Ministry of Industry Investment Opportunities In .../media/IE Singapore/Files/ASBF2016... ·...

Federal Democratic Republic of Ethiopia

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Ministry of Industry

Investment Opportunities In Manufacturing Sector In Ethiopia

Funding Agency

By Mebrahtu Meles (PhD)

State Minister


Presentation to AFRICA-SINGAPORE BUSINESS FORUM

24-25 AUGUST 2016


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1.Ethiopia at Glance

Ethiopia Land size:

• 1,140,331 sq. km

• World Rank 27th

• Africa Rank 8th

• 45%(513,000 sq.km of the Total Land) is arable

and suitable for Agricalture

• 10 million hactares of irrigable land(only

3% utilised)

• 18 major agro-ecological zones and 49

agro-ecologicalsub-zones

Population : 90 million+

• World Rank: 13th

• Africa Rank : 2nd

Ethiopia & Nigeria account for 25% oftotal African population.


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3Source: UNCTAD

Ethiopia is geographically well-positioned and accessible to wide & growing markets. Ethiopia

also enjoys Duty Free and Quota Free (DFQF) privilege extended by international

markets of USA(AGOA), EU(EBA), China, India, Japan & Korea. COMESA Market

about19 countries, 450 M Pop. Middle East and International markets

1.1 Geographic Location Advantage

South Africa

Source: UNCTAD


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1.2 The biggest Passenger & Cargo Airline in Africa >90 Destintion in z world

50 in Africa

No 1 Air Liner In Africa

EAL has Created Investment Opportunities in Perishable items like Flowers,

Fruits, Meat etc


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• Political ,Social and Macro-economic Stability

• Fast Economic Growth

• Good Governance & Attractive Investment Law

• Zero Tolerance for Corruption

• Lowest Crime Rate in Africa

• Commitment to Support Private Sector Development & FDI

• Competitive Incentive Packages

• Simple and Transparence Investment Approval Procedures

1.3 Major Important Facts about Ethiopia


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2. Macro-economic trends …

Consistently Outperformed Most other Countries

Source: IMF Economic Outlook


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Source: World Bank, NBE, Moody’s

3. Investment Opportunities …


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Some of Multinationals Operating in Ethiopia…

George’s Shoe CorporationShoemaker

Huajian


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Some of Multinationals Operating in Ethiopia…


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2. Macro-economic trends …

Trade is growing fast

Source: IMF Economic Outlook


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• No restrictions on equity ownership in joint venture investment with

domestic investors

• One incentive policy for domestic & foreign investors

• Generous incentive

o Income tax exemption (2 to 8 years)

o Exemption from the payment of customs duty

o Carry forward of losses: half of the tax holiday period

o Export Incentive Schemes: Duty Draw-Back scheme, Voucher

scheme, Bonded Manufacturing Warehouse scheme and Export

Credit Guarantee scheme

o Hand holding Support through the Sector Supporting Gov.

Institutes

Attractive Investment Policies and Incentives



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• Guarantee against expropriation or nationalization (Constitution &

Investment Law, MIGA & BITs)

• Full repatriation of profits, dividends, principal and interest payments on

external loans

• The right to employ expatriate experts and management staff

• Bilateral Investment Promotion & Protection Treaties with more than 30

countries

• Double taxation avoidance treaties with 18 countries

Cont…Attractive Investment Policies and Incentives



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Attractive Business Climate• Availability of inexpensive

skilled and semi-skilled

labor

Daily laborer ----

$2/day

Salaries of fresh

university

graduates ……

$100-200/month

English is the

medium of

instruction

Monthly wage in select African countriesPPP USD


90

3%

56%Age 15-64

Age 0-14 41%

Age 65+


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• Green, Clean & Low energy costs

o Massive renewable energy

infrastructure investments

undergoing in the country

to reach 10,000 MW in 2-3

years.

