China Eximbank provides $36 million export seller's credit to Qiyuan Group for the Eastern Industrial Zone Park

Project narrative

In 2011, the Export Import (EXIM) Bank of China Jiangsu Province Branch agreed to provide a $36 million export seller's credit to Qiyuan Group for the the Eastern Industrial Zone Park Project. Prior to this agreement, in 2008, Chinese companies committed to invest 690 million yuan to build Ethiopia's first industrial park in Dukem, which is 32 km from Addis Ababa. Construction of the Eastern Industrial Zone Park (EIZ) (Chinese name: 埃塞俄比亚东方工业园 ) began in 2009 and was expected to be completed in 2014, though construction within the industrial park was ongoing in 2015 and 2016 . Qiyuan Group, the primary contractor for the project, initiated the idea of building an industrial zone in Ethiopia and the participation of Yonggang Group, a much larger conglomerate, guaranteed financing. Both companies formed the Jiangsu YongYuan Investment Company, which won the second MOFCOM bidding in 2007 to build the industrial park. Later, two additional Zhangjiagang companies, Jianglian and Yangyang Asset Management, joined the project. When completed, up to 80 companies involved in textiles, leather, and manufacturing construction equipment are expected to invest in the industrial zone, which is intended to help Ethiopia emulate China's patter of accelerated development, according to Trade and Industry Minister Tadesse Haile. The industrial park is also expected to create 20,000 local jobs. The government reports that it plans to build five more industrial zones throughout the country to attract further foreign investment. Zhangjiagang Free Trade Zone was brought in as a technical partner, but not as a shareholder. Because of financial difficulties, Yonggang left the project early in 2009 and the smaller company, Qiyuan, has become the major shareholder and executor (Interview, Eastern Industrial Park Management, 2009). Because of the Chinese partners financial difficulties (related to the global economic crisis), the area of the zone was reduced from 5 to 2 square kilometers (500 to 200 hectares) export and the investment from renminbi (RMB) 1 billion (US$146 million) to RMB 690 million (US$101 million). The first project in the zone, a cement plant, began production in 2010. As of 2016, 63.99 of the 175.74 available hectares had been used/constructed. Eleven enterprises with US$91 million total investment have signed letters of intent to move into the park. These enterprises cover such industries as construction materials, steel products (plates and pipes), home appliances, garments, shoes, leather processing, and automobile assembly. The zone is 100% Chinese-owned, developed and operated by Qiyuan Group. In addition to the provision of land at an extremely favourable rate‚ the Ethiopian government has agreed to provide all the necessary infrastructure outside the zone and to cover the cost of 30% of the internal infrastructure. In April 2015, the Ethiopia Eastern Industrial Park was assessed by the Ministry of Commerce and Ministry of Finance, and declared as an 'Overseas Economic and Trade Cooperation Area' (国家级经贸合作区 in Chinese). As of 2016, the Eastern Industrial Zone had attracted 64 enterprises, of which 31 were fully operational. These enterprises engage in sectors including textiles, garments, footwear, construction materials, auto assembly/parts, and food processing. Initially most companies in the Eastern Industrial Zone came from the southern and southeastern provinces of China, primarily the Jiangsu and Guangdong provinces. The Eastern Industrial Zone later began to host manufacturers from other parts of China as well as from other countries.