 26 January, 2021, IPDC sent a letter to JICA that it decided to dissolve
ongoing temporary projects with JICA. As a result of this, EIPP relocated its
project office from IPDC to private rental office.
In the context of business operation, IPDC as the corporation is required to
pursue profitability, in order to sustain industrial parks development and
operations. IPDC needs to recover huge invested loan amount for development
of industrial parks.
4.3 Impact of COVID-19 on Project Implementation

Since early 2020, COVID-19 started spreading across the world, and in March
2020 JICA announced the suspension of travel by JICA related persons. Since
then the Japanese members of EIPP have been conducting activities remotely,
in close communication with their national staff. Since COVID-19 may affect
an entire activity plan, it was required to closely monitor the situation and
respond to any issues and challenges in a flexible manner, in consultation with
JICA and the Ethiopian counterparts. Another challenge in remote operation is
communication: although the Project is making best efforts to use different
modes of communication such as online meeting tools (e.g. MS-Teams, zoom,
etc.), e-mails, skype, etc., it was not as efficient as face-to-face to discuss with
counterpart officials remotely, particularly on technical issues, etc. To address
this, the role of EIPP’s national staff is crucial to coordinate between the
12
counterparts, by making necessary follow-up on the ground. Although the
travel restriction was lifted in January 2021, there were travel restrictions later
in relation to national security, as discussed below in 4.4, and EIPP continued
to face challenges in remote operation.
4.4 Impact of Security Concerns at National Level on Project Implementation

In addition to COVID-19 above in 4.3, issues of security concerns have
impacted travel plans by Japanese experts. Travel to Ethiopia was restricted
from 5 May to 21 July 2021 for the general election, and from 2 November
2021 to early February 2022 during the state of emergency. Particularly the
travel ban since November 2021 had significant impact on project
implementation. According to the Record of Discussion (R/D) between JICA
and Ethiopian counterparts, the project activities of EIPP were originally
scheduled until the end of January 2022. However, since all JICA personnel
evacuated when the state of emergency was announced on 2 November 2021,
consultations between EIC and JICA on extension have been difficult to be
arranged. In February 2022 JICA personnel have resumed activities in Ethiopia,
and in mid-March minutes of meeting on extension of R/D has been signed.
With this enabled Japanese experts to travel to Ethiopia during the project
implementation period.
13
Joint Coordinating
Committe e (JCC)
Ethiopian Industial
Promotion Project
(JICA-EIPP)
Second Phase
Ma y 2 0 2 2
EIPP
2
Ethiopia Industrial Promotion Project
Investment Promotion and Industrial Park Development
OUTLINE
I. Background
II. Activities of Phase II
(Oct. 2019-May 2022)
III. Issues on Project Implementation and
Modalities to Address the Issues
IV. Way Forward towards Industrial Promotion
3
Background
I. Background
▪ JICA-EIPPstarted operation in February 2017with the aim

