In­ter­view: Had­dis Tadesse, Rep­re­sen­ta­tive of Bill & Melinda Gates Foun­da­tion to Ethiopia and to the Africa Union

Africa Renewal - - CONTENTS - — Had­dis Tadesse (The full in­ter­view is avail­able on http://­newal)

In Fe­bru­ary 2012 the Bill & Melinda Gates Foun­da­tion an­nounced the ap­point­ment of Had­dis Tadesse, a US na­tional of Ethiopian de­scent, as its rep­re­sen­ta­tive to Ethiopia and to the African Union. It was the Foun­da­tion’s first-ever rep­re­sen­ta­tive to an African coun­try. Re­cently, Africa Re­newal’s Masimba Tafirenyika spoke with Mr. Tadesse in his of­fice in the cap­i­tal Ad­dis Ababa about the rea­sons driv­ing Ethiopia’s eco­nomic growth.

Why did the Gates Foun­da­tion choose Ethiopia to host its first of­fice in Africa?

It’s for a few rea­sons, but pri­mar­ily there are two rea­sons why we have a large con­cen­tra­tion of our work here. First, the need is sig­nif­i­cant. There is a huge pop­u­la­tion with a heavy poverty and dis­ease bur­den. Sec­ond, we be­lieve in the prom­ise of Ethiopia. We think the gov­ern­ment’s com­mit­ment and in­vest­ments to pro-poor sec­tors, with sup­port from de­vel­op­ment part­ners, have en­abled our in­vest­ments to yield pos­i­tive re­sults. We place high value on part­ner­ships, and since we un­der­stand the gov­ern­ment’s agenda, we are able to con­trib­ute in a way more aligned to their pri­or­i­ties. There are also some lo­gis­ti­cal rea­sons why Ethiopia makes sense. It’s the diplo­matic cap­i­tal of Africa: you can reach the rest of Africa be­cause the African Union and the United Na­tions Eco­nomic Com­mis­sion for Africa are based here.

How did Ethiopia get to be among the top 10 fastest grow­ing economies in the world?

The gov­ern­ment has been clear about how it wants to grow the econ­omy. It is com­mit­ted both to growth and to lift­ing many peo­ple out of poverty. This is ac­tu­ally a com­pelling story. If you look at the gov­ern­ment bud­get, about 65 to 70% of it goes to pro-poor de­vel­op­ment ac­tiv­i­ties such as agri­cul­ture, health, ed­u­ca­tion and in­fra­struc­ture. They’ve also been very fo­cused on in­fra­struc­ture: the road and the light rail net­work is im­pres­sive. The power gen­er­a­tion work Ethiopia has em­barked upon is im­pres­sive. In a very short pe­riod of time, it is go­ing to be a power hub, gen­er­at­ing suf­fi­cient power not just for it­self but also for ex­port to other coun­tries. Tele­com is another ex­am­ple of in­fra­struc­ture the gov­ern­ment has planned quite well. But go­ing for­ward, I’m not sure all these will be suf­fi­cient. Mas­sive and ex­panded ac­tiv­i­ties from the pri­vate sec­tor will need to be cou­pled with the public sec­tor for con­tin­ued growth. So far, growth has been heav­ily de­pen­dent on public sec­tor in­vest­ment.

Are there any spe­cific poli­cies tar­geted at en­cour­ag­ing pri­vate sec­tor in­vest­ments?

The gov­ern­ment is go­ing above and be­yond to strengthen the ca­pac­ity of the pri­vate sec­tor and also to at­tract FDI [for­eign di­rect in­vest­ment] to sup­port de­vel­op­ment. They are do­ing that by pro­vid­ing dif­fer­ent in­cen­tives. There’s a pro­mo­tional ef­fort to at­tract in­vest­ments, depend­ing on the sec­tors they think are cat­alytic to growth. The gov­ern­ment is plan­ning to in­vest heav­ily on in­dus­trial zones across the coun­try that will house textile, leather, agro-pro­cess­ing and other labour-in­ten­sive fac­to­ries. The hos­pi­tal­ity in­dus­try is also ea­ger to at­tract in­vest­ments.

Many coun­tries are con­cerned about high growth rates along­side grow­ing un­em­ploy­ment. How is Ethiopia deal­ing with job­less growth?

