June 26, 2016

10:25 am

Ethiopia is on track to become Africa’s industrial powerhouse

Source: QUARTZ Africa 
By Jostein Hauge and Muhammad Irfan  

Ethiopia seems to be attracting the attention of economists interested in Africa, and for good reason. Except for Rwanda, Ethiopia is the only African country whose economic growth has been consistently high for more than a decade without relying on a natural resource boom.

Between 2004 and 2014, per capita growth in Ethiopia was 8% per year. This was the highest on the continent during this period, and is impressive by any standard.

The growth has been attributed mainly to a construction boom and increased agricultural productivity. But manufacturing has also been vital. It has grown at 11% per year and manufacturing exports increased more than elevenfold. This was largely thanks to the increasing export earnings of the footwear and apparel industries. The growth represents more than a doubling of manufactured exports’ share in total merchandise exports, which itself more than quintupled during the period.

Nevertheless, manufacturing as a share of gross domestic product in Ethiopia remains 5%, well below the African average of 10%. The country also scores below the African average on diversification, export competitiveness, productivity and technological upgrading.

Despite this, it’s not a long-shot to predict that Ethiopia will catch up with countries like China and Vietnam in some low-tech manufacturing industries in the near future. These are industries for which labour costs are very important. And right now you’d be hard pressed to find a country in the world that has cheaper labour than Ethiopia. Even beyond these obvious industries, there are reasons to believe that Ethiopia might be on the right track to catch up with more advanced economies.

The developmental state

First is the country’s developmental orientation. In many ways it resembles that of successful catch-up experiences in East Asia, such as Korea and Taiwan, with a relatively “authoritarian corporatist” structure and centralised economic planning.

Meles Zenawi, Ethiopia’s recently deceased prime minister who ruled from 1995 to 2012 and whose legacy remains strong in today’s ruling political coalition, repeatedly expressed admiration for the East Asian experience. He stressed that its success was based on a prudent combination of market forces and state intervention. The state not only provided basic infrastructure and services but also a conducive environment for the private sector.

The second reason to be optimistic about Ethiopia’s prospects is the impressive industrial policymaking capability it has accumulated since the Ethiopian People’s Revolutionary Democratic Front government came to power in 1991.

The quality of this capability becomes clear if you read the Growth and Transformation Plan covering 2010-2015. According to economist Kenichi Ohno the plan is unusual in its brevity, coherence and strategic direction. Priority manufacturing industries were designated based on resource availability, labour intensity, linkages to agriculture, export potential and relatively low technological entry barriers. They include apparel and textiles, agro-processing, meat processing, leather and leather products, and construction.

Supporting institutes have been set up for each industry to coordinate the value chains effectively, for example by ensuring efficient supply of inputs to manufacturers and to assist firms with technological upgrading.

Two state-owned banks, the Commercial Bank of Ethiopia and the Development Bank of Ethiopia, provide most credit to firms in these industries. Foreign banks are simply not allowed to operate in Ethiopia. The understanding is that they will be allowed in only when domestic banks have developed the capacity to compete.

Education and infrastructure

While the Ethiopian government is formulating policies to support specific industrial sectors, for most of the past 20 years the federal budget has been devoted to policies that are more “horizontal” in nature, like education and infrastructure. Results so far are impressive.

Enrollment in primary schools has increased from below 20% in the early 1990s to about 94% in 2012. The number of universities has increased from one in 1990 to more than 30.

And the government has invested massively in infrastructure development, focusing on transport and power generation. The road network expanded from 26,550km to 53,997km between 1997 and 2011. The country is set to quadruple its power generation capacity when the Grand Ethiopian Renaissance Dam on the Nile is finished in 2017/18. One of the largest hydroelectric power stations in the world, the dam will generate 6,000MW.

Cement and floriculture

Feeding on the boom in construction, cement production has grown dramatically since 1999. The average annual growth of cement production has been more than twice the world average. As a result, Ethiopia is now the third largest cement producer in Africa.

State support has been both direct and indirect. Direct measures include entry incentives for domestic firms, like long-term loans for capital investments, easy access to mining resources and the allocation of foreign currency on a preferential basis.

Additionally, government provision of transport and energy has been crucial.

Like the cement industry, the Ethiopian floriculture sector has made important contributions to overall economic development.

Cut flower exports increased from three tons in 2003/04 to more than 50,000 tons in 2011/12, substantially raising export earnings. From 2007 to 2012, the sector’s employment doubled from 25,000 to 50,484. The industry grew from a single firm in 2000 to about 100 in 2014.

