The chang­ing face of Ethiopia

An as­sertive na­tion flexes its eco­nomic mus­cle

Africa Renewal - - CONTENTS - By Masimba Tafirenyika

When a se­vere famine hit Ethiopia 30 years ago, the UN in­ter­vened with hu­man­i­tar­ian as­sis­tance. To raise aware­ness of the famine, it launched a news­let­ter, Africa Emer­gency, which later turned into a mag­a­zine re­named Africa Re­cov­ery and re­port­ing on Africa’s eco­nomic de­vel­op­ment. To­day the mag­a­zine – this mag­a­zine – is pub­lish­ing un­der the name,

Africa Re­newal. Re­cently Masimba Tafirenyika vis­ited Ethiopia to see how much has changed since the famine. This is the first of a two-part se­ries on a coun­try in tran­si­tion.

Ev­ery so of­ten, a speaker at a con­fer­ence says some­thing provoca­tive or sim­ply voices an opin­ion that sparks dis­cus­sions long af­ter the event. At African con­fer­ences, brusque com­ments by Nige­rian of­fi­cials used to dom­i­nate con­ver­sa­tions. Not any­more. Ethiopi­ans have usurped the role. And there are good rea­sons to sup­port the Ethiopi­ans’ new as­sertive­ness: they run one of the world’s fastest grow­ing economies; they have done a good job in meet­ing the Mil­len­nium De­vel­op­ment Goals; they are build­ing what will soon be Africa’s largest hy­dro­elec­tric dam; their na­tional air­line dom­i­nates the con­ti­nent’s skies; they have achieved an ad­mirable level of po­lit­i­cal sta­bil­ity in one of the re­gion’s rough­est neigh­bour­hoods, and their cap­i­tal Ad­dis Ababa, whose skyline is dot­ted with con­struc­tion cranes, is the con­ti­nent’s diplo­matic cap­i­tal, thanks to the pres­ence of the African Union’s head­quar­ters.

“Ethiopia is in a hurry to de­velop,” says Eu­gene Owusu, who un­til re­cently was the head of the United Na­tions of­fice in Ethiopia, adding: “You might think it’s in­sane for any coun­try to as­pire to grow at such a fast rate. But it re­flects the con­fi­dence the coun­try has right now. It re­flects the bold am­bi­tion and the po­lit­i­cal com­mit­ment of the lead­er­ship.”

Ac­cord­ing to the World Bank, Ethiopia’s “strong and broad-based growth over the past decade” has lifted its GDP to an im­pres­sive av­er­age of 10% per year. The high growth ad­mit­tedly started from a low base, but it has cat­a­pulted Ethiopia from be­ing iden­ti­fied with the in­fa­mous famine of the 1980s into a premier club mem­ber of the world’s fastest grow­ing economies. The East African na­tion is pour­ing bil­lions into, among other things, build­ing ba­sic in­fra­struc­ture in energy, rail and road trans­port.

A Chi­nese-built elec­tri­fied pas­sen­ger rail­way will start op­er­at­ing in the cap­i­tal dur­ing the sec­ond half of this year. Sev­eral hy­dro­elec­tric dams now un­der con­struc­tion will soon gen­er­ate enough elec­tric­ity to meet Ethiopia’s needs plus sur­plus for ex­port to other African coun­tries. The Grand Re­nais­sance Dam on the Blue Nile is the most fa­mous and has come to sym­bol­ize the coun­try’s “bold am­bi­tion” and po­lit­i­cal as­sertive­ness. Ethiopia went ahead with the pro­ject de­spite ini­tial re­sis­tance from Egypt, whose econ­omy de­pends on the Nile’s wa­ter down­stream, and af­ter donors had re­fused to fund its con­struc­tion. In­stead, it de­vised in­no­va­tive ways to raise the money through lo­cal taxes, gov­ern­ment bonds, do­na­tions from the wealthy and re­mit­tances from the di­as­pora. The $4.7 bil­lion dam is ex­pected to gen­er­ate 5,520 megawatts of elec­tric­ity when com­pleted in 2017. Ac­cord­ing to re­ports, by 2020 Ethiopia’s elec­tric­ity pro­duc­tion will reach 17GW, up from the 4GW gen­er­ated in 2011.

