Relocation, Compensation Court Case Delays Industrial Park

Construction of the highly acclaimed Huajan Industrial Park, for which the Prime Minister laid the cornerstone on April 16, 2015, further delayed as relocation and compensation of occupants of the land goes to the Supreme Court.

The case involves the plaintiffs, 10 residents of Lebu area in Nefas Silk Lafto District and defendants, the administrators of the city, the Nifas Selk Lafto District, and the Wereda 02 under it. It started on July 7, 2014, with a file presented to the High Court protesting the administrative decision to relocate the residents and the compensation assigned them for doing so. The claimants assert their right of land holding, covering 3,989sqm, as legally protected since 2003.

On July 31, 2015, the High Court decided in favour of the administrative body’s noting that it has no jurisdiction over the case. They took their case to the Federal Supreme Court, which deemed the case admissible to the court and therefore adjourned for examination in November, 2015.

The three defendants were summoned to appear at the High Court, but they failed to appear, and so the case was heard in their absence. Later in their statement of defense, they argued that proper compensation and substitute land was given by the district to the farmers with accompanying legal rights. However the 10 are considered to be illegal grabbers who deserve neither compensation nor substitute land, according to their argument. They also argued that, based on Proclamation No. 455/2012, Expropriation of Land Holdings for Public Purpose & Payment of Compensation, the case was not the mandate of the court but of the Compensation & Evacuation Appeals Hearing Tribunal in the City Administration.

Presided over by Judge Birhanu Mengestu, the High Court examined the case and said based on Urban Land Lease Holding Proclamation No. 721/2011, once an immovable property is acquired illegally, evacuation can be ordered by the district without compensation by giving just a notice. The court discarded the application of the residents noting that the case should have been first referred to the respective administrative organ to hear appeals and that the case is beyond its jurisdiction. But the Supreme Court to which the plaintiffs appealed their case accepts that the case is capable of falling under court’s jurisdiction and appointed the parties for November 2015 to examine the substance of the case.

The pause in the overall process costs everyone involved, weighing high on the Huajan Group, President of the group, Zhang Huarong told Fortune. “All is in place; 80pc of the materials for construction of the factories has already been imported from China. All earthwork and land labelling have been accomplished and 46 employees have already been hired. What hinders the construction of the park is just the court case.”

Huajian’s industrial park development has four phases extending to December 2019. Part of the first phase was carried out before the lawsuit started.

According to data from the Chinese company HHD Engineering, in charge of the preliminary design of the park, the overall industrial park which is a combination of factory sheds and residential areas includes family villas, business districts with shopping centres, corporate headquarters building, district office,training schools and other facilities. The construction will be undertaken by Huajian itself, supervised by local construction company Eyoel Construction Engineering.

Huajian decided to invest in the country after the close personal follow-up of the late Prime Minister Meles Zenawi. In 2012, Zhang and Meles inaugurated the first buildings of a future city of 200,000 inhabitants, the Huajian International Shoe City in Ethiopia. The city was imagined and planned in less than two years. A contract with wider scope of collaboration was signed between the two in June 2013. Having the construction of industrial park, the company immediately started a shoe factory in Eastern Industrial Zone.

The industrial zone mainly focuses on light industrial products of footwear and their accessories. It rests on 138ha of land, covering a factory area of 50ha. The industrial park which targets production exclusively for the export market is expected to generate over two billion dollars of export revenue each year at its full production capacity of 35,000 pairs of shoes per day. Its current capacity is 10,000 pairs at its rented factory in Eastern Industrial Zone on Dukem.

The leather sector contribution to export revenue of the country is slowly improving. Last fiscal year around 33 million dollars were obtained from the export of footwear, half of the exports coming from Huajian and Gorge Shoe, from Taiwan, both the largest in the industry.

There are also around 14 local companies exporting footwear and more than 1,000 smaller and micro enterprises that produce footwear on substandard technology and input, according to the Industry Development Institute of the Ministry of Industry.

During implementation of the next Growth & Transformation Plan (GTP II), the government plans to earn around 800 million dollars from leather and leather products export market with 50pc of expected revenue from the exportation of footwear. The estimated export revenue expected from the footwear industry alone is 100 million dollars a year.

There are now two Turksih companies that have shown interest in participating in the production of non-leather footwear in Ethiopia, said Wondu Leggesse, director general of the Leather Institute, adding that non-leather footwear accounted for 65pc of the global market.

“While this is the global scenario, we cannot be competitive exporting leather footwear and a shift to non-leather footwear is essential to expand our market,” he said.


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