Convenience at minimum cost is a leading consideration for investors looking for new locations to set up enterprises.
Around the world, industrial parks have become the popular vehicle for countries to provide a competitive environment for industries to take off. Technically, an industrial park is a geographically delimited area, intended for the settlement of industrial plants with proper location, infrastructure, equipment and services conditions, and with a permanent administration for its operation.
Recently, Uganda announced that it is setting up 22 new industrial parks around the country. This is commendable if the government does not go back on its word by failing to put in place the basics needed to attract both local and foreign investors. It is going to be expensive, but will pay off in the long run if it is done right.
All the Tiger Nations of East Asia developed industrial parks during the 1980s and early 1990s which helped attract investment especially from Japan. South Korea started in the 1960s. The government at the time adopted a strategy of concentrating industries in regions with high growth potential, rather than dispersing investments nationwide, in consideration of the country’s limited financial resources. The policy has worked out well as reflected in South Korea’s spectacular growth. Note, this is the country with the highest internet penetration in the world.
Today, industrial parks are the industrial/manufacturing hubs that drive the economies of Thailand, Indonesia, Malaysia and the Philippines.
For the East African Community (EAC) to take advantage of a similar growth strategy, governments must coordinate their vision for the region. We cannot offer all things to all or work at odds with each other considering what is at stake here. There must be some sharing out of enterprises and a common purpose to setting up the parks. And most especially, the tax regimes must be the same.
There are couple of factors that investors consider crucial and the first being location. Experts say since an industrial park is a type of real estate property, the golden rule for property development also applies. It is location, location, and location. Unless the location is appropriately chosen, an industrial park will not attract many manufacturing firms.
Manufacturing firms require various inputs including electricity, telephone, internet, water, sewage treatment, transportation, residence, and so on.
While the relative importance of each input depends on each firm, an industrial park must offer all of them. Stable supply, high and consistent quality, and low cost are essential for all services. Large-scale infrastructure (such as ports, airports, major highway and national power grids. We cannot forget local infrastructure in the immediate neighborhood (road access, apartments, water plants and power substations are also very necessary.
Investors like to be in close proximity to a port (or an airport, depending on the need of each firm). Land transportation to the port and the nearest urban centre must be fast, cheap and reliable.
Availability of a large supply of professionals and workers at reasonable cost. Wages are high in urban centers while qualified workers are scarce in remote areas. Suburbs of a large city offer the best choice of quality, availability and low wage.
Industrial parks can contribute to the development of the country’s infrastructure and promote modernization. Other factors involved include creating employment, helping to decentralise decentralization and contribute to the rational consumption of energy and water resources.
Obviously industrial parks also increase the tax base and revenues while also improving living standards of the communities where they are established.
THe EAC has a growing number of young people who are tech savvy, but have no designated place to develop their ideas into possible money spinners. This is something the EAC governments should look into by setting up more technology parks. More industrial parks in the region convey to the rest of the world that the EAC is ready to compete.
Source: Business Week

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.