Afreximbank: How poor electricity and transportation are stalling Africa’s industrial parks 

This is according to a new report by Afreximbank Research tagged “Industrial Parks and Industrial Development in Africa,” posted via its X page on Tuesday.

The report states that one of the most prominent challenges facing industrial parks across the African continent is infrastructural deficiencies, even though significant progress has been made in developing physical infrastructure.

“Inadequate infrastructure, such as unreliable electricity supply, poor transportation networks, and insufficient water and sanitation facilities, still pose significant barriers to the efficient operation of industrial parks.  

“In Nigeria, the Calabar Free Trade Zone suffers from frequent power outages, which significantly disrupt manufacturing activities. 

“Similarly, in Kenya, the Athi River Export Processing Zone is hampered by poor road conditions that increase transportation costs and delay the movement of goods.  

“Ethiopia’s Bole Lemi Industrial Park grapples with insufficient water supply, which affects operations, particularly in the textile and garment industries,” the report added.

“This problem is worsened when IPs are designed in a manner that further reduces the proximity between foreign-owned firms and indigenously owned firms, as it was in Ethiopia, for example, ” the report added.

“The short-term gains of IP development include employment creation, stimulation of exports, and foreign exchange earnings. 

“Long-term gains include the effects on the country’s economic transformation in terms of technology transfers, forward and backward linkages, demonstration effects, and other spillovers,” the report added.

To boost industrial park operations in Africa, the report called forthe  strengthening of public-private partnerships (PPPs) in IP development and use.

“Through cooperative investments and subsidies, PPPs can lessen financial barriers that tend to hamstring IPs on the continent.  

“Parties are more inclined to contribute to sustainable projects as a result, leading to the growth and development of eco-friendly IPs,” the report added.

The report asked countries to stimulate export-led industrialization, adding that export-oriented IPs are likely to attract foreign industrial investors, even when the domestic market is small, as it is in most low-income economies of Africa.

The report also urged stakeholders to promulgate policy to promote business-to-business linkages in African IPs, adding that available statistics show that most of the private sector enterprises in Africa are MSMEs.