Africa’s population is projected to double over the next
generation to more than two billion people. Free trade zones offer some
possibilities for the continent’s governments to create the jobs necessary to
meet the aspirations of their youthful populations. Success is not only
dependent on cheap labour, though this helps.
To ensure these zones are more
than just sweatshops, Ethiopia and Morocco show that the full package of policy
aspects has to be addressed, including: political stability, free trade deals,
logistics to and through ports, integrated value chains, and tax and other
incentives. Crucially, if countries are to quickly move up the industrial
ladder enabling higher incomes, then improving skills is a crucial component.
Ethiopia’s
Industrial Parks: Hard Yards, But what’s the Alternative?
Hawassa. Some 270 kilometres south of Addis Ababa, the
picturesque Rift Valley city has relied on agriculture as source of income and
employment, the regional Sidama coffee one of Ethiopia’s best-known brands, and
the name of the local football side.
That was until the establishment of the Hawassa Industrial
Park (HIP), inaugurated by then Prime Minister Hailemariam Desalegn in June
2017. Flanked by Lake Hawassa, HIP is the largest government industrial park,
built at a cost of US$250 million in just nine months by the contractor, the
Chinese Civil Engineering Construction Corporation (CCECC). The first phase
covers 140 hectares with 52 factory sheds, housing 20 textile and apparel firms
from 11 countries. By the start of 2019 Hawassa’s factories employed 23 000
local workers and 700 expats. Though it was not the first, other government
industrial parks are today modelled on Hawassa, which itself incorporated
lessons from the first park at Bole Lemi in Addis. Five of 11 government parks
are to date in operation (with six due to be inaugurated in the next six
months) and two of four privately-owned examples. Together the five operational
government industrial parks host 36 companies, providing 45 000 jobs that did
not, ten years before, exist. A town of 350 000, Hawassa’s GDP has alone
increased four-fold in just two years. The parks have been Ethiopia’s response
to the challenge of unemployment and the need for economic diversification. ‘I
assigned a team led by Dr Arkebe [Oqubay]’ – now the chairman of the Ethiopian
Industrial Parks Corporation (EIPC), recalls Hailemariam. ‘We made a study of
the successes and failures of industrial parks around the world, looking at
Nigeria, Mauritius, Taiwan, Vietnam, Singapore, South Korea, and of course to
China.
Tangier:
Marching to a Different Beat
Casablanca is just a four-hour flight from Lagos. But it’s a
world away. Instead of paralysing traffic, we move quickly on a multi-lane
highway towards Rabat, not a pothole in sight. Instead of sprawling tin and
wooden slums the expressway is dotted with cranes atop new multi-story housing
settlements stretching out toward the horizon. Instead of clusters of yellow
Lagosian danfo taxis clustered at informal stops hindering the flow, Morocco’s
roadside amenities and its péage would not be out of place in Europe; neither
Casablanca’s surly immigration officers. As you leave the city, instead of bush
and mounds of garbage, there are ploughed fields, acres of which are under a
different sort of plastic, greenhouses producing for Europe’s tables just 14kms
away across the Gibraltar Strait from Tangier. For a while, the 350km road from
Casablanca to Tangier hugs the TGV rail-line opened in November 2018 after ten
years of planning and construction cutting the journey to a fuss-free two
hours. Traditions remain. Women in jellaba and men in Obi-Wan Kenobi-style
pointy-hatted amama tend sheep on the verges of the motorway. And neither is it
perfect. Poverty levels remain high in the rural areas. Four million of
Morocco’s 36 million today live near or in poverty, three-quarters of them in
the rural areas. Tangier is at the epicentre of this merging of European
modernity and Berber tradition, which has so far worked to Morocco’s advantage,
the economy touching 5 per cent growth for nearly 15 years, driven by foreign
investors and they, in turn, by a carefully-sweated combination of policy,
stability and infrastructure. Tangier’s modernisation has hinged around the
development of a new port, known as Tangier Med, three ‘free zones’ (the
original Tangier Free Zone opened in 2000, Renault Tangier Med, and Tangier
Automotive City), and two industrial parks at Tetouan. With US$8 billion in investment
to date, together these employ 80 000 with US$7 billion in turnover, making
this the largest free zone in Africa. To these developments has been added a 45
000-seat sports stadium in the centre of the city, an expanded new business
district, and renovated tourist infrastructure.
Once famed for its tangerine production, today Tangier is
better known for its sweet Renaults. In 2018 the Kingdom produced 430 000
passenger vehicles, second only on the continent to South Africa, which
produced 600 000. Nearly all are exported to Europe from Tangier Med. The
300-hectare Tangier plant employed 6 700 workers and produced 318 600 cars in
2018, making it the third-largest Renault plant worldwide. With a significant
onsite government training centre, great pride is taken in the upskilling of
the workforce. Peugeot too will soon open a factory in the free zone in
Kenitra, with a capacity of 300 000 units per annum and 200 000 drive-trains.
But the value also comes from the associated automotive component manufacturers,
including the likes of Magnetti Marelli, Federal Mogul, Hands and Valeo. None
are household names, but nine of the largest 15 auto parts firms worldwide are
represented in Tangier.
Read Full Report
About The Author
Dr Greg Mills heads the Johannesburg-based Brenthurst
Foundation, established in 2005 by the Oppenheimer family to strengthen African
economic performance. He holds degrees from the Universities of Cape Town and
Lancaster and was the National Director of the SA Institute of International
Affairs from 1996 to 2005.
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