Development Secretary Priti Patel Stresses Economic Growth in Visit to Ethiopia Industrial Park

February 01, 2017

Citing long-term domestic and security benefits to the United Kingdom, International Development Secretary Priti Patel looked ahead this week to a sharpened focus on economic development in the world’s poorest countries.

Speaking at a burgeoning industrial park in Ethiopia, where clothing is being manufactured for brands such as Calvin Klein and Tommy Hilfiger, Patel said that continued development assistance will help Ethiopia create jobs to sustain its rapidly growing native and refugee populations.

UK Development Secretary Priti Patel is greeted by DAI's Nebil Kellow, managing director of Enterprise Partners.

“If the jobs aren’t there, young Africans who are educated will want to migrate. They will want to have better prospects and futures elsewhere,” said Patel, as quoted by The Times of London. “So we need to support these [countries] in Africa to industrialise. If you think about the long-term benefit, many of the countries we are working with right now will become our trade partners as well.”

Patel was visiting the Hawassa Industrial Park, a fast-growing industrial zone where workforce needs and constraints are being addressed by Enterprise Partners, part of Private Enterprise Programme Ethiopia, a project funded by the U.K. Department for International Development and implemented by DAI. Just six months after opening, the park is already expanding, with several leading global suppliers and blue-chip retailers looking at the site, according to The Times.

Hawassa, a city of 160,000 people located 200 miles south of Addis Ababa, was identified for investment because of the city’s and region’s promising workforce potential. The Ethiopian government built the park for US$250 million as part of a planned surge in economic investment using public funds and cash generated from Eurobond sales. The park, which focuses on the garment and textile industries, provides space for 35 factories and 19 other buildings to be used for exhibition halls, food courts, dormitories, and other purposes.

Hawassa serves as the flagship of 10 manufacturing and export hubs the country plans to build in coming years to attract foreign direct investment and leverage Ethiopia’s available workforce and raw materials, favorable climate, and positive economic outlook. According to the International Monetary Fund, Ethiopia’s economy is the fastest-growing of any sub-Saharan country. Its apparel sector has grown by more than 50 percent since 2010. The Ethiopian government initially targeted an increase in garments exports to reach US$1 billion by 2020. After initial successes with its park-building programme (Hawassa is expected to deliver US$500 million to US$1 billion in exports), the government is now setting out ambitious plans to reach US$30 billion in garments exports by 2025.

In August 2016, Enterprise Partners launched a 2½-year program to help employers overcome constraints in employing the estimated 60,000 to 80,000 jobs to be created at the park by 2020. These jobs will primarily be factory operators for clothing manufacture as well as support functions such as warehousing, cleaning, maintenance, and transportation. Eighty percent of this workforce is expected to be women.

The key constraint to meeting this high demand for labor is an inadequate supply of “ready” workers. Other constraints include high absenteeism and turnover, lack of skills and industrial orientation, lack of awareness of job opportunities, poor employee relations, and a lack of gender support services.

Enterprise Partners organized a world-first public-private partnership (PPP) that includes the association of investors, textile and apparel firms operating in the park, the Ethiopian Textile Industry Development Institute, as well as the government of the Southern Nations, Nationalities, and Peoples’ Region, the region where Hawassa is located. These partners are working together to match the park’s workforce demand with job seekers.

This approach includes opening 10 sourcing “job-centres” in outlying and rural areas to screen and register potential workers, and a worker grading centre in Hawassa where prospective workforce entrants are technically graded and allocated to the jobs in the park. Job seekers are then recruited by factories and trained by private sector providers on soft skills such as industrial norms and ethics, productivity, and teamwork. Job seekers are also trained in life skills to aid the transition from an agrarian to an industrial life. To de-risk the service, Enterprise Partners is funding 25 percent of the recruiting and training costs, with employers paying the balance. The next step is to roll out the service nationally by creating a digital jobs platform in a similar PPP model.

To date, the project has identified 25,000 job-seekers, and has screened and graded more than 4,000, with 2,000 trained and onboarded to jobs at the park.

While the park’s manufacturers import textiles and other clothing inputs from countries such as China, Turkey, and Bangladesh, Enterprise Partners is also supporting Ethiopia to develop its capacity to supply the park with inputs such as cotton, accessories, and services. The Ethiopian government and Enterprise Partners are working together to make Hawassa serve as a model for other industrial parks planned elsewhere in the country and across the continent.