The industry has also created indirect jobs through the expansion of horticulture. Related activities, such as packaging production, cold chain logistics and air transport have all benefited.

While Ethiopian firms initially kicked off the floriculture industry, foreign firms have increased their investment. In 2012 they accounted for 63% of all firms operating in the sector.

This foreign investment has contributed to technological development and improved market access.

Foreign investors say Ethiopia has become an attractive investment location because of natural endowments such as land and altitude, cheap labour and government incentives. These incentives include tax holidays on profits for up to five years, duty free privileges on all capital goods and the provision of construction material.

Subsidized loans have been the prime source of long-term investment financing for firms in the floriculture industry. Almost two-thirds of firms in the industry have relied on loans from the Development Bank of Ethiopia. And private banks, seeing the success of these loans, have also started lending to the industry.

Sectors destined for future success

Both the leather products and the textile and apparel sectors have been designated as top priority manufacturing industries in the recently released five-year development plan (2015 to 2020). One reason for this is because they have strong linkages with the agricultural sector as they use inputs from the livestock and cotton sectors. They are also both labour intensive, thus absorbing labour from the agricultural sector, and have major export potential and low entry barriers.

To become internationally competitive, the Ethiopian government has invited foreign investors to provide much-needed investment capital and technological capabilities. A slew of incentives has been created to induce these firms – as well as domestic ones that can meet international standards – to export. These include:

  • subsidized land rent in industrial zones;
  • generous credit schemes;
  • 100% exemption from the payment of duties on imported capital goods and raw materials for the production of exports; and
  • five-year tax holidays on profits.

Export figures from the past two years indicate positive trends for both industries. But the results are not yet near where they need to be to make a significant contribution to structural change.

However, considering all the positive signs, Ethiopia might very well be on its way to become Africa’s industrial powerhouse.

 This article is an edited extract from Transformative Industrial Policy for Africa, a report produced by Ha-Joon Chang, Jostein Løhr Hauge and Muhammad Irfan on behalf of the United Nations Economic Commission for Africa.The Conversation
Jostein Hauge, PhD candidate, University of Cambridge and Muhammad Irfan, PhD student, A Political Economy of Subsidies and Countervailing Measure in International Trade and Development – Issues of Policy Space and the WTO’s SCM Agreement, University of Cambridge

Archive

People celebrate Timket, the annual Ethiopian Epiphany festival, in Addis Ababa, the capital of Ethiopia, Jan. 20, 2024.

Read more

The Ethiopian calendar is also seven years and eight months behind the Western calendar, making Saturday the start of 2014.

Read more

France’s telecom firm Orange has submitted an expression of interest to participate in the ongoing partial privatisation of Ethiopia’s Ethio Telecom firm, Ethiopia’s ambassador to Paris said on Twitter on Tuesday.

Read more

Today marked a milestone moment for Ethiopia and its flag carrier. The country received 2.184 million doses of the coronavirus vaccine through the COVAX global vaccine-sharing initiative. These doses were brought in by Ethiopian Airlines.

Read more

An 18th Century Ethiopian crown has been returned home after being hidden in a Dutch flat for more than 20 years…

Read more

The Nobel Peace Prize was awarded to Ethiopian Prime Minister Abiy Ahmed

Read more

Ethiopia may give up majority control over its telecommunications monopoly in a second phase of privatization once it’s sold 49% of the company next year…

Read more

September 11, 2019

2:09 pm

Happy Ethiopian New Year 2012

Dr. Arvid Hogganvik is a medical doctor born and raised in Ethiopia. He is of Norwegian descent and currently lives in Norway. His family and siblings celebrate The Ethiopian New Year. His parents came to Ethiopia from Norway in 1949 along with their two children and then the third child, Arvid Hogganvik , was born… View Article

Read more

Over 350 million trees were planted in an ambitious move to counter the effects of deforestation and climate change.

Read more

When supermodel Liya Kebede was growing up in Addis Ababa, she wore comfortable Ethiopian clothing — ample dresses made from strips of woven cotton sewn together.

Read more

Ethiopia has positioned itself to become one of the world’s top exporters of textile and garments…

Read more

March 26, 2019

10:50 am

Ethiopia: Africa’s next powerhouse?

Ethiopia has been one of the continent’s best economic performers, growing at a rate of 10 percent for the past 15 years…

Read more

Voted the Best Airline in Africa in 2018, the airline’s triumphs are arguably down to reasonably priced tickets, efficient service delivery, a good safety record and a wide network of flights…

Read more

[A]s a plan it sounded much like a Sunday in Hampshire. So you can understand my concern when I saw the man holding a carrier bag full of old rope.

