THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA MINISTRY OF COMMUNICATION & INFORMATION TECHNOLOGY ETHIO ICT VILLAGE

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1 THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA MINISTRY OF COMMUNICATION & INFORMATION TECHNOLOGY ETHIO ICT VILLAGE

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3 Background The FDRE s Ministry of Communication and Information Technology (MCIT) is a government institution which spearheads the ICT development of the nation by way of developing policy instruments, designing various programs, mobilizing resources, guiding and monitoring implementation. Among the ministry s many roles, the Ethio ICT Village development can be cited as a major part of the ministry s ICT development programs. ICT parks are an important resource for new information and communication technology based enterprises. More likely linked with universities and research institutions, they promote university and industry collaboration in addition to cooperative commercialization and the transfer of new technology. ICT parks provide conducive environments for ICT companies, professionals and entrepreneurs. Various models of ICT parks exist globally, ranging from self-sufficient towns of technology that encompass residential neighborhoods, shopping centers, restaurants, recreational facilities, technical universities/training centers, research centers, ICT manufacturing and services and business incubators. The Ethio ICT Village falls under this model. In addition to facilitating the emergence of ICT industries, ICT parks enhance economic linkages between foreign and local industries and enhance knowledge and technological capabilities. To reap these benefits, policy makers have implemented targeted strategies from the outset such as encouraging joint ventures and strengthening local human capital. Rapid advances that are being made in new and emerging technologies in such fields as information, telecommunications, environ- 1

4 ment, clean energy, health, materials and transportation technologies, and the increasing pace of globalization are imposing a new social and ethical responsibility on the scientific and technological community to direct applications in ways that strengthen efforts for achieving the objectives and goals of sustainable development for nations. Given the potential complexity of such projects and the possible scope of required investments, there is a pressing need for collaboration on best practices in developing, financing and sustaining ICT projects. The Ethiopian Government is highly committed to developing the ICT sector as it is a major tool for the country s overall multi-dimensional growth and development. The Ethio ICT Village which rests on 200 hectares of land is undergoing major infrastructural development and is located within 12 minutes of Bole International Airport in Addis Ababa, the capital of Ethiopia. Ethiopia is among the few African countries committed to the development of an ICT park and its commitment is clearly demonstrated by its allocation of ample land within the boundaries of Addis Ababa and by financing the basic infrastructure within the Ethio ICT Village.. 2

5 Introduction The underlying principles to establish an ICT park in Ethiopia are to foster the growth of the ICT sector in the country by providing a conducive environment for business, to develop ICT supported indigenous business entrepreneurs and to provide employment opportunities for Ethiopians. At this juncture, major infrastructural development projects underway are roads, multi-purpose buildings, utilities (water, power, telecom infrastructure) and landscape development. As shown on the Strategic Medium-Term Development Program document (2005) of the ICT sector, the Ethiopian government recognizes that the role of the private sector in attaining the country s on-going program for sustainable development and poverty reduction is crucial. There are several reasons for partnering with the private sector on ICT development. First, there are definite cost advantages in the use of resources, for example, in efficient utilization of scarce human capital. Second, the private sector has the potential and expertise that can be tapped for national ICT development. Third, private investment in general and direct foreign investment in particular will result in technology transfer and contribute to the country s overall ICT development. Fourth, the involvement of the private sector will enhance implementation of ICT development initiatives including government-to-citizens business initiatives that will facilitate improvements in the provision of information to citizens and businesses in the context of the e-government initiative. 3

6 In this regard, establishment of the Ethio ICT Village has a multidimensional purpose in bringing about growth and development as well as improving the sector s contribution towards change. 4

7 Vision to establish Ethiopia as Africa s premier ICT hub Mission Provide impetus for the development of the ICT sector in the country by offering a world class business environment along with a conducive policy and regulatory system, state-of-the-art infrastructure and a value proposition geared towards positioning Ethiopia as the preferred ICT hub of Africa Create a destination for foreign investment and the on-going generation of foreign earnings Create employment opportunities for Ethiopians 5

8 Aims of the Ethio ICT Village Entrepreneurship development in the ICT sector Export revenues and import substitution Sector s growth and development alongside job creation Emergence of enterprises Research commercialization or dissemination of research findings for commercial use Knowledge transfer 6

9 Major advantages expected from the Ethio ICT Village Provides ICT infrastructure and skilled yet cost effective manpower Generates tremendous employment opportunities and skill development to locals Generates foreign earnings Develops the commercial and retail businesses in the surrounding areas Creates opportunities in areas such as construction, supply chain and related industries Target Industry of the Ethio ICT Village Research shows that a large majority of information and communication technology parks worldwide are located near business clusters. They also specialize mainly on the same technology within same sector. The Ethio ICT Village, however, is totally dedicated to the ICT sector and the major key industry verticals that the park could attract are ICT Manufacturing, ICT Services Industry, and Business Process Outsourcing (BPO). I). ICT Manufacturing ICT manufacturing ranges from assembly line production to pure play manufacturing. In many developing countries, initial investments were made in fixed-line telephone handset assembly capa- 7

