Ethiopian Business Review

Can it be a vibrant Hub?

Located 99 kilometers from Addis Ababa, Adama is one of the largest and most vibrant cities in the state of Oromia and is home to almost half a million people. Its key role as a route for a large portion of the nation’s imports and exports has made it one of the most energetic cities in Ethiopia. Even more, the completion of its first industrial park last month makes it one of the country’s most promising investment spots. Despite the growth in businesses’ desire to invest in Adama, the city administration has been unable meet demands for investment licenses, which have accumulated for the past four years. Recurrent water shortages and rising living costs have remained challenges for the city’s residents. EBR’s Ashenafi Endale, who visited the city last month, reports.

Early October, 2018, marked an exciting event for the residents of Adama. Prime Minister Abiy Ahmed (PhD) was in town to inaugurate the city’s first industrial park, along with Lemma Megersa and Gedu Andargachew, the presidents of the states of Oromia and Amhara respectively, as well as Arkebe Oqubay, board chairman of the Industrial Parks Development Corporation. Even long waits in the sun and rigorous security checks didn’t dampen the trademark enthusiasm of Adama’s residents who had gathered for the inauguration ceremony. 

Adama, known as the ‘Jewel of the Rift Valley’, was once the capital of the state of Oromia, and is home to around half a million people. Located 99 kilometers south-east of Addis Ababa on the Ethio-Djibouti corridor, Adama is one of the country’s key import-export routes and business hubs. However, compared to its investment, trade and logistical importance, its march to industrialization started relatively recently, and included the opening of the first phase of the industrial park, which has 19 sheds and cost ETB4.1 billion. 

After its establishment in 1916 as a train depot, Emperor Haile Selassie gave the town the biblical name of Nazareth in 1954. But in 1992, when the country embraced federalism, many ‘baptized’ cities started using their older names. The name Adama is said to come from different sources, including the Adami plant, plentiful cacti which were found in the area when the town was established. Another theory holds that the name comes from Adama Butta, an Oromo historical figure. 

The city covered an area of 120 hectares in 1937, but migration and urbanization raised that to the current area of 13,666 hectares. According to the Central Statistical Agency (CSA), 59.2Pct of the Adama’s residents are migrants. 

With an average temperature of 22 degree Celsius, Adama is one of the sunny and windy towns in the Rift Valley. The high speed wind, which blows from east to west year round, has enabled the government to put up three wind power farm projects around the city. 

Since Adama sits at the crossroads of passages to all parts of the country, it attracts many guests, for conferences and tourism alike. A room at one of its 235 hotels would run from ETB250 upwards. The city also has 576 restaurants, 523 cafes and seven libraries, according to the Adama Investment Office. However, the hospitality market is still largely untapped, and many hotel and lodge projects are underway.

In spite of this, many entrepreneurs testify that Adama is exceptionally difficult for new investment ventures especially in manufacturing, due to various reasons, including difficulties in accessing land and poor institutional services, as well as insufficient government support, which has decreased business activities, especially over the last three years. Yet, the city is home to industries, such Belayab Cables and Car Assembly, Adama Metal Products, Brothers Flour and Biscuits. 

“There is a big demand for many products in the town. The population is growing. However, most of the market is currently addressed by contraband goods,” says Mihret Yilma, who just finalized the establishment of a garment company with ETB300,000, as a sister company of Fikir Flour. “Getting business licenses is simple. However, land is very expensive, and power is not reliable.”

Contrary to Addis Ababa’s large space occupied by government institutions, Adama is filled with private businesses, but investment endeavors have been taking place in a scattered manner so far. For the last five years, there have been few new investments. So far, there have been a total of 835 investments in Adama town, with a total capital of ETB16 billion. Out of these, 274 are under construction. The majority of them are in the manufacturing sector. 

