The Industrial Parks Development Corporation (IPDC) is in the process of establishing a set of subsidiary companies in a bid to better handle the responsibilities of managing more than a dozen industrial parks in the country.
The subsidiaries under formation will be tasked with separately handling logistics, construction, consultancy, manufacturing, and agricultural supply chain services previously under the Corporation.
The development comes as the federal government moves ahead with its plans to transform industrial parks into Special Economic Zones (SEZs). Lawmakers have introduced legislation that would allow the parks to make the transition, which would entail additional logistics and trade capabilities on top of the manufacturing mandates they already handle.
All 13 industrial parks developed and managed by IPDC are slated to make the transition.
“We are reforming IPDC to transform it from an entity that leases out factory sheds to a fully commercial one. We’re establishing new business units as IPDC subsidiaries,” Fisseha Yitagesu (PhD), head of the Corporation, told investors during a panel discussion on September 5, 2024.
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The state-owned Corporation is looking to tap in on businesses related to SEZs.
Its executives plan to establish a logistics services subsidiary to cater to investors leasing space in SEZs. The Corporation is in the process of procuring heavy trucks to move goods between ports and SEZs, according to Fisseha.
Another IPDC arm is slated to provide consultancy, valuation, and project advisory services for investors, while an agricultural subsidiary will supply raw materials to factories in SEZs, according to the CEO.
Fisseha also disclosed plans to form a subsidiary engaged in the hospitality industry.
“Industrial parks and SEZs will gradually change into urban centers so they’ll need hospitality services,” said Fisseha.
The move will likely ensure continued state dominance in the upcoming SEZs through government affiliated enterprises.
However, the CEO said the Corporation is also looking to work with private firms in joint ventures.
The Corporation is tasked with operating the 13 industrial parks that have been erected across the country over the last decade. There are an additional 10 privately-run industrial parks in Ethiopia.
Despite industrial parks having been the focus of the state-led drive to grow the manufacturing sector for more than a decade, none are performing as well as the federal government had hoped. The external debt taken on during the construction of the parks also continues to weigh on state coffers.
The commercialization of the parks is essential to solving the problems, says Fisseha.
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