o Currently 2300 MW

already produced

o Now Started producing

1870 from Gillgil Gibe III

and 6000 MW from

Renaissance Dam in 2-3

years.52% is completed

o Besides Wind, Solar and

Geothermal Energy

sources projects are

under construction

o Total estimated potential

from all sources more than

1milion MW

Attractive Business Climate



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Massive investment in infrastructureBuilding 72,000 km of new roads(URRAP),

virtually all kebele administrations is

underway.39094 km i.e 55% is finished

Expressway linking Addis Ababa-Adama (key

to import-export) become operational

Construction of > 2300 km Railway line in

progress

More than 10,000 km Fiber Optics are

constructed.47 million mobile

subscribers.50%country coverage.


Addis-

Adam

Express

Way

Addis-Djubuti Rail Way Ready


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a) MANUFACTURING OPPORTUNITIES

1. Textiles & Garments/Apparel

2. Leather & Leather Products

3. Agro-processing,

4. Chemical and Construction

Material Products

5. Pharmaceutical Products

6. Metal Fabricated Products

7. Chemical and Construction

materials products

4. Priority Sectors


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b)AGRICULTURAL OPPORTUNITIES

• .

4. Priority Sectors

• 3 million hectaressuitable for cottonplantation

• Sugarcane plantation• Tea Plantation• Horticulture• Floriculture• Aquaculture• Rubber tree plantation• Fibre crops : Cotton,

jutes, etc


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Industrialization in Ethiopia

Funding Agency

Through development of Industrial Parks


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I. Background: Vision & Targets

Ethiopia aims to achieve Middle-Income Statusby 2025 while Developing CRGE

• Rapid Economic Growth - annually by 11% till2025

• Increased contribution of industrial sector toGDP: form 15% in 2015 to 28% by 2025

• Manufacturing (%GDP) - 5% (2015) to 18% (2025)

Leading country in light manufacturing sector inAfrica by 2025

https://www.google.it/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCPPB65yR5cgCFctWFAodPD4IOw&url=https://www.cernachha.co.uk/about-us/our-core-values/&bvm=bv.106130839,d.bGQ&psig=AFQjCNFx0T1yxPZticUYy-uw4O6Q_Bag2Q&ust=1446120604187636

https://www.google.it/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCPPB65yR5cgCFctWFAodPD4IOw&url=https://www.cernachha.co.uk/about-us/our-core-values/&bvm=bv.106130839,d.bGQ&psig=AFQjCNFx0T1yxPZticUYy-uw4O6Q_Bag2Q&ust=1446120604187636


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• Manufacturing Road Map Developed13 years Strategic Plan Developed

Phase 1: Enhancing productivity Priority Sector Industry (2013-25)

Phase 2: Diversifying and emerging new key industry (2016-25)

Phase 3: Building up high-tech industry (2021 -25)

• Different Sector Base Strategies up until 2025 are Developed

I. Background …

Industrial Development Strategy & Road Map


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S.N Sector Strategic Plans & Feasibility Studies

1. Manufacturing Human Resource Demand

2. Meat Industry Development Strategic Plan

3. Cement Industry Development Strategic Plan

4. Spices Industry Development Strategic Plan

5. Fruits and Veg. Industry Development Strategic Plan

6. Honey Industry Development Strategic Plan

7. Construction Industry Development Strategic Plan

8. Pharmaceutical Strategy and plan of action

9. Dairy strategy

10. Metal Packaging Factory Feasibility Study

11. Plastic Packaging Factory Feasibility Study

12. Bottle Packaging Factory Feasibility Study

13. Paper Packaging Factory Feasibility Study

14. Coffee Processing Packaging Factory Feasibility Study

15. Sesame Processing Packaging Factory Feasibility Study

16. Textile Accessories Factory Feasibility Study

17. Leather Accessories Factory Feasibility Study

18. Corn Processing Factory Feasibility Study

19. Label Factory Feasibility Study

Sector Plans & Feasibility Studies Developed I. Background …


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A. Fastest growing economy

• GDP average growth rate: 11% for the last 12 years in a row

• Manufacturing (medium & large): 20%

B. Shared growth

• Gini coefficient 0.3, poverty reduction 22%

• Life expectancy 64 years

• Primary education net enrolment reached 94%

C. Long term investment

• 60% federal budget goes to infrastructure

• Saving 22%, rate of investment 39%; of GDP

Achievements

I. Background …


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II. Key Strategies for Industrialization