On the other hand, new investment licenses have not been granted in the last three years, except to four hotels and seven micro and small enterprises that graduated to the medium level, according to Debela Chala, Lease Contract Follow up Process owner at the Adama City Land Management Office. “The main reason is there is no budget to compensate people who have to evacuate from the land needed by investors.”

As a result, the number of requests for investment licenses and land has accumulated to over 400, according to Debela. The requests for investment licenses have become higher than ever, due to the large number of Diaspora coming home. “We are suggesting that they join the industry parks, if they qualify. But there is a budget shortage to provide land for all 400 requests,” argues Debela. “In Ethiopia, other cities beg for investors, but here in Adama, it is the investors that are begging.”

According to Debela, the only solution for the shortage of land supply is directing capable investors to the industrial park. “We will employ other mechanisms for investors who still fail to secure sheds in the industry parks.”

While such promises may mean a bright future for many residents, everyday life in Adama has always been satisfactory, even despite challenges, like rising costs, and infrastructure.

The city’s night life is equally lively, offering a selection of nighttime activities. Crowds make their way between boutiques, restaurants, and shops during the day, and throng towards their favorite watering holes in the evening. 

Adama’s streets, especially at the center, are crowded. Taxis and motorized rickshaws are forced to fight for space with people, and even have to use pedestrian paths, since the two lane roads are unable to accommodate traffic. Adama’s road coverage is around 10Pct, according to data from the Adama Municipal Office, less than the 30Pct requirement at a national level. “The road is always overcrowded, although many people buy only motor rickshaws,” explains Solomon Abdisa, a rickshaw driver, whose daily income is between ETB700 and ETB800. 

Migrants from all over the country constitute a large part of the youth demographic in the city, making unemployment one of Adama’s features.  “A large section of the population waste their time chewing khat and drinking, increasing HIV prevalence and crime rates. This puts the town’s good image at risk,” argues Dawit Tadesse a former football player for various clubs, including Adama Kenema. Currently he runs a physical training center. 

A few young people are also involved in making movies, independently of the industry that is usually based in Addis Ababa. Dawit has also acted in three movies, including ‘Eros’. “Almost all of the youth involved in making movies in Adama lack financing and have no support from the government. I was never paid for the movies I was involved in.  There are many talented and willing youth but there is no support or even recognition.” 

Tourism is another untapped business sector in Adama. In fact, even though Adama and its surroundings are full of historical and natural tourism thrills, many Ethiopians know only Sodere, a natural steam spring located 27 kilometers from Adama. Amazing river falls, hot springs known as ‘Tsebel’, Columbus monkeys, the colorful Kereyu Oromo tribes, historical halls, the notable Awash national park and the obelisk of Aba Geda are some of the tourist attractions.

Being unexploited does not necessarily mean businesses are at standstill in Adama. Despite repetitive changes in administrative structure, which resulted in a weak and unstable structural function, business in Adama is always active. The number of traders registered in the city increased from 14,672 in 2012/13 to 25,084 in 2016/17. There are 25 government and 45 private bank branches, 15 insurance and ten microfinance branches. Adama’s tax revenue stood at close to one billion birr annually. 

The boom in businesses and rise in number of residents is, however, challenged by a shortage of water supply, which has been insufficient and unsafe. The water in the Rift Valley naturally has a high fluoride content, which damages teeth and bones. The demand for water in the city is 14.4 million cubic meters, but the supply is around 7.24 million cubic meters, excluding leakages. Currently, 72.6Pct of Adama residents have a clean and safe water supply, while 20Pct of the gap is created by leakage, according to Adama City Water and Sewerage Organization Office.

Even though recent years have brought their own challenges, residents have managed to keep up their spirits. “For people in Adama, life is elegant and cheap at the same time. They believe in love, and living together, no matter whatever your status is. It is a combination of good values, which is rare in many countries and towns,” says Negasi Lema, 41, a businessman raised in Adama. “Adama is where all can live together in harmony.”


7th Year • Nov.16 - Dec. 15 2018 • No. 68


 

 

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