If Ethiopia succeeds, It can set an example for Nigeria, a potential powerhouse, and a slew of other countries on the continent: How to escape from a spiral of poor governance and poverty through clever planning of economic development. If Dr. Abiy Ahmed Ali manages to get the opposition on board, Ethiopia could become a country of thousands of factories…
Is What Happens In Ethiopia Important To Nigeria?
For a long time, Ethiopia was known as one of the poorest nations in the world. Hunger and drought were synonymous with the country where Emperor Haile Selassie once held sway.
It may therefore come as a surprise that the economy of the largest country in the Horn of Africa has shown remarkable growth for a number of years. Ethiopia can now claim to be one of the fastest growing large countries in the world. Millions of Ethiopians have already managed to shake off absolute poverty.
It sounds like a performance of almost Chinese allure – and that is exactly the intention of the government in Addis Ababa. Ethiopia wants to become the China of Africa.
Growth is badly needed indeed. Ethiopia has more than one hundred million people, and by the end of this century there will be a quarter of a billion Ethiopians on earth. For many tens of millions of young people, employment will be needed that offers the prospect of a better life than their parents and grandparents had.
To achieve that Addis Abba, under the direction of Meles Zenawi, the rebel leader-turned-prime minister who passed away in 2012, drew up a hyper-ambitious Growth and Transformation Plan. It aims at attracting investors and factories that will make goods for the entire world. It is an experiment in rapid industrialisation that has not been seen before in Africa.
Can the second country of Africa – only Nigeria has a larger population – make the transition from poverty, hunger, war and maladministration to some modest prosperity?
If Ethiopia succeeds in making the leap, it can become an example for other African countries that face challenges like an expanding young population, little economic dynamism and poor governance. It could mean that in the course of this 21st century, Africa is able to transform from a continent that many people want to flee to a part of the world where you want to be, because of its great opportunities.
Misery and Miracle
To some, that may sound like a mirage. But consider this: The Chinese, the South Koreans, the Vietnamese also succeeded against the odds. Anyone who looks up the misery and adversity that these Asian countries have endured in the past century can be sure: Economic miracles exist.
Take China: in the twentieth century, it had to contend successively with an empire collapsing from corruption, an assortment of warlords, civil war, invasion and partial colonisation, Mao’s red terror, famine and economic mismanagement. Nevertheless, around 1980 a few smart people, led by Deng Xiaoping, saw a chance to make a new start.
In 2018, almost forty years later, China is back as a world power – and together with Europe and the U.S., it can play a vital role in the industrialisation of Africa. China, like the West, is getting older and expensive. In Africa, there are still plenty of young people and some low wages – just like when Deng reformed Chinese society.
So Ethiopia is now close to becoming the China of Africa? No, there are still many daunting tasks ahead. European consultants and Asian business leaders will tell you, for example, that productivity must increase by at least half, to make sure that many still empty new factory sheds in Ethiopia attract investors and actually start production.
HIP: Underwear From the Rift Valley
Ethiopia is indeed beginning to industrialise. It now boast dozens of new outfits that employ thousands – companies like Huajian, a large Chinese shoe manufacturer, or the Dutch Afriflora, the largest rose farm in the world. New industrial parks are added every year, helped by both the Chinese and the European Union, which is pumping hundreds of millions of euros in Ethiopia to dampen unwanted migration.
The largest industrial cluster so far was opened in 2017 in Hawassa, a city of a quarter of a million people in the Rift Valley. Along the main road from Addis Ababa to the Kenyan border, a futuristic structure towers over the asphalt: the gateway to Hawassa Industrial Park. HIP, in short.
When I travelled in Ethiopia in early 2018, it was busy at the gate. In the early morning hours, thousands of young women and men passed the guard posts. In the villages behind the factories you can still see traditional Ethiopia: Sturdy round huts made of branches and mud. More and more of them are now being replaced by houses made of bricks and cement, because more money is being made in Hawassa and its surroundings.
HIP was built in record time by a Chinese state construction company. Approximately six thousand people now work there, mainly young women, and five years from now, the work force should be ten times that. All young Ethiopians producing clothes for export, for global brands like H & M and Levi’s.
Too Low Wages
Production is slowly increasing. The first full containers have left HIP, with five million pieces of underwear in them. Anyone who buys underwear from H & M this year will for the first time have the opportunity to come across a label that says ‘Made in Ethiopia’ instead of ‘China’, ‘Bangladesh’ or ‘Indonesia’.