Read more

At 19-years-old, Betelhem Dessie is perhaps the youngest pioneer in Ethiopia’s fast emerging tech scene, sometimes referred to as ‘Sheba Valley’…

Read more

Full of natural wonders and ancient culture, this vast country is also home to booming cities and a youthful population. Explore it with our guide on where to go, what to see and where to stay

Read more

The state-owned Ethiopian Airlines, Africa’s largest carrier by number of passengers, according to FlightGlobal…

Read more

Ethiopia Overtakes, Ghana loses No. 1 sub-Sahara spot as IMF revises 2018 economic growth forecasts…

Read more

Chicago has become one of the newest dots on Ethiopian Airlines’ global flight map…

Read more

The project is Beijing’s big experiment in outsourcing, and a $10 billion shot in the arm for the African nation—if there isn’t a civil war first…

Read more

Source The Washington Post By Paul Schemm ADDIS ABABA, Ethiopia — The Marvel Comics movie “Black Panther” has wowed audiences across the United States and around the world, including Africans who have cheered on the African superheroes and their fictional Kingdom of Wakanda. There is a little something for everyone in Wakanda for Africans. The… View Article

Read more

Rambunctious, manic, beguiling, exciting — it’s hard to accurately describe Addis Ababa…

Read more

an effort by Ethiopia to turn itself into an exporter of electricity to the region, channeling at least $4 billion into geothermal projects across the nation…

Read more

The old man’s face was beautiful, although it was etched with deep furrows — no doubt the result of having lived through droughts, famines and 17 years of a brutal and paranoid communist government that has slaughtered half a million of his countrymen…

Read more

Apart from Saudi-Ethiopian billionaire Mohammed Al-Amoudi, Samuel Tafesse is arguably the most popular businessman of Ethiopian origin.

Read more

The World Bank again declared that the Ethiopian economy would be Africa’s most expansive in 2017…

Read more

As Ethiopia strives to become the manufacturing hub of Africa, more and more Chinese companies are showing an interest in investing in the east African country …

Read more

As global demand for teff, Ethiopia’s gluten-free indigenous staple crop grows, officials and businesses are looking to tap the global market…

Read more

The BBC World Service has launched three websites for Ethiopia and neighbouring Eritrea as part of its biggest expansion since the 1940s.

Read more

It is an important security step since if Internet Service Providers (ISPs) do not have this new key, the Internet will not work for them or their customers, according to Mr. Dandjinou

Read more

I have always questioned God’s existence, but in the northern Ethiopian town of Lalibela, I was presented with fairly substantial evidence.

Read more

Turkish construction giant Yapı Merkezi hopes a $3 billion modern railway-line project it is building in Ethiopia and Tanzania …

Read more

The e- visa is processed and issued online on a single Web page where applicants apply, pay and secure their entry visa online.

Read more

Ethiopian Airlines was betting Airbus SE’s new A350 widebody would help it lure lucrative business-class passengers away from the likes of Emirates. . .

Read more

Government reforms are designed to encourage farmers to produce more high-quality beans…

Read more

Pizza Hut is set to open three outlets in Ethiopia this year, becoming one of the first international restaurant chains to enter Africa’s second-most populous country.

Read more

Ethiopia, the second-most populous Sub-Saharan African country with a GDP size of $61.54 billion (Rank: 73), is projected to grow annually at 8.7%

Read more

Germany fosters change in Ethiopian textil industry…

Read more

Norfund has made a USD 7.4 million investment in Verde Beef Processing PLC, an Ethiopian beef producer. Verde Beef Processing PLC produces premium beef and aims to become the largest cattle processing operation in Eastern Africa with a target output of more than 130,000 carcasses per year. The capital provided by Norfund will help the… View Article

Read more

The Danakil Depression, including the Dallol volcanic area is one of the most remote, inhospitable and poorly studied areas in the world.

Read more

The Embassy participated in the inauguration of the Ethiopian Airlines flight to Oslo on Friday 24 March 2017. Read the speech made by the ambassador below.

Read more

Lenders are lining up to set up businesses in Ethiopia, one of Africa’s fastest-growing and most under-banked economies…

Read more

ADDIS ABABA, Feb. 19 (Xinhua) — The airport of the Ethiopian capital Addis Ababa is training Chinese-speaking staff upon arrivals of more Chinese travellers…

Read more

The Caesarea-based firm is teaming up with partner TodayTomorrow Ventures Inc. in a $400,000 deal to construct a wastewater treatment facility at the EPRI 1 condominium complex in Addis Ababa.

