Are you planning to invest in the agroindustry sector of Ethiopia, but still haven’t yet decided whether or where? Why not consider opportunities and more supportive environments being put in place through the development of industrial zones and enter one. If you choose to do so, you will smoothen the establishment and operation of your agroindustry while making the investment process much easier and less complicated.
To achieve these, however, you need to know how. This article contains quick step-by-step guides and useful advises intended for new investors like you. Read until the end.
Agroindustrial project is a high priority area of the government and thus eligible for comprehensive incentive packages. While there exist high potentials in the agriculture sector, value addition and agro processing opens much wider room for investment. That makes investment in the agroindustrial development sector crucial.
Industrial development zone means “an area with distinct boundary designated by the appropriate organ to develop identical, similar or interrelated industries together or to develop multifaceted industries, based on a planned fulfillment of infrastructures and various services such as road, electric power, and water, and having special incentive schemes, with a broad view to achieving, planned and systemic development of industries, mitigation of the environmental pollution and development of urban centers, and includes special economic zones, industrial parks, technology parks, export processing zones, free trade zones, and the likes designated by the Investment Board.” Investment Proclamation (Amendment) No 849/2014).
Cognizant of the importance of the manufacture industry including agricultural manufacturing, the government of Ethiopia is undertaking industrial zone development projects at various selected sites in major cities such as Addis Ababa, Dire Dawa and Kombolcha.
The 2014 amendment of the investment proclamation also provides for opening of this undertaking for the private sector investment wholly or jointly with the government. There are favorable investment, infrastructure and tax incentives for such undertakings (US Department of State 2013). All these initiatives explain the reasons why you should invest in the agroindustry sector or even run an industrial zone development venture.
You need to decide the product and market for your agroindustry business early on. There are ample opportunities in agriculture with huge industrial potentials. You need to collect information on business opportunities and identify those areas in which you are interested in or knowledgeable about.
Be aware that not all zones can cater for your proposed agribusiness industry. You need to locate the one that is right for you.
If you are in the agroprocessing industry, then Kilinto Industrial Zone is for you. It is located around Addis Ababa. Currently, a total of 308 hectares is under master plan and design preparation stage. Kilinto will cater to the agro-processing, food, beverages, spices and pharmaceuticals sectors.
If you are in one of the manufacturing industries that have backward linkages with agriculture, then Bole-Lemi Industrial Zone is for you. This zone is also located around Addis Ababa. It has a total of 342 hectares available. During the first phase, according to Hunegnaw (2014), 156 hectares of land are being developed, including the construction of 20 factory shells and common facilities. Development of the remaining 186 hectares will begin at a later stage. Bole-Lemi will focus on the textiles, garments and leather products (including footwear) sectors.
An adequate institutional arrangement is being put in place to support the development of industry zones, including agriculture. The Ministry of Industry has two subsector state ministers, one for textile, leather and metal and another for food, beverage and pharmaceutical chemical and construction inputs. Identify the appropriate organ for your proposed project and seek the support you need at this stage.
To open an enterprise in Bole Lemi or Kilinto industry zone, you need to register with the Ministry of Industry.
You need to follow up the establishment process of the industry zone as well as your registration. This may require frequent contacts with the concerned body in the Ministry of Industry.
Upon handover of the land in the industry zone you applied for, you can now establish your agroindustry and starting operating same.
NotesTake note that this article was prepared by Amare Molla, Information Hub Coordinator for ABSF, and as such does not reflect the views and opinions of the institutions involved in funding or managing the AGRIbiz.et website. The article is written with utmost care by referring available and reliable information sources on the agribusiness and investment situation of Ethiopia. It is also thoroughly reviewed by Gertjan Becx, the ABSF project coordinator, and other experts of the project. Despite that, you are advised to check the accuracy of the information as agroindustry investment opportunities and requirements or other related conditions in Ethiopia may change over time with, for instance, changes in related policies or regulations.
TipsBe aware that the current cost of land for leasehold in industrial zones is USD 1.00 per square km. You can calculate the total cost of land lease using this unit price and allocate sufficient budget. However, you need to check the prevailing unit price and currency requirements depending on your investor status at the time you register.
WarningsBe the first to invest. There are limited spaces at the Bole-Lemi and Kilinto industry zones. Unless you choose to be the first to invest, these zones may in the short run be fully occupied by foreign and domestic agribusiness investments. And you should understand that the approach is “first comes first served”.
ReferencesHunegnaw Abebaw. Manufacturing industry investment opportunities in Ethiopia. paper presented at the Third Spices, Herbs and Aromatics Subsector Stakeholders Platform Meeting Organized by Agribusiness Support Facility (ABSF) held on October 2014. Investment incentives and Areas Reserved for Domestic Investors Regulation No 84/2012. Investment incentives and Areas Reserved for Domestic Investors (Amendment) Regulation No 312/2014. US Department of State. Ethiopia Investment climate 2013. http://www.state.gov/e/eb/rls/othr/ics/2013/204639.htm. Accessed on January 6, 2015.