Ethiopia has announced plans to commission four Chinese-built industrial parks by the end of the year as concerns grow over the level of debt the country is taking on.
Belachew Mekuria, the commissioner of the Ethiopia Investment Commission, said the government expected to give the go-ahead to parks at Jimma, Adama, Arerti, and Dire Dawa, reports Xinhua, China’s state news agency.
Jimma and Arerti Industrial Parks are expected to be built by China Communications Construction Company (CCCC) and Dire Dawa and Adama Industrial Parks are being constructed by China Civil Engineering Construction Corporation (CCECC).
Mekuria added that Arerti Industrial Park would produce building materials and Adama would contain a suite of factories to turn woollen fleeces into textiles. He did not give the projects’ construction costs, but did say Adama had attracted $1bn of investment finance.
Ethiopia is pinning its economic future on a series of Growth and Transformation plans, which will lead to the “Ethiopian Renaissance”, intended to give the country middle income status by 2025.
One of the main means of reaching that goal is to build 30 industrial parks, thereby increasing manufacturing output from about 5% to 20% of GDP (see Further reading).
These developments will go ahead in spite of Ethiopia’s struggle to find foreign currency, and amid increasing concern over its level of debt.
Although China is a major lender to Ethiopia, its mission to the African Union in Addis Ababa said on its website in July that some creditors were worried about repayment risk as government debt reached 59% of GDP, reports Reuters.
According to the Johns Hopkins School of Advanced International Studies, Chinese creditors have loaned at least $12.1bn to Ethiopia since 2000, on top of which the country has borrowed from the Middle East, the World Bank and others, and has a total debt of U$29bn.
One victim of China’s concern about debt levels is a plan to build an extension of the Addis Ababa high speed line, which opened at the beginning of 2018 after a difficult 15-month commissioning period, largely because the line was built without supporting infrastructure, such as dry ports and access roads.
The project, which envisages a northern extension from Awash to Woldia and Mekele, has suffered multiple delays and the full funding package from the Chinese Export and Import Bank has not been released yet, according to Reuters.
Image: Hawassa Industrial Park was completed in 2016 (Government of Ethiopia)