Ethiopia follows China’s lead with textile-focused industrial parks - African Business
Ethiopia is attempting to transform its economy by establishing over 20 industrial parks modeled after China's special economic zones, with a heavy focus on the textile and garment industry.
In an effort to replicate the economic success of Chinese special economic zones, Ethiopia has established 22 industrial parks designed to drive manufacturing and foreign investment. According to reporting from Google News – Ethiopian economy, these zones are primarily focused on the textile and garment sectors, which now account for 85% of total production within the parks. The flagship $250 million Hawassa Industrial Park stands as the largest facility of its kind on the continent, symbolizing the nation's push toward industrialization.
The strategy aims to capitalize on Ethiopia's massive untapped cotton potential. Although the country possesses millions of hectares suitable for cultivation, only a tiny fraction is currently utilized. By concentrating manufacturing in these specific zones, the government provides investors with streamlined administration, infrastructure, and financial incentives. Experts note that the initiative has been particularly transformative for the workforce, creating tens of thousands of jobs for young women who are entering the formal economy for the first time.
However, the path toward becoming a global manufacturing hub has faced significant obstacles. The combination of the COVID-19 pandemic and the two-year civil conflict in Tigray severely disrupted operations. A major blow occurred when the United States suspended Ethiopia’s access to the African Growth and Opportunity Act (AGOA), removing tariff-free trade benefits that many exporters relied upon. This geopolitical shift, combined with rising costs due to global supply chain issues, has forced some firms to scale back or relocate.
Despite these setbacks, the industrial parks have shown resilience, contributing roughly 40% of the country’s manufactured exports by 2021. Tsegaye Abebe of the Ethiopian Cotton Association told African Business that while the infrastructure is state-of-the-art, the "journey has been uneven" due to fierce global competition and external shocks. Moving forward, the industry faces the challenge of reducing its dependence on imported raw materials by better utilizing domestic cotton resources.