Key Strategies:

1. Targeting manufacturing Investment (FDI and domestic)

2. Development of industrial parks

3. Quality infrastructure, skills and competitiveness

10 Key industries in 3 categories:

1. Light manufacturing (textile, leather, agro-industry, electronics )

2. Basic & import substitution (steel, equipment, chemical and

pharmaceutical)

3. Strategic (energy, ICT and bio-technology)


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• Our parks fits C-TPAT (Customs-Trade Partnership Against Terrorism) compliant reducing, customs check for exports to the US market.

• Heavy maintenance and 24/7 roaming security are taken care-off.

• Agreeable environment: 10% of land reserved for green areas

• Custom clearance available on-site (bonded parks)

• One-Stop-Shops with all necessary services.

II. Key Strategies …


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• Phase 1 of 156 Ha already operational; Phase 2 of 186 Ha in design stage;

• Conventional common effluent treatment plant in construction (primary to tertiary;

• Residential area for workers currently being designed – delivery by end of 2015

• Agreeable environment: greening of Park on-going;

• Focus solely on exports;

• On-site custom clearance (at each factory)

BOLE LEMI INDUSTRIAL PARK


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• Total size of 300 Ha (Phase 1 -130 Ha inaugurated 13 July/16)

• State of the art Industrial Park

• Word class, ready for ‘plug and play’,

• Dormitories for expats 1,000

• Offices for One stop shop, banks, etc.

• Security Services: personnel & cargo access, exit control, traffic control with in the park, CCTV system, Fire brigade,

• Sanitation: cleaning services at public area

• Landscaping: maintaining the green area

• Adequate facility maintenance for water supply, power, telecom etc.

HAWASSA ECO-IP


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1. Expansion of Eastern (Dukem) China

2. George Shoe (Mojo), Taiwan – China

3. Huajian (A.A), China

4. Arerti (Minjar), China

5. CCECC (Dire Dawa), China

6. Yangone Corp. (Adama), South Korea

7. Hunan Prov. (Adama), China

• Promote development of private industrial parks



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Development of Integrated Agro-Industrial Parks


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1. Coffee

• Ethiopia is home of coffee Arabica & leading producer

• Globally, 5th - 8th top producer for 2009 -2012 (FAOSTAT)

• But 99% of the exports is raw coffee

• Receives low price

Some of the focused commodities …

III. The Integrated Agro Industrial Parks …


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0.9Niger

Ethiopia 3.3

Nigeria 2.3

Tanzania 1.1

Uganda 1.7

Maize production, 2011 Million quintals

Sesame seed production, 2011 Million quintals

Ethiopia

Nigeria

Egypt

S. Africa

68.8

Tanzania

49.9

91.8

103.6

13.0

Kenya 18.0

Tanzania 21.3

Nigeria 18.9

S. Africa 13.7

Ethiopia 53.4

Livestock (Cattle), 2011 Millions

1st in Africa 4d in Africa1 1st in Africa

1 South Africa and Egypt are 1st and 2nd but they produce genetically modified maizeSource: Food and Agriculture Organization

Production level of select agriculture products for the top five producers in Africa


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2. Sesame

• World’s 3rd largest producer

• Accounts 18% of global export share

• 95% of the exports volume is in raw form




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• Ethiopia is 1st in Africa and 10th in the world

• However, meat export is very limited

• Export of live animal represents 49% of total livestock export value

• Constitutes only 15% while Namibia 40% of African market.