As a land­locked coun­try, Ethiopia re­lies heav­ily on Dji­bouti and Kenya for ac­cess to the sea. To­day, it takes sev­eral days for freight trucks to haul con­tain­ers from the port of Dji­bouti to Ad­dis Ababa. But when the re­fur­bished elec­tric rail­road con­nect­ing the two cities opens next year, it will re­duce trans­port costs and cut de­liv­ery time from four days to just ten hours.

The avi­a­tion story is dif­fer­ent. Ethiopia’s ge­o­graphic lo­ca­tion and the suc­cess of its na­tional air­line give it easy ac­cess to many

global mar­kets. Ethiopian Air­lines flies pas­sen­gers to 83 in­ter­na­tional des­ti­na­tions, 49 of them in Africa, and hauls cargo to 24 cities around the globe. It is Africa’s fastest grow­ing and most prof­itable pas­sen­ger and cargo car­rier. Three years ago, the sta­te­owned but pri­vately-man­aged air­line be­came the sec­ond car­rier out­side Ja­pan to op­er­ate the Boe­ing 787 Dream­liner, a sta­teof-the-art pas­sen­ger jet.

Chi­nese firms not only have a big pres­ence in dam and road con­struc­tion, but are also in­vest­ing heav­ily in man­u­fac­tur­ing in ex­port pro­cess­ing zones that have sprouted through­out Ad­dis Ababa. The zones have also be­come mag­nets to textile and leather man­u­fac­tur­ers from In­dia, Tur­key and Bangladesh. Last year, Ethiopia at­tracted $1.2 bil­lion in for­eign di­rect in­vest­ments, and this year it ex­pects a record $1.5 bil­lion, ac­cord­ing to the Fi­nan­cial Times, a UK busi­ness daily. The pa­per cred­its the coun­try’s high FDI rates “to in­creased re­lo­ca­tion of fac­to­ries, at­tracted by low wages, cheap power and sup­port­ive gov­ern­ment poli­cies.”

In­deed, busi­ness-friendly poli­cies and huge public in­vest­ments have been the big­gest cat­a­lyst for Ethiopia’s high growth rates over the past decade. “The gov­ern­ment has been pretty clear about what it wants and how it wants to grow the econ­omy,” says Had­dis Tadesse, the Bill and Melinda Gates Foun­da­tion rep­re­sen­ta­tive to Ethiopia and to the African Union. “They’ve been very fo­cused on in­fra­struc­ture: the road and the light rail net­work is im­pres­sive, the power gen­er­a­tion that Ethiopia has em­barked upon is im­pres­sive.”

Ex­perts list count­less rea­sons to ex­plain the econ­omy’s re­mark­able per­for­mance. But top among them is Ethiopia’s pur­suit of what econ­o­mists call a “de­vel­op­men­tal state model” whereby the gov­ern­ment con­trols, man­ages and reg­u­lates the econ­omy. They note that sim­i­lar state-led de­vel­op­ment poli­cies lifted East Asian economies out of poverty dur­ing the late 20th cen­tury. “The Chi­nese eco­nomic model of suc­cess res­onates with the Ethiopian cur­rent eco­nomic sit­u­a­tion, given that China has gone through sim­i­lar growth in re­cent history,” the Gates Foun­da­tion rep­re­sen­ta­tive said in an in­ter­view with Africa Re­newal.

So far the ap­proach ap­pears to be work­ing for Ethiopia. Its lead­ers are cruis­ing ahead with what is ev­i­dently a very am­bi­tious de­vel­op­ment pro­gramme and stub­bornly refuse to lis­ten to naysay­ers who warn it can­not be done or it can­not be sus­tained. The coun­try as­pires to be a mid­dle-in­come na­tion by 2025. Mr. Owusu of the UN says this as­pi­ra­tion “is what drives ev­ery­thing the gov­ern­ment and the peo­ple are do­ing.”

