Ethiopia Rises, but Challenges Remain – Addis Fortune


For a very long time, Ethiopia and famine had almost been household words. People in all parts of the world still remember the heartbreaking pictures of emaciated and undernourished children, men and women of this ancient land called Ethiopia. This story is just 40 years old.

The old scene where the famine in Ethiopia morphed as one of our global scary memories is now fast fading. Today, Ethiopia appears to challenge the pecking order, as the country now craves for a top flight on board the “Africa Rising” narrative.

Gauging current trends of development in economic growth, political power, diplomatic upper hand and military might of countries across Africa, a study published recently by the Institute of Security Studies (ISS) described Ethiopia as the third largest continental power in determining Africa’s economic and political destiny, only next to South Africa and Nigeria. ISS, an independent research organisation based in South Africa, analysed county-specific trends on a wide spectrum of performances along socio-economic and political domains, including human security issues, terrorism concerns and post-conflict issues.

Many would wonder what exactly put the wind in the sails of such progress that Ethiopia, rising from the ashes, is now calling shots far and wide. One would wonder even more, why Ethiopia’s robust posture in regional and international scene has come off over only the last decade. In much of this time, Ethiopia enjoyed a double digit economic growth rate, making it the largest economy in Eastern Africa.

Ethiopia’s sterling performance as an emerging giant in the African continent is hugely ascribed to a number of factors, such as the relative political stability, the praiseworthy inclusive economic growth – guided by sound policies and strategies, the huge and vibrant opportunities for trade and investment, the ongoing massive regional economic integration with its neighbours and its excellent records in the promotion of regional peace and stability.

Primarily, in a region where many of its neighbours are being racked on a treadmill of political instability, internal socio-economic tensions, raging war and violence, and soaring concerns of terrorism, Ethiopia, in relative terms, is enjoying sustained political stability for over 20 years now. Much of the country’s stability is flourishing as an offshoot of the federalist structure of governance, which Ethiopia took on over a couple of decades.

Substantial achievements have been gained at forging accommodations of diversity in exercising rights across languages, cultures, religions and sexes. In addition, the inclusive political system of governance greased the surfaces for decentralised platforms, where power devolution reigned, thereby making the peoples of Ethiopia the sole owners of the political power and the decision-making process.

Ethiopia’s towering performance as one of the most influential countries in Africa hails from the praiseworthy inclusive economic growth that the country embarked on for years. Ethiopia is one such country where significant human development gains have been recorded in recent years.

A United Nations Human Development Report in 2013 indicated that “Ethiopian human development is down to massive investments to pro-poor projects and to sound economic policies that the government has been committed to for so long.” In the same year, over 70pc of the government’s budget allocation went for human development schemes, like health facilities, education, social protection, agriculture and infrastructural packages, all intended to lifting millions out of poverty.

In association, Guang Zhe Chen, World Bank country director for Ethiopia, recently said over 2.5 million people in Ethiopia have been lifted out of poverty thanks to the strong and inclusive economic growth in the country. In consequence, the country’s poverty rate showed a cutback from 38.7pc to 26pc between 2004/05 and 2013/14.

The World Bank also lauded the government’s development policies, which, in practical terms, managed to advance with an account of broad-based economic growth and significant reduction in poverty. This is partly evidenced in the thriving of a new class of successful business and professional women in Ethiopia, unlike the traditional roles of Ethiopian women as second rate in the country’s economy.

For some countries, economic growth is viewed as a primary development policy goal, and that efforts of poverty reduction befall merely out of such growth. That is why some countries fall flat in terms of translating development into poverty reduction despite robust economic growth.

Ethiopia, nonetheless, chose a different course. The Ethiopian government has it that the task of poverty reduction remains a prime objective of its development policy, whilst mindful of the fact that economic growth is the principal, but not the only means to this objective.

Several robust reasons are offered to explain why Ethiopia has gone over relatively big at courting considerable trade and investment in-flows. Today, Ethiopia is on the frontline as one of the most favored destinations of trade and investment on a global scale.

Addis Abeba, Ethiopia’s capital is now the third diplomatic hub in the world, with the highest concentration of Embassies next to New York and Geneva. Ethiopia, home for 90 million people, making it the second most populous country in the continent, is marked with the lowest cost of living and the cheapest labour force, thus attracting investment and increased economic activity.

With 70pc of the population below the age of 30, 95pc of its children in schools, and with the highest life expectancy, 63, in Africa, the country is placed at the receiving end of further demographic advantages for trade and investment.

Ethiopia also offers quick market access to 3.5 billion people who are located in a radius of eight hours of flight from the capital. Another comparative advantage that the country sits on is the fact that Ethiopia is among the top regional manufacturing hubs of Africa, with the world’s cheapest electricity prices.

