Regulating Industrial Parks Development in Ethiopia: A Critical Analysis

Abstract

There is strong policy and legislative rationales behind establishing Industrial Parks. International experience has shown that successful IP have clear rules on regulatory objectives, location decisions, investor selection and land acquisition procedures. Perhaps most importantly, the global experience of IP’s suggests that optimal results are achieved when they are established and operated as part of a national economic development regulatory reform strategy, and not as a “one off” venture. This paper is intended to provide a brief overview of the regulatory areas and instruments of IP’s, the different experiences, the key lessons that Ethiopia can learn from other countries, as well as the recent evolution of regulatory areas in the world. Some key elements for success are provided specifically on those critical regulatory areas and instruments of location decisions, regulatory objectives, investor selection and land acquisition procedures as well. The adequacy and potential of the legal frameworks to respond to these regulatory areas are inspected. This article presents the main findings with respect to the four currently operational zones: development goals and the anticipated regulation of the zone projects, key regulatory challenges and preliminary proposals on enhancing the regulatory process. Hence, the study identified the inadequacy of legal frameworks on location decisions with a less concentrated regulatory objective and blurred rules on investor selection and land acquisition procedures. The existing rules do not establish well-empowered, central and effective regulatory organ in regulating and handling industrial disputes and grievance of industrial park investors. Most importantly, the finding shows IP rules fail to embody local content, backward and forward linkage with local entrepreneurs, investors and producers which have emanated from absence of a prior well-developed coherent IP policy.