ix years of pronounced decline in investment attractiveness due to political unrest and other economic factors has led the federal government to bet big on a new approach: Special Economic Zones (SEZs). The authorities hope to see the initiative integrate various sectors, rather than the sole focus on manufacturing that was the hallmark of the preceding industrial park era, and reduce government involvement in the development and operation of SEZs.
The Gada SEZ was inaugurated on May 11, 2024, in the presence of Prime Minister Abiy Ahmed and senior government officials. During the launch ceremony, the Prime Minister announced that the government has shifted its policy focus from industrial parks to SEZs, which he hopes will address the shortcomings of industrial parks by integrating a wide range of economic sectors and relying less on credit for construction. Abiy foresees that SEZs will create more jobs and generate foreign currency.
However, the initiative is not without its skeptics.
Ethiopia’s experience with industrial parks, which focused solely on manufacturing and were built through significant foreign debt, has not yielded the expected results. This raises concerns about the success of SEZs, which are slated to include agriculture, trade, and even housing.
The federal government recently approved the long-awaited Special Economic Zones Proclamation. It looks to establish SEZs across the country, moving beyond the traditional focus on manufacturing industries.
According to the proclamation, these zones will attract foreign direct investment, create jobs, enhance trade and productivity, and integrate Ethiopia into global value chains. SEZs are also hoped to serve as a platform for experimenting with reform programs to facilitate the move towards economic liberalization.
There are two significant SEZ projects under development at present: the Dire Dawa SEZ and the Gada SEZ.
Work to establish the latter started in April 2019, according to Motuma Temesgen, director-general of Gada SEZ. Construction has begun following the completion of a feasibility study and site selection process.
Motuma and his team are looking to integrate economic sectors such as agriculture, trade, industry, and services at the site, which will feature free trade zones, facilities for import-export trade, administrative zones, logistics parks, real estate, recreational areas, service areas (education and health), agro-processing, urban farming, and commercial centers or central business districts.
Will Special Economic Zones Make a Difference? – The Reporter Magazine (thereportermagazines.com)