2. Livestock

Some of the focused commodities in the IAIPs



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•53.99 million cattle

•25.51 million sheep

•24.06 million goats

•0.92 million camels

•50.38 million poultry

•9.01 million Equine

•10 million bee colonies with

Potential 550000 ton of honey

ETHIOPIA IS 1st in Africa and 10th in the world in Livestock Population


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4. Fruits & Veg.

35

Has a comparative advantage due to its

• favorable climate,

• proximity to Europe & Middle East markets

• cheap labor.




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IAIPs

• Are new initiatives derived from the agro-industry strategy

• Aimed to enhance rural industrialization &agricultural transformation:

• Dedicated to agro-processing

• Address supply chain and infrastructure

• Create rural off-farm jobs

• Trigger geographic clustering

• Reduce regional disparities

• Develop Integrated Agro Industrial Parks (IAIPs)



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17 Agro Industry Growth Corridors selected



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Four ACPZs selected for piloting IAIPs

Selection Criteria:

1. Production potential

2. Triggering Effect

3. Infrastructure

4. Market potential

5. Access to support services

6. Attractiveness for investors



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IAIP Business Model

IAIP

Modern Farm ClustersGreen Houses

Livestock farmsMushroom Nursery

FP ZonesUtilities & Services

CommercialComplex

R&DIncubation QCL

Commissaries &Packaging

CommonInfrastructure

AgribusinessMgt. Trg. Inst

Convention CenterIT/ Library

Training Center

Agro tourismWellness &Nutrition

Terminal MarketsLogistics

Cold StoresRipening Chambers

Warehousing

RuralTransformation

Centers

RuralTransformation

Centers

RuralTransformation

Centers

RuralTransformation

Centers

Production

R

&

D

Trade

III. The Integrated Agro Industrial Parks


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IAIP Business Model…



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• Master plan developed for the 4 IAIPs

• The studies show the projects are feasible & bankable

• Specific sites are identified for the IAIPs and RTCs

• 1000 ha. each for the four IAIPs

• 28 RTCs sites are delineated with average of 10 ha each.



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Bird Eye View for IAIP


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Bird Eye View for RTC


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Ministry of IndustryBAEKER IAIPS MASTER PLAN - WESTERN TIGRAY


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Ministry of IndustryBURE IAIPS MASTER PLAN - SW AMHARA


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Ministry of IndustryYIRGALEM IAIPS MASTER PLAN – EASTERN SSNP


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Ministry of IndustryBULBULA IAIP MASTER PLAN - CENTERAL EASTERN OROMIA


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Processing opportunities

Source: MACE analysis

Baby food

Canned fruits

Canned jackfruits

Corn flakes

Maize popcorn

Avocado oil (industrial use)

Bakers yeast

Biscuits

Corn/maize oil

Edible avocado oil

Red meat processing plant

Milk powder (dairy product)

Pineapple jam / marmalade

Poultry feed

Soya milk

TEJ drink

Margarine from vegetable oil

Milk processing & dairy

Potato chips

Poultry processing

Ready to eat vegetables

Sesame oil

Soya bean flour, defatted soya flour (DSF)

Tomato ketchup

Tomato soup (ready to cook)

Turmeric polishing

Vegetable oil refinery

Vegetable wax (CARNAUBA WAX)

Beeswax

Cattle meat processing

Confectionary

Egg albumen flakes

Egg powder

Fruit squash

Leather sole

Honey

Macaroni & pasta

Maize flour

Malt

Mango processing



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• Agri inputs: bio energy, green house cultivation, agrichemicals, agri Hi-tech, renewable energy

• Agri infrastructure: energy management, mechanization and transport, storage facilities, field handling, transport, bulk material handling

• Agri Industry: food technology, processing industry

• Capacity building: agri research, education hub, agri lab and clinic, extension service

• Others: agri tourism, rural financing, crop insurance

Expected Business Opportunities & Benefits



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IV. Incentives & Success Factors for IAIPs


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• Duty-free import of capital goods, construction materials, machines etc.