The country also has a steadily improving surface transportation infrastructure, with the largest cargo shipment to almost fifty countries.

Today, Ethiopia owns the biggest and most profitable airline in Africa, and the biggest merchant ship operator in the continent. Even more, Ethiopia is now first in Africa in coffee exports, and 10th in the world; as well as the second largest cut flower exporter in the continent, next to Kenya.

The country also offers a generous assortment of export incentives and support schemes, which include the export credit guarantee scheme, duty free import of capital goods, tax holidays, investment credit support, and many others. Ethiopia’s standing as one of the attractive destinations for investors and companies is further fueled by half a dozen schemes for unilateral export market access.

These arrangements on preferential export access to the markets in Europe and the United States are duty free and largely quota-free. The African Growth Opportunity Act (AGOA), Everything But Arms (EBA,) Sanitary and Phytosanitary Standards (SPS) are just some of these schemes.

As part of the African Union’s grand design on forging inter-African infrastructural integration, Ethiopia is now being a catalyst for economic and political integration in the sub-region.

Accordingly, Ethiopia is currently collaborating with its neighbours, in various regional interconnection projects, such as an increase in the road networks along with the 2,400kms long railway project it launched in a bid to link up producers and consumers of the East African region.

In more specific terms, the regional integration process is moving ahead with the construction of roads, telecommunications, electric power and water facilities. Ethiopia is now supplying electric power to Sudan and Djibouti.

Currently, the Ethio-Kenya power transmission links are being completed to start power supplies to Kenya. Ethiopia, with the largest hydro electric power dam in Africa, the Great Ethiopian Renaissance Dam (GERD), has plans to supply significant amounts of electric power to both Egypt and Sudan.

Upon completion, the GERD along with other ongoing hydropower projects will scale up the country’s electricity production from a mere 2,002Mw to 10,000Mw, while other related major works are currently underway, building 2,500 miles of new power distribution lines, and rehabilitating over 4,800 miles existing transmission lines. In this regard, Ethiopia with its abundant and renewable energy resources remains an attractive destination for investment in clean energy.

Certainly, Ethiopia has had remarkable performance in the promotion of regional peace and stability. In mid-February 2015, Ethiopia was ranked fourth in the United Nations ratings of Peacekeeping Missions’ contributions around the world. In fact, it did not take long enough for Ethiopia to double up its standings, way up from Top-10 to Top-5 of the largest troop-contributing countries in the UN rankings of Peacekeeping Missions; it was ranked 10th in 2011.

Ethiopia upholds a proud, long history of promoting international peace and security. It was one of the few founding Member States of the League of Nations (now United Nations).

The country’s principled and historical commitment to the principles of collective security, anchored in the UN Charter, began in the 1950s. It all started in the 1950 Korean War.

As North Korea crossed borders to invade the South, Ethiopia joined a multinational UN command peacekeeping force, which cobbled together 16 countries, missioned to restore the status quo.

The heroism, discipline and commitment of the Ethiopian contingent shown back in the Korean War now captures an enduring page in history, as U.S. army combat historian, S.L.A. Marshall, in his book, Pork Cop Hill, spelled out in full proof. Even more, the Memorial Hall, at Korea’s Chuncheon City, is dedicated to these gallant Ethiopian soldiers, bearing the stain and glory, high up in the skies.

Ten years on, since its first major involvement in a UN authorised peacekeeping mission, Ethiopia’s commitment to the global peace and security was further reaffirmed in the 1960 war in Congo.

Ethiopia went on board for its second peacekeeping operation and once again, the performance of the Ethiopian contingent in peacekeeping operations was commendable. Back then, Ethiopian peace enforcing troops managed to restore peace and order, and establish confidence among the local communities, notably in the Orientale Province of Congo, within shortest period of time.

Apart from its major involvement in the peacekeeping operations, earlier in Rwanda, Burundi, and now in Somalia through AMISOM, Ethiopian military personnel, mission experts and police force are currently engaged in observing regional peace and security, in various UN authorised peacekeeping missions in Darfur, Liberia, Abyei, and Cote d’Ivoire.

In all these peacekeeping missions, Ethiopia has been commanding both continental and international recognition for the effective execution of ongoing operations. After all, the country’s huge contributions in the promotion of regional peace and security have so far been tremendous, and have contributed to the success of countries’ transition from war to peace.

As Ethiopia finds a place in the ‘Africa Rising’ narrative, however, challenges remain ahead, given the country is expected to join the rank of Middle-Income Countries by 2025. The fragile peace and instability in the sub-region is in fact worrisome to Ethiopia.

The country’s economy keeps growing and Ethiopia could also face the Middle Income Trap, unless genuine transformations are being made. The economic transformation should, thus, edge from an agricultural base to manufacturing and industrialisation, strong enough to absorb the constantly rising skilled manpower and labour force.

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