So Ethiopia is now close to becoming the China of Africa? No, there are still many daunting tasks ahead. European consultants and Asian business leaders will tell you, for example, that productivity must increase by at least half, to make sure that many still empty new factory sheds in Ethiopia attract investors and actually start production.
Wages are another challenge. They should go up, to make them more like living wages. So far there has been a lot of turnover – no wonder with monthly pay between 800 and 1500 birr, or 25 to 45 euros.
“I’m not going to work in a factory for so little,” says a fishermen on Lake Hawassa. His explanation is practical: On a good day he earns easily double fishing – as a free man without a boss panting down his neck.
For years, Ethiopia’s Revolutionary Democratic Popular Front government did not want a minimum wage, since it might deter investors. But in 2018 this could change: A basic wage of 20 to 25 euros may be introduced. Low indeed, but that’s also how the Chinese started out 40 years ago, the policy makers in Addis Ababa argue.
Barbed Wire, State of Emergency
HIP is the largest industrial park in Africa, according to claims by the government. Ambitions are huge, that’s for sure. The park has endless rows of brand new factory warehouses, fresh asphalt roads, new flats intended for team managers and quality controllers from countries such as China and Sri Lanka.
HIP is also surrounded by a serious wall and barbed wire, with surveillance cameras at regular intervals and police guard towers in strategic places. It says a lot about the current state of Ethiopia.
So what may Ethiopia look like in 2025? It will not be a copy of China, of course. But it is the only African country so far that seeks serious practical inspiration in Asia. That means building new industry parks with real factories that churn out real consumer products – not just lots of talk and largely theoretical national development plans.
There is unrest, and that doesn’t work well.
Beyond wages and productivity, social stability is the main challenge for Ethiopia. Since 2015, unrest has been brewing, resulting in demonstrations and strikes that have increased the pressure for change. Hundreds of young Ethiopians have been killed by federal riot police; thousands, including prominent journalists and bloggers, were arrested. And significantly, a number of foreign companies were attacked by demonstrators.
A second state of emergency has now been in force since February. The unrest has ethnic and economic roots – the central government is dominated by the Tigray, a minority from the north of the country. The Oromo and Amhara, who together form a majority, have felt shortchanged for decades.
The ruling EPRDF now seems to realise it must move to avert bad scenarios – the most sombre being civil war and disintegration of the country. At the beginning of April, the Popular Front therefore appointed an Oromo, Dr. Abiy Ahmed Ali, as prime minister for the first time.
The 41-year-old new leader, who is the son of a Muslim father and a Christian mother, is an expert in conflict resolution. It was his speciality at university – and now Mr. Abiy Ahmed will need all his skills and experience to resolve the current tensions.
African Century
It makes 2018 a key year for Ethiopia – and for Africa.
“If social and political tensions remain, then a few year from now, the H & M’s of this world will have packed their bags”, a manager of a foreign textile company near Addis Ababa warns. “That would mean the millions of jobs this country needs will be a fata morgana”.
So what may Ethiopia look like in 2025? It will not be a copy of China, of course. But it is the only African country so far that seeks serious practical inspiration in Asia. That means building new industry parks with real factories that churn out real consumer products – not just lots of talk and largely theoretical national development plans.
If Ethiopia succeeds, It can set an example for Nigeria, a potential powerhouse, and a slew of other countries on the continent: How to escape from a spiral of poor governance and poverty through clever planning of economic development. If Dr. Abiy Ahmed Ali manages to get the opposition on board, Ethiopia could become a country of thousands of factories and important agricultural industry, providing a much-needed perspective for millions of young Africans who are looking for a better life.
That would be really kickstarting this Century of Africa, indeed. Bring it on, Addis.
Hans Gerard Moleman is a writer based in Maastricht, The Netherland. He worked as a economics reporter and foreign correspondent for Volkskrant, a leading Dutch newspaper, in Europa, Africa and China.
The book Made in Afrika was published in the Netherland in April. An English version will be available early 2019. Hans’ Made in Afrika project was supported by a grant from the Innovation in Development Reporting Programme of the European Journalism Centre and the Bill & Melinda Gates Foundation. These institutions have had no say whatsoever in the content of the stories.
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