• Up to 15 Yrs for IP developer & up to 10 years for IP enterprise tax-holiday periods

• Access to loans from the EDB at low interest rates for up to 50% of the total investment

• Easy access to pre-built factory sheds & Serviced Land in IPs;

• Access to common facilities & Zero Liquid Discharge technology

• One-stop-shop service

Solid Fiscal and Regulatory Incentive Package

IV. Incentives & Success Factors for IAIPs


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• Competitive labour cost

• Availability for skilled and unskilled labour,

• with excellent vocational training centres we >1350 TVET Centers

• 35 universities Plus Additional>10 by2020 total will be 50. Ratio of 1 UNIVERSTY PER 2MILLION

• Lowest costs of electricity in Africa/world 0.5 US Cents per KWH

• Real estate costs at par with comparable countries

Competitive Cost Of Doing Business:-

IV. Incentives & Success Factors …


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Strong Government Leadership & Commitment to promote investment

• At federal &• Regional Level

Tigray

Amara

SNNPR



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SDG 9: Building Resilient Infrastructure, Ensuring Inclusive and Sustainable Industrial Development and Fostering Innovation

• Following the Lima Declaration, Ethiopia & Senegal selected to pilot implementation of PCP.

• PCP is a model of partnership for achieving ISID with UNIDO

• The PCP-ETH was developed under the leadership of the Government of Ethiopia.

Ethiopia is selected as Pilot country for ISID – SDG 2030



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5. Institutional Support

• Government is dedicated to provide hand holding support to the private sector

• At Federal - Investment Board is under the Chairmanship of the PM

• At Regions - Investment Board is chaired by the Regional Presidents

• Under the MoI there are different sectorial supporting institutions such as:

1. Textile Industry Development Institute 2. Leather Industry Development Institute 3. Metal Industry Development Institute 4. Chemical and Construction Input Industry Development Institute 5. Meat & Dairy Industry Development Institute 6. Food Beverage and Pharmaceutical Industry Development Institute 7. National Kaizen Institute 8. Industrial Park Development Corporation (Federal and Regional Levels)9. Industrial Input Development Enterprise



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I. Program for production & productivity enhancement

• Interventions are designed by MoANR, MoLF, ATA in the four IAIPs catchment areas

• High level Regular Ministerial Meeting is established among MoI, MoANR, MoLF

II. Program for completion of complementary studies

• Detailed Engineering design, Environmental and Social impact assessment studies are on going

Six Key Programs Developed for IAIPs Implementation



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III. Program for social rehabilitation & rural transformation

• Communication strategy is prepared

• Awareness creation forums with the different levels are ongoing at Regional and Zonal levels

• Community mobilization will continue up to kebele level

Key Programs …



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IV. Program for institutional set up & capacity building

• Required legal framework are in place at the Regional States

• Regional Industrial Park Development Corporations are established in 3 Regions (Amhara, Tigray & SNNP)

• MoU signed between MoI & research Institutions within the four Regions to establish industry-university linkage

V. Program for investor mobilization• Aggressive investment promotion is undergoing

VI. Resource mobilization• Closely working with development partners

6. Key Programs …



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The Investment Forum will give you the opportunity to: • Create strategic partnerships and expand your network through

business-to-business meetings. • Meet directly with policymakers at the ministerial level. • Learn about the investment environment in Ethiopia. • Secure a foothold in one of the fastest growing economies in Africa

6. Key Programs …



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Thank you

We look forward to seeing you in Addis Ababa October 5, 2016

For more information, please contactMs. Virginie Ticha at email: [email protected]

mailto:[email protected]

Ministry of Industry Investment Opportunities In .../media/IE Singapore/Files/ASBF2016... ·...

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