of providing technical support for the realization of
sectoral transformation through accelerating
industrialization in Ethiopia.
▪ The JICA-EIPPhas two Phases:
a) Phase-I: February2017to May2019
b) Phase-II: October 2019to May2022
▪ This presentation focused on Phase-II.
5
Actitivies of Phase II
(Oct. 2019– May 2022)
(Oct. 2019– May 2022)
Category Title Activities
Assessed the export performance of
companies from all Industrial Parks (IPs)
Export Gap Analysis
after the COVID-19 pandemic, and identified
Study challenges faced by IP enterprises
Industrial Park Proposed the implementation methodology
Regulatory Framework of the regulatory works
Prepared a strategic plan that proposed the
Planning ICT Park Strategic Plan ICT Park plays a key role for digital
transformation (DIGITAL ETHIOPIA 2025)
Mixed Residential Area Prepared a mixed residential area plan
Development Design Guideline including housing development guideline
Guidelines/ Proposed how to implement the green-smart
Green-Smart Building 7
Standards building in the new Administration Building at
Guideline
BLIP
(Oct. 2019– May 2022)
Category Title Activities
A Proposal to transfer E-waste Proposed different alternatives to
management facility from CRTC transfer E-waste management facility
to IPDC from CRTC to IPDC
Preliminary Study on Suitable
Identified potential sites and proposed
Site Identification for Logistics
key functions for logistics parks
Parks
Business Center of Excellence for Eco- Conducted a feasibility study to
Development Industrial Development establish a Center of Excellence
Developed a road-map to set-up Center
Road-Map to Set- up Center of
of Excellence by utilizing old
Excellence
Administration Building at BLIP
Technical proposal on
Conducted a feasibility study to develop 8
“Welosefer” for Mixed-Use
mixed use building inWelosefer area
Building Project
Support to EIC
Export Gap Analysis in Industrial Parks
Survey: conducted from end of December 2020 to March 2021;
53 companies in 8 Industrial Parks were interviewed .
Major reasons for the gap of export performances against target values:
(1) delayed supply of raw materials;
(2) order decrease;
(3) customs problem;
(4) shipping insufficient operation;
(5) infrastructure problem;
(6) labor problem;
(7) problem of bank process and procedures;
(8) foreign currency shortage; and
9
(9) the impact of COVID-19.
Support to EIC
Export Gap Analysis in Industrial Parks (cont.)
Suggestions to increase exports from IPs:
(1) improve the operation of IPs and recover export gap of the tenant
companies;
(2) provide housing facilities to workers in cooperation with relevant
government agencies or through PPP;
(3) improve image of working environment of manufacturing in the IPs in
cooperation with regional government, parents of potential workers
and their school teachers;
(4) regular monitoring of infrastructure facilities and immediate
responses to any infrastructure -related problems;
(5) attract both export and import substitutions;
(6) promote phased development of IPs to avoid over supply;
10
(7) encourage diverse industries in IPs; and
(8) allow investors to choose in IPs.
Support to EIC
Regulatory Framework for Industrial Parks
Suggested regulatory work to be implemented from three perspectives:
(1) Economy-based regulatory work for better production and export
performance, and facilitating the knowledge and skills transfer to
Ethiopians;
(2) Social-based regulatory work for labor issues, follow -up of the
tripartite committee (labor association, MoLSAand IP developer/IP
enterprise); and
(3) Environment -based regulatory work for waste and pollution issues in
IPs.
11
Support to EIC
Regulatory Framework for Industrial Parks (cont.)
Work done by EIPP:
(1) Examined applicable laws and regulations for each item of regulatory
work;
(2) Determined necessary process and procedures of the above item; and
(3) Created survey sheets for interview with and data collection from IP
enterprises, to assess the current conditions of the above items.
Compiled recommendations:
a. Regulatory and incentives must be the couple as the tools to create
favorable investment climate.
b. If regulatory framework becomes more controlling/restricting against
investors, compare with current condition, it will be less attractive for
them to invest in Ethiopia.
12
c. Therefore, it is suggested to consider/increase the incentives, instead of
placing the strict regulatory.
Support to IPDC
Bole Lemi Industrial Park (BLIP) Development Plan
(1) Finalization of Bole Lemi Smart Industrial City

(BLSIC) Development Plan;
(2) Formulation of development standards and
related documents for ICT Park;
(3) Examination and proposal of the role that ICT Park
plays toward the realization of digital
transformation, as indicated in “Digital Ethiopia
2025” 13
Support to IPDC
Financial Sustainability through effective use of IPDC’s
existing assets
(1) Drafting of business plan for use of existing assets

through private sector; Gaizoarea, administration
offices at BLIP-I, support framework for local
tenant companies in Industrial Parks
(2) Support for processes and procedures of
solicitation for private sector initiatives
(3) Formulation of Logistics Park Implementation 14
Strategy
Support to IPDC
3. Recommendation on profit -generating business for
BLSIC (BLIP+ICT Park)
 Confirmation of profit -and-loss balance and
recommendation to BLIP
 Land valuation and price setting (land lease/rent,
service fees, etc.) for ICT Park
15
Issues on Project
Implementation and Modalities
to Address the Issues
III. Issues / Challenges on Project
Implementation and countermeasures
Issues / Challenges Countermeasures
1. Remote operations due to 1. (a) Utilization of online
travel restrictions to meeting tools (MS-
Ethiopia, caused by: Teams, Zoom) and on-
 Outbreak of COVID-19 time communication
 National State of Emergency tools (Skype, Telegram)
2. Request from IPDC on 1 .(b) Utilization of National
secondment of EIPP’s Experts
national staff, which did
2. Suspension of additional
not match with J ICA’s
support to IPDC, except for 17
scheme
ongoing activities
Way Forward towards
Industrial Promotion
Investment Climates in Ethiopia
1. Investment Climate in Ethiopia