It is in­deed sheer tenac­ity – what Mr. Owusu calls lead­er­ship with “bold am­bi­tion and a clear vi­sion” – that is cred­ited for Ethiopia’s eco­nomic suc­cess. How­ever, crit­ics ques­tion if such poli­cies can be sus­tained with­out ac­tive par­tic­i­pa­tion from the pri­vate sec­tor. The West, in par­tic­u­lar mul­ti­lat­eral in­sti­tu­tions, com­plain that by not open­ing up parts of its econ­omy, Ethiopia’s state-led de­vel­op­ment poli­cies have thwarted pri­vate in­vestors. Ethiopia’s laws for­bid for­eign busi­nesses in sec­tors con­sid­ered strate­gic like tele­com, fi­nan­cial, in­sur­ance and trans­port ser­vices.

How­ever, de­spite the im­pres­sive eco­nomic growth that has lifted mil­lions out of ab­ject poverty, Ethiopia is still a poor coun­try. Its per capita in­come of $470 is one of the low­est in the world. It ranks 173 out of 186 coun­tries on the 2015 Hu­man De­vel­op­ment In­dex com­piled by the UN De­vel­op­ment Pro­gramme (UNDP), although the gov­ern­ment has taken tan­gi­ble steps to fight poverty. UNDP reck­ons that in 2004-2005, for ex­am­ple, four in ev­ery ten Ethiopi­ans lived in ex­treme poverty – or on less than $0.60 per day as mea­sured by the coun­try’s poverty stan­dard. By 2012/13, the rate had im­proved to less than three in ev­ery ten cit­i­zens.

“This is a huge de­cline in terms of the pro­por­tion of the pop­u­la­tion that is be­low the poverty line,” says Mr. Owusu, who un­til re­cently was also the head of the UNDP in Ethiopia. “We are not talk­ing about a [small coun­try] with two mil­lion peo­ple. We are talk­ing about a coun­try with 95 mil­lion peo­ple [the sec­ond most pop­u­lous in Africa] – and that is a huge quan­tum leap in poverty re­duc­tion.” The UN gives the coun­try high marks for its suc­cess in meet­ing some of the Mil­len­nium De­vel­op­ment Goals: it cut the child mor­tal­ity rate by half, more than dou­bled the num­ber of peo­ple with ac­cess to clean wa­ter and quadru­pled pri­mary school en­rol­ments.

Yes, Ethiopia has been suc­cess­ful in grow­ing the econ­omy, but crit­ics say the gains have come at the cost of hu­man rights. They ac­cuse the gov­ern­ment of pay­ing scant at­ten­tion to ba­sic free­doms and democ­racy. Even the gov­ern­ment’s sup­port­ers con­cede the coun­try has a lot of catch-up to do es­pe­cially, ac­cord­ing to UNDP, in ar­eas such as “im­proved po­lit­i­cal space, ac­cess to media, vi­a­bil­ity of op­po­si­tion par­ties… and civic ed­u­ca­tion.”

“De­vel­op­ment is not just a com­mon trans­for­ma­tion,” says Mr. Owusu, “It also lib­er­ates the en­er­gies of the peo­ple.” Mr. Tadesse, the Gates Foun­da­tion rep­re­sen­ta­tive, adds: “the late for­mer Prime Min­is­ter Me­les Ze­nawi once said hu­man rights were not a pre­con­di­tion for de­vel­op­ment. ‘You can grow with­out ad­e­quately pro­vid­ing [ ba­sic free­doms],’ the prime min­is­ter said. ‘ But the en­tire sys­tem and your en­tire sur­vival over time could be ques­tioned be­cause you have to have a demo­cratic so­ci­ety that as­pires for a brighter fu­ture.’

Still, the pre­vail­ing nar­ra­tive on Ethiopia is the suc­cess of its eco­nomic poli­cies and the po­lit­i­cal clout that comes with it, which has gen­er­ated scep­ti­cism among crit­ics and ad­mi­ra­tion among sup­port­ers. African an­a­lysts watch with awe and won­der if the suc­cess can be sus­tained or repli­cated in other African coun­tries. The next decade – the pe­riod within which Ethiopia as­pires to be a mid­dle-in­come coun­try – will pro­vide the an­swers.

Panos/Sven Torfinn

A view of streets and high rise apart­ment build­ings in Ad­dis Ababa, Ethiopia.

Africa Re­newal/Masimba Tafirenyika

Chi­nese engi­neers work­ing on a new pas­sen­ger train in Ad­dis Ababa, Ethiopia.

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