I’m not ex­actly sure how many jobs have been cre­ated as a re­sult of the growth in Ethiopia, but there are a cou­ple of things the gov­ern­ment is try­ing to do. First, there is a huge em­pha­sis on build­ing and main­tain­ing small en­ter­prises to feed into the in­dus­try. For ex­am­ple, there is a large public hous­ing scheme where many of the prod­ucts and labour are supplied by small and mi­cro-en­ter­prises. The goal is to grow them into medium and lar­ge­size com­pa­nies. Sec­ond, there is a shift of fo­cus to man­u­fac­tur­ing. The gov­ern­ment has an in­ter­est in cre­at­ing a large em­ploy­ment base. They now have shoe, leather and textile com­pa­nies that are set­ting up shop for Euro­pean and US mar­kets. The likes of H&M, Zara, Tommy Hil­figer and Calvin Klein brands and some big-name shoe com­pa­nies are now out­sourc­ing to Ethiopia. And then there is the ser­vice in­dus­try that’s grow­ing at a high rate and cre­at­ing em­ploy­ment op­por­tu­ni­ties as well. The growth that has hap­pened may not have cre­ated many jobs, but the cur­rent pol­icy and ef­forts are geared to­wards a huge ad­di­tion to the em­ploy­ment base.

Another pos­i­tive story in Ethiopia is agri­cul­ture. What has made Ethiopia move from famine 30 years ago to the cur­rent suc­cess in agri­cul­ture?

Here again, there are mul­ti­ple rea­sons why agri­cul­ture has per­formed well. The sec­tor’s im­pact on Ethiopia is pretty sig­nif­i­cant: 45% of the GDP comes from agri­cul­ture; 80- 85% of em­ploy­ment comes from agri­cul­ture and it is also a huge source of the ex­port com­modi­ties. Ethiopia has a history of food in­se­cu­rity, given the weather and man­age­ment chal­lenges the coun­try has had. There has been a con­cen­trated ef­fort by all the play­ers, gov­ern­ments, donors, farm­ers and oth­ers to change that. If you change

the story of agri­cul­ture, you change the story of Ethiopia, given how the two are in­ter­twined.

Pro­duc­tiv­ity has in­creased sig­nif­i­cantly, the mar­ket struc­ture, while not per­fect, has im­proved and tech­nol­ogy is im­pact­ing the agri­cul­ture sec­tor as well. Com­pared to 20 years ago, the coun­try now has bet­ter seeds, bet­ter man­age­ment tech­niques, more fer­til­izer and ac­cess to do­mes­tic and in­ter­na­tional mar­kets. In some pock­ets of the coun­try, farm­ers have done phe­nom­e­nally well. There’s a pro­gramme where these high-per­form­ing farm­ers can be ex­am­ples to their com­mu­nity.

Sev­eral years ago, Ethiopia cre­ated an in­sti­tu­tion, the Agri­cul­tural Trans­for­ma­tion Agency, which the UN, through UNDP, has been sup­port­ing. It’s a gov­ern­ment agency and staffed by highly trained tech­ni­cal peo­ple able to drive the trans­for­ma­tion agenda. Ethiopia has con­sis­tently al­lo­cated 10-17% of its bud­get on agri­cul­ture. The other in­ter­est­ing thing that has hap­pened is the re­silience built around food in­se­cu­rity. Be­cause the net­work of food dis­tri­bu­tion and early warn­ing sys­tems built, even when there is drought, the num­ber of peo­ple im­pacted is min­i­mal.

Where is Ethiopia get­ting the money to fi­nance all these projects, like the Grand Re­nais­sance Dam?

A por­tion of the money on in­fra­struc­ture is com­ing from the gov­ern­ment. But that’s not suf­fi­cient for the mas­sive in­fra­struc­ture that they have un­der­taken. I would sep­a­rate the dam from the rest of the other projects be­cause that one is a spe­cial pro­ject that’s be­ing fi­nanced partly by gov­ern­ment but mostly by the peo­ple of Ethiopia them­selves. There are a num­ber of mech­a­nisms that the peo­ple are us­ing to con­trib­ute to this iconic dam, at least in the con­text of Ethiopia. Peo­ple from all walks of life are con­tribut­ing to the dam through the pur­chase of bonds. The other projects are fi­nanced by the gov­ern­ment and ex­ter­nal re­sources, mostly con­ces­sional loans.