Ø Logistics: land-locked country, exit from AGOA,customs
Ø Foreigncurrencyrestrictions
Ø Basic Infrastructure: electricity, water
2. Market changes due to the COVID-19
Ø Conversionfrom corporate to house/private consumption
 Promotionof local production for local consumption
3. Energy and materials challenges due to Ukraine Conflict
 Prices increase, especially on the fuel which bring the big
disadvantagefor land-locked countries 19
Way Forward towards Industrial Promotion
Necessaryto mitigate challenges faced by FDIto come to Ethiopia, by creating a
better investment climate, instead of regulating or limiting their business
opportunity .
NecessaryActions to be taken by EIC
1. Establishment of regulatory framework: initially it is necessary to confirm the
problems the investors face. Regulation should came after a sustainable
investment was secured for the investors.
2. Coordination among relevant agencies to;
a) improve the performance of relevant support industries;
b) secure appropriate and sustainable economic development from the
aspects of social, environmental and financial issues, and;
c) attract FDI. 20
Way Forward towards Industrial Promotion
Necessary Actions to be taken by the Government of Ethiopia
1. Utilization of domestic materials for domestic market to mitigate challenges
of logistics and foreign currency, through expansionof import substitution .
2. Expansion of foreign business opportunities in the manufacturing sector
through cooperation/business matching with local enterprises.
In order to promote industrialization, it is important to collaborate with related
organizations not only in manufacturing sector, but also in logistics, finance,
infrastructure, and other related sectors to provide support, and to considerate
social and environmental issues, including workers and pollution issues that are
indispensable.
“The Key to Success” lies in the government's vision and strong leadership to
address the current situation .
21
አመሰግናለው
Ameseginalew
Thank you
Arigato Gozaimasu
22

"Welosefer" High-Density Mixed-Use: Building Project

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"Welosefer" High-Density Mixed-Use: Building Project

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“WELOSEFER” HIGH-DENSITY

EIPP-JICA September 2020

✓ To explore appropriate land use function to optimize revenue for IPDC;

Existing land use Proposed land

- The project area is

The project area is very near

PPP is a good model for implementing public projects, combining

There are varieties of PPP models.The most known are:

Public contribution Private contribution

▪ Utility supply ▪ Management

 Principle of Adherence to Law: In the procedure of

 Despite the fact that the public partnership proclamation no

proclamation No. 1076/2018  Commercial Code

For Infrastructure Projects For Non-Infrastructure Projects

Legahar Housing Village project Total Area: 36 hectares

Lowest construction Cost Largest construction cost Average construction cost

Total Area 3,705.20

Total Project Cost 1,278,294,000.00 35,127,617.48 2,556,588,000.00 70,255,234.95 1,917,441,000.00 52,691,426.22

Source of Funds Advantage Disadvantage

- High interest rate

List of Table ............................................................................................................................................... v

List of Map ................................................................................................................................................ vi

Acronyms ................................................................................................................................................. vii

PART I: BACKGROUND ....................................................................................................................... 1

1.1 The Promoter ..................................................................................................... 1

1.2 The Business Plan Objective ................................................................................. 2

1.3 IPDC Values and Culture ....................................................................................... 2

1.4 Organizational Structure ........................................................................................ 2

PART II: Service Description, Rational, Location and Market Analysis................................. 4

2.1 Service Description ................................................................................................ 4

2.2 Rational of Developing The Center of Excellence .................................................. 4

2.3 Location of the Project Area ................................................................................... 6

2.4 Market Analysis ...................................................................................................... 6

2.4.1 Training Center Supply Analysis ...................................................................... 6

2.4.2 Demand Analysis ............................................................................................. 8

2.5 Service Fee Structure .......................................................................................... 12

2.6 Service Capacity and Programme ....................................................................... 14

2.6.1 Service Capacity ............................................................................................ 14

2.6.2 Training Programme ...................................................................................... 14

2.7 Service Process ................................................................................................... 15

2.7.1 Admission ...................................................................................................... 15

2.7.2 Thematic Areas of the Training ...................................................................... 15

2.7.3 Certification .................................................................................................... 16

2.8 Marketing Strategy & Competition ....................................................................... 16

PART III: Technical Study ................................................................................................................... 17

3.1 Infrastructure and service..................................................................................... 17

3.2 Development Concept.......................................................................................... 17

3.2.1 The Center of Excellence Physical Development .......................................... 17

3..2.2 Materials and Inputs .................................................................................... 19

3.2.3 Utilities ........................................................................................................... 20

3.2.4 Machinery and Equipment ............................................................................. 20

3.2.5 Land, Building and Civil Work ........................................................................ 21

3.3 Human Capital and Governance .......................................................................... 25

3.3.1 Human Capital and Training Requirement ..................................................... 25

3.3.2 Governance and Management Arrangement ................................................. 26

3.4 Scheduling ........................................................................................................... 29

3.5. Financial plan ...................................................................................................... 31

Part IV: Business Plan ......................................................................................................................... 32

4.1 General Construction Cost ................................................................................... 32

4.2 Source of Revenue for IPDC................................................................................ 34

4.3 Project Viability .................................................................................................... 34

4.3.1 Financial Viability ........................................................................................... 34

4.3.2 Sensitivity Analysis ........................................................................................ 36