On 20 December 2017, Ethiopia and the World Bank today signed a financing agreement amounting 470 million US dollars. The agreement was signed between Dr. Abrham Tekeste, Ethiopian Minister of Finance and Economic Cooperation and Carolyn Turk, World Bank Country Director for Ethiopia.
According to the agreement, 300 million US dollars of the total funding will be utilized to support the government of Ethiopia in its continued efforts to improve the provision of quality education nationwide. Over the past decade, Ethiopia has made positive strides in the education sector, and has significantly improved the quality of teaching and learning conditions in 40,000 primary and secondary schools across the country, the bank said. The remaining 170 million US dollars will be used to boost the contribution of the livestock and fisheries sectors to Ethiopia’s economy. The project will be principally implemented in 58 Woredas (districts) in Amhara, Benishangul-Gumuz, Gambella, Oromia, SNNPR, and Tigray regional states with crosscutting activities of the project having a national coverage.
Carolyn Turk, World Bank country director for Ethiopia, Sudan, and South Sudan said the project will help 1.2 million farm households who largely depend on livestock-keeping and fishing, with the skills and tools they need to considerably increase the volume and quality of their produce.
Ethiopia has signed an agreement to build two geothermal power plants at a combined cost of $4 billion, to be run by the country’s first privately-owned utility. The Corbetti and Tulu Moye plants will produce a combined 1,000 MW of power upon completion in eight years time in the volcanically-active Rift Valley south of the capital Addis Ababa. Ethiopia is eager to meet rising energy demand from its industries as well as becoming the continent’s biggest exporter of energy.
“No doubt the success of this effort will have a significant impact in the country’s future economic well-being,” said Azeb Asnake, chief executive of state-run Ethiopian Electric Power (EEP). The project’s equity investors include the Paris-based asset manager Meridiam, as well as the Africa Renewable Energy Fund and InfraCo Africa – funds that focus on infrastructure. As Ethiopia’s first privately-owned utility, the project will be operated by the developers for a period of 25 years. In an economy traditionally dominated by state spending, the government has suggested that the nascent sector could be a model for increased private investment.
“Going forward, the government recognises the added value to be gained by working in partnership with the private sector, specifically in sharing with it the burden of investment for large-scale power generation,” said Seleshi Bekele, minister of water, irrigation and electricity.
Under a new 2015-2020 development plan, Addis Ababa wants to raise power generation to 17,346 MW from a current capacity of just over 4,300 MW from hydropower, wind and geothermal sources. It has an array of projects under construction, including the $4.1 billion Grand Renaissance Dam along its share of the Nile river that will churn out 6,000 MW at full capacity upon completion within the next 10 years.
On 13 December 2017, International Monetary Fund (IMF) Managing Director, Christine Lagarde, arrived in Ethiopia for a historic three-day visit, touring new industrial parks and meeting with government officials. This is the first time in the IMF’s 72-year history that a managing director paid a visit to the Ethiopian capital, as a demonstration of Ethiopia’s growing recognition as an economic hub of Africa.
“We had a very productive discussion about the performance of the Ethiopian economy which is doing very well in terms of growth”, Mrs. Lagarde told journalists following her discussion with President of Ethiopia Mulatu Teshome at the national palace. The Managing Director visited the country to witness for herself the economic development that the country has registered in the past two decades. “I’m very proud to come and visit. I really had a better understanding of the economic development model which has been implemented in Ethiopia” added the Managing Director.
Lagarde also appreciated Ethiopia for hosting 850,000 refugees, which is among the largest refugee population in the world. The IMF head said the work that the country is conducting to bring peace and stability to the Horn of Africa particularly Somali and South Sudan is commendable. During the discussion, President Mulatu who explained about the implementation of country’s pro-poor and inclusive development policy praised IMF for its support to Ethiopia’s economic development. He expressed hope that the visit of the Managing Director will help to further strengthen Ethiopia’s relation with the IMF, according to a high-level official who attended the meeting.
European Union Support to Energizing Development in Ethiopia Project with EUR10, 500,000 was launched in Addis Ababa on 12 December 2017.
During the launching of the project, Water, Irrigation and Electricity State Minister Dr. Frehiwot Woldehanna said adequate, reliable and affordable energy access is a critical enabler in realizing every country’s development and transforming economic prosperity as well as the wellbeing of all its citizens.
He added that the role of energy in improving quality of life through improved health care, improved education and economic opportunities cannot be over emphasized.