10 bility where telephone kits were imported from different parts of the world and assembled locally; this then led to assembling mobile handsets and networking equipment. This approach is viable in the Ethiopian context due to the Ethio ICT Village s proximity to Bole International Airport, availability of suitably-skilled human resources, low-cost nature of the environment and proximity to market. It will then develop to include more complex manufacturing activities such as developing products for telecom service providers. In a broader sense, this necessitates participation and involvement of some renowned world class telecom companies, from which some have already requested plots. II). ICT Services Industry For the ICT sector, several reports indicate that market opportunities are emerging in four broad sectors - ICT services, software products, ICT enabled services, and e-businesses which would give opportunities for companies in developing countries such as Ethiopia to enter these sectors. Initial entry into this sector could be through custom software development, web / multimedia / graphic design and maintenance projects. III). Business Process Outsourcing The nascent Business Process Outsourcing (BPO) sector in Ethiopia is poised for growth and will gradually move up the value chain in the same way that the BPO sector in other countries did. The potential and suitable entry point is ICT-enabled services such as data entry, call centre services, medical transcription, data processing and others. Emerging BPO companies in other countries have developed to such levels so as to undertake the outsourcing of entire business processes such as customer relationship management, call centre 8

11 services, data management services, engineering services, financial services, creative services, web analytics services, healthcare services, digital image editing services, software services, research and analysis services and a host of additional services. Development Model Land Project Support Create enabling legal framework Government State Nodal Agency Administer the Zone Assistance to Industries Lead Promoter Major Equity in Project Company Lead Role in Developing, Marketing, O& M Management of Project Company Project Company Anchor Tenant And User Industries Specific Facility Providers Supporting Social infrastructure Project conceptualization/ development Develop detailed master plan Develop and O&M Core Infrastructure Essential public buildings / services Threshold Commercial & Residential 9

12 Physical Infrastructure World class infrastructure is a prerequisite to development of a successful ICT park. Companies playing in today s global economy have a wide choice of potential locations and in order to compete on the world stage, a world-class infrastructure is absolutely essential. It should include a conducive environment, roads and air/sea transportation facilities, water, power, telecommunications together with the best-in-class facilities management and high quality amenities for families (i.e., healthcare, education, recreation, etc.). Safety and security are also paramount. The Ethio ICT Village which rests on 200 hectares is in the process of fulfilling the above-mentioned pre-requisites and is located in the Bole Lemi area of Addis Ababa which is on the eastern side of Bole International Airport. The advantages of the proposed location are: Close proximity to Bole International Airport, business community, market, universities and R&D institutions Good approach road under construction connecting the city and airport Year round climate Terrain suitable for green field development World experience shows that ICT parks are mostly an urban (or semi urban) phenomenon, which is precisely the case in Ethiopia considering its proximity to the market and international airport. The design of the Ethio ICT Village is intended to create a favorable destination for national and multinational businesses and industrial activities. The area is demarcated into various sub-zones facilitating 10

13 simplified movement patterns and inter-zone movement. The sub-zones within the Ethio ICT Village are:- Zone 1 Business zone Zone 2 Assembly warehouse zone Zone 3 Commercial zone Zone 4 Administrative zone Zone 5 Knowledge park zone Proposed ICT Village Main Existing Road Sub Way IT Plots Ware House Commercial Knowledge Park Aminities Utilities Green Road Conceptual Zoning Currently, the construction of buildings and infrastructure of these zones is underway. 11

14 When the Ethio ICT Village operates at full capacity among others the following facilities are expected:- An entrance plaza with administrative buildings, commercial centre, convention centre and petrol stations Commercial amenities such as restaurants, food courts, pubs and karaoke lounges, retail outlets, medical facilities, financial service outlets, postal & banking services Institutional and supporting facilities such as child care centers, meeting / function rooms, training centers, estate management, fire station, police, customs, sports and recreational facilities. Bole Airport ICT Village 12

15 Incentives The Ethiopian government provides attractive investment packages to companies entering the Ethio ICT Village. High technology businesses establishing units within the Ethio ICT Village get tax exemption for 5 years and tax reduction for an additional 2-3 years, which would be delineated in the guidelines or operational manuals of the Ethio ICT Village. Tax benefits are extended to foreign and domestic companies. Other benefits include use of bonded warehouses and reduced/duty free imports for equipment to be used within the park. Setting of attractive land lease price for the Ethio ICT Village which promotes investment is underway. Eligibility criteria for plots within the Ethio ICT Village 13

16 The following are eligible to acquire space in the Ethio ICT Village: Individuals and companies, local or foreign, public institutions and civic societies engaged in ICT In addition, the Diaspora and foreigners who have investment permits to undertake business development activities in the ICT sector of Ethiopia Requirements to acquire space within the Ethio ICT Village Investment license for foreigners/diaspora Business license as required by trade/investment rules and regulations of the Ethiopian government Completion of the application form & the requirements provided by Ethio ICT Village/ MCIT Detailed short and long term project proposal demonstrating capital and labor force (skilled & unskilled) Clear timelines for construction completion, occupation of office space and commencement of business activities 14

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18 Ministry of Communication & Information Technology P.O.Box Addis Ababa, Ethiopia Tel Fax