Dear Excellency, Ato Ahmed Abitew, Minister of Industry, Ato Ahmed Shide, State Minister of Finance and Economic Development, senior government officials, private sector and development partners, members of the press, ladies and gentlemen:
I am honored to participate in the launch of the Competitiveness and Job Creation Project.
Ethiopia is projected by the UN to be among the world’s top ten most populous nations by 2050.
Over the past decade, the country has experienced double digit economic growth. More recently annual growth rates have declined slightly, but still remain at high single-digit levels.
The Government’s Growth and Transformation Plan sets a long-term goal of becoming a middle-income country by 2023, with growth rates of at least 11.2 percent per annum during the plan period.
To sustain its GDP growth target rate and create new jobs, the Government has emphasized the critical role of light manufacturing and export-led growth.
Our analytical work also indicates the significant potential of Ethiopia’s light manufacturing sector. Both private investment and employment in manufacturing are on the rise.
However several business environment constraints—related to access to land, infrastructure, trade logistics and customs regulations as well as the skills gap—hamper private sector development and manufacturing investment.
To address these constraints, we commend the Government’s two-tracked approach:
· Establishing industrial zones (IZ) as a platform for catalyzing investment and job creation, with a focus on export-led manufacturing; and
· Tackling cross-cutting constraints for private sector development with a particular focus on SMEs.
We are honored that the Government has sought World Bank Group’s support for its ambitious Industrial Zones program.
Appreciating that the Industrial Zones program is a cornerstone of the country’s growth and job creation strategy, my team has moved briskly in preparing this IZ-focused project in record time.
Through the Project preparation facility—approved in July 2013—the Government and World Bank Group teams have worked hard to establish the building blocks related to the institutional and policy framework, along with capacity building for delivering on this bold and complex program.
The Ethiopia Competitiveness and Job Creation Project represents the World Bank Group’s first direct financial support to the industrialization effort in Ethiopia targeting industrial zones and businesses involved in light manufacturing .
This is also one of the most important projects for the newly established Trade and Competitiveness Global Practice in the World Bank Group.
Many of you are aware that the World Bank Group restructured a couple of months, creating 14 Global Practices and 5 Cross-Cutting Solution Areas to connect local and global expertise.
The Trade and Competitiveness Global Practice brings together the technical teams of the World Bank and IFC to offer integrated, flexible, client-focused solutions, such as the Ethiopia Competitiveness and Job Creation Project.
Special Economic Zone (SEZ) projects, as many of you are aware, have had a mixed record across and within countries.
Ethiopia is a latecomer in the creation of SEZs, and thus can avoid the mistakes of the dozens of failed SEZs in the rest of Africa.
In designing this project, the World Bank Group team has incorporated good practices from the successful experience of countries like China and other East Asian countries, as well as the lessons learnt from experience of industrial areas in Ethiopia and Sub-Saharan Africa.
Key lessons that informed the design of the Ethiopia SEZ project include:
· establishing an effective regulatory framework and enhanced institutional capacity;
· conducting the feasibility of industrial zone site;
· generating private sector demand for investors and anchor tenants,
· and developing linkages to the local economy.
By bringing the World Bank Group’s best knowledge and expertise to the forefront, and involving global practitioners to help build client capacity, we expect this flagship Project to contribute to the reduction of extreme poverty and promotion of shared prosperity in Ethiopia, which are key goals of the World Bank Group.
As members of the World Bank Group, IFC and MIGA are expected to help Ethiopia attain this objective by leveraging private sector resources and engagement in the Ethiopia SEZ. IFC can help attract private sector investments, while MIGA can provide credit enhancement and political risk insurance protection to investors.
The project will promote:
· medium and large firms that are to be established within the industrial zones;
· SMEs that will act as local suppliers and be part of the value chain for the manufacturing sectors within the industrial zones;
· as well as the sectoral institutes which will be involved in the project implementation.
The project will provide large and medium firms with new serviced industrial land, infrastructure (buildings, water, electricity, roads, etc.), and with a one-stop shop service—thereby reducing transaction costs of doing business.
The project will also create employment opportunities for thousands of people—32,000 jobs are expected to be created—especially women in the garment and shoe industries that initially set up business in the industrial zones. Sectoral institutes will benefit through the project support of their training of trainers programs.
The project will also support the emergence of a business friendly environment for firms within industrial zones.
Lastly, the positive impacts will not be confined to the industrial zones being developed under the project but are expected to contribute to the development of other industrial zones and the attraction of new investors.
Let me reiterate that this is a very important transformative engagement for the World Bank Group, and we will make every effort to make it a success.
The World Bank Group resources are at the disposal of government of Ethiopia.
In addition to the IDA funding, IFC can help bring in bring private sector developers for the industrial zones, and MIGA can provide political risk insurance, among others, for FDI.
Lastly, the Trade and Competitiveness Global Practice is supporting this project through multiple trust funds with the support of our development partners.
Our vision is to use the success in Ethiopia and replicate it in our partner countries.