Read more

Ethiopian Entrepreneurs who were educated overseas are returning home

Read more

Bethlehem Alemu’s shoes have been sold worldwide by Amazon (AMZN, Tech30), Urban Outfitters (URBN) and Whole Foods (WFM)…

Read more

January 19, 2017

10:27 am

Ethiopian to Open Seven New Destinations

Ethiopian envisages to reach 120 international destinations worldwide by the year 2025…

Read more

Ethiopia on Saturday officially opened the Gibe 3 hydroelectric dam, which is among the biggest in Africa…

Read more

Ethiopia has welcomed hundreds of new taxis…

Read more

A $3.4 billion Chinese-built railway linking the Ethiopian capital Addis Ababa and the port city of Djibouti…

Read more

Ethiopia seems awake to look in to its tourism potential. Along with the development of various tourist infrastructural facilities, the country is endeavoring to market the resource for economic development…

Read more

Gibe III Hydroelectric Project, Ethiopia […] is expected to be in full operation by August, 2016. ..

Read more

Ethiopia seems to be attracting the attention of economists interested in Africa, and for good reason…

Read more

Ethiopian has been voted as the Best Cargo Airline of the Year …

Read more

Ethiopia, Africa’s second most populous nation, has transformed into one of the world’s fastest-growing economies…

Read more

Source: CNN Native to Ethiopia, the Ge’ez is more than just an ancient, nearly forgotten language. It’s Ethiopia’s link to its distant past.  

Read more

Addis Ababa February 10/2016 The government of Sweden is interested to further strengthen all rounded cooperation with Ethiopia, according to the country’s Ambassador to Ethiopia…

Read more

February 4, 2016

5:45 pm

Investments: When Ethiopian giants dance

Ethiopia’s in the driving seat, as investors from East and West seize on opportunities in sectors ranging from construction to brewing…

Read more

A previously unknown population of at least 100 lions has been discovered by a wildlife charity in a remote park in north-western Ethiopia…

Read more

January 12, 2016

10:18 am

An insider’s guide to shopping in Addis

With the headquarters of the African Union located in Ethiopia’s capital city, as well as an award-winning airline…

Read more

Ethiopian Tourism expects the growth to double by 2016

Read more

There are now 2,700 millionaires in Ethiopia, reflecting an increase of 108% between 2007 and 2013 — the fastest growth rate in Africa…

Read more

Ethiopian airlines operated an All-Women Functioned Flight today on the Addis Ababa – Bangkok route…

Read more

Maersk Oil has agreed to buy half of Africa Oil Corporation’s shares in three onshore exploration licenses in Kenya and a further two in Ethiopia…

Read more

Addis Ababa gets first sub-Saharan Africa metro system…

Read more

Minimal corruption, efficient bureaucracy, and cheap production costs are driving China’s investment in Ethiopia…

Read more

– If there was ever a country that embodied the optimism of the “Africa rising” narrative, it would be Ethiopia. The economy of Africa’s second-most populated country has for the past decade grown at an average of 10.8% every year …

Read more

October 15, 2015

5:08 pm

Made in… Ethiopia? Yes, Ethiopia

— So we got used to “Made in Japan,” “Made in China,” “Made in Hong Kong” and most recently “Made in Vietnam.” There’s going to be a new kid in town, but he’s not Asian. Prepare yourselves for “Made in Ethiopia.”…

Read more

September 25, 2015

1:19 pm

Arsenal breaks new ground in Ethiopia

Arsenal Football Club has become the first Premier League side to secure a regional partnership in Ethiopia after announcing Dashen Brewery as its Official Beer Partner…

Read more

Tekle Negash’s days of riding a battered minibus to work in Ethiopia’s capital are over. Boarding Addis Ababa’s $475-million, Chinese-built and funded Light Rail, he can slash his one-hour commute by two-thirds and still save money…

Read more

Ethiopia is head and shoulders above the rest of Africa in meeting the Millennium Development Goals (MDG)…

Read more

Ethiopia’s Addis Ababa has the most expensive hotel room prices in Africa, according to research based on the price comparisons of select major African cities…

Read more

EEthiopia won the first gold medal at the IAAF Beijing World Athletics Championship in the female 1,500 mt race with world record holder Athlete Genzebe Dibaba in Beijing, yesterday…

Read more

Ethiopia’s government will boost spending by 20 percent in the budget year that begins next month to expand infrastructure in one of Africa’s fastest-growing economies,State Finance Minister Abraham Tekeste said…

Read more