Are there lessons for other coun­tries from this type of fi­nanc­ing scheme?

Ab­so­lutely, I don’t see any rea­son why, if there’s a pro­ject of sig­nif­i­cance and na­tional pride, the gov­ern­ment and peo­ple of any coun­try can’t say, ‘This is us, this is ours, and we’re go­ing to do this our­selves.’ Hope­fully the com­ple­tion of the Grand Re­nais­sance Dam will be a shin­ing ex­am­ple of that. For the other projects, in ad­di­tion to the gov­ern­ment’s own com­mit­ment and putting re­sources it is ob­vi­ously clear that China has been a very strong part­ner in de­vel­op­ing this in­fra­struc­ture – namely rail, roads, tele­com and power gen­er­a­tion projects. A lot of the money has come from China as soft loans. So on in­fra­struc­ture, I wouldn’t un­der­es­ti­mate the role China has played in pro­vid­ing the fi­nance and tech­ni­cal ex­per­tise.

Some eco­nomic ex­perts are fas­ci­nated by the eco­nomic model that Ethiopia is fol­low­ing. What can other African coun­tries learn from this model?

The les­son for other coun­tries is not so much fol­low­ing Ethiopia’s eco­nomic model, be­cause it is tai­lored for Ethiopia’s cur­rent needs and as­pi­ra­tions. I wouldn’t try to say it should be em­u­lated. But what is worth pick­ing up here is the strong role that the state plays in chart­ing the course of the eco­nomic model it needs, in con­sul­ta­tions with its ex­perts. Gen­er­ally speak­ing, I would say Ethiopia’s eco­nomic model has worked for Ethiopia. It’s worth look­ing at the process by which they iden­ti­fied their eco­nomic model, and fol­lowed through to make it hap­pen. But each coun­try should look at the eco­nomic model that best suits its dy­nam­ics.

Still, some ex­perts look at what Ethiopia is do­ing and draw sim­i­lar­i­ties with China’s eco­nomic model. Do you think there are some par­al­lels?

My sense – and this is my own ob­ser­va­tion – is that the Chi­nese eco­nomic model Had­dis Tadesse, mid­dle, with Ethiopian Min­is­ter of For­eign Af­fairs, Te­dros Ad­hanom, left, and Bill Gates. of suc­cess res­onates with the cur­rent Ethiopian eco­nomic sit­u­a­tion, given that China has gone through sim­i­lar growth in re­cent history. The model un­der which they had high eco­nomic growth given the base where they started is very rel­e­vant to Ethiopia be­cause it is where China was 25 years ago. My hope is that we don’t just do what China or other coun­tries did; you pick and choose what makes sense for you.

China wouldn’t be in­vest­ing here on a large scale if they didn’t agree with Ethiopia’s eco­nomic model, if they didn’t see a re­turn on their in­vest­ments.

I am sure the Chi­nese have made their cal­cu­la­tions about plac­ing this kind of money in Ethiopia. It’s not a gift, it’s with the as­sump­tion that the growth model is solid enough that once the coun­try grows and gen­er­ates rev­enue, the money will be paid back with in­ter­est. The pri­mary driv­ers of the eco­nomic mod­els are the Ethiopi­ans them­selves and they have to de­cide what works best for them. So far, the coun­try’s credit rat­ing is a solid B with fis­cal deficit tar­get of 2.9 per­cent of GDP this year.

When­ever peo­ple talk about Ethiopia’s eco­nomic suc­cess, they also make ref­er­ence to hu­man rights is­sues. Do you think there is a sac­ri­fice be­tween eco­nomic de­vel­op­ment and hu­man rights?

I would look at them sep­a­rately. I tend to agree with for­mer Prime Min­is­ter Me­les Ze­nawi who said: ‘ Democ­racy and hu­man rights are not nec­es­sary pre­req­ui­sites for eco­nomic growth. Ethiopia can grow with­out hav­ing those things at­tached to eco­nomic progress.’ But for a coun­try like Ethiopia that has a multi-eth­nic, mul­tire­li­gious pop­u­la­tion to sur­vive over a pe­riod of time, those ba­sic hu­man rights, democ­racy, free­dom of speech, and other things have to be em­bed­ded into so­ci­ety. With­out that, your sur­vival can­not be en­sured. It is an in­ter­est­ing view. You can grow with­out ad­e­quately pro­vid­ing these things, 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.

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