The energy provision program launched will include rural and deep rural areas by scaling up connectivity.
The State Minister pointed out that the country will use all renewable energy sources to generate electric power that has less environmental impact to reach to every corner of the country.
GIZ Ethiopia Country Director, Dr. Mathias Rompel said the European Union acknowledges the commitment of Ethiopia to use renewable energy sources.
According to the Country Director, Germany is working with the government of Ethiopia to bring energy transformation in the country from fossil fuels to sustainable energy development.
The European Union Support to Energizing Development in Ethiopia Project will provide a model for work with the private sector, he added.
It will provide modern energy services to individual household, institutions and small and medium size enterprises in Ethiopia, Rompel explained.
This is one of the best performance and outcome based programs in the energy sector, the Country Director said.
EU Infrastructure Team Leader, Giorgia Favero said the project is a solid starting point to support the energy sector in Ethiopia by the European Union.
She stressed that EU is committed to support the solar energy sector in Ethiopia to address energy to the rural community in Ethiopia.
Favero added that EU plans to do a lot in the dynamism of renewable energy development in Ethiopia.
Prime Minister H.E. Hailemariam Desalegn and EU Commission President Mr. Jean-Claude Juncker
On 12 December 2017, the European Commission announced 13 new actions worth €174.4 million under the EU Emergency Trust Fund for Africa to support refugees and host communities in the Horn of Africa region.
At this occasion, Commissioner for International Cooperation and Development Neven Mimica said: “The European Union stands by refugees and local populations in the Horn of Africa. With today’s new actions worth €174.4 million, weare stepping up our support – to protect vulnerable migrants, to create economic opportunities on the ground and to foster stability in the region.” The Trust Fund was established in 2015 in order to address the root causes of irregular migration and forced displacement. A total of 13 new actions have been approved today, each of them tailored to the specific needs on the ground.
In Ethiopia, three new projects will focus on creating employment opportunities and providing energy access to refugees and local populations (total of €38.05 million).
The programme “Leather Initiative for Sustainable Employment Creation (LISEC) in Ethiopia” (EU Trust Fund contribution: €15 million ) aims at creating greater economic and decent employment opportunities, especially for young men and women through the development of the Ethiopian leather industry and the Modjo leather industrial park. This programme proposes a new vision towards inclusive and sustainable industrial development that protects the environment and supports social inclusion. The programme will be implemented by the United Nations Industrial Development Organization (UNIDO), the Industrial Parks Development Corporation (IPDC) and by a partnership of national and international non-governmental organisations.
The programme “Stimulating economic opportunities and job creation for refugees and host communities in Ethiopia in support of the Comprehensive Refugee Response Framework (CRRF) in Ethiopia” (EU Trust Fund contribution: €20 million ) aims at supporting the implementation of the Comprehensive Refugee Response Framework (CRRF) to shift from a ‘care and maintenance’ or camp-based model of refugee assistance to an approach, which emphasises refugee self-reliance, refugee mobility in-country and the integration of refugees into regional and national development processes. The programme will be implemented by UNHCR, the World Bank and organisations with experience in private sector development.
The programme “Shire Alliance: Energy Access for Host Communities and Refugees in Ethiopia” (EU Trust Fund contribution: €3.05 million ) aims atimproving the living conditions in host and refugee communities by creating livelihood opportunities, enhancing local capacity building and improving access to energy services. The beneficiaries are around 40 000 members of the host and refugee communities in and around Adi-Harush, Mai Aini and Hitsats refugee camps. The programme will be implemented by the Spanish Agency for International Cooperation and Development (AECID).
On 9 December 2017, the Embassy of Ethiopia in Brussels celebrated the 12th Nations, Nationalities and Peoples’s Day with members of the diaspora living in the Benelux. It was an occasion of exchange, discussion and festivities celebrating Ethiopia’s diversity and unity.
On Saturday 9 December 2017, the Embassy hosted celebrations of the 12th NNPD for members of the diaspora. Here are the pictures of this joyful celebration: Pictures NNPD 2017
Despite being a developing country, Ethiopia has been playing a leading role in climate change negotiations. It has become a country that is engaged in successful climate diplomacy so that the voice of developing countries is heard in various international arenas. Ethiopia is also a model country in implementing a green economy development strategy.
One of the key factors that enabled the country to play a key role in climate negotiations is the fact that it has integrated climate into its domestic development and foreign policies and strategies. This strong commitment has earned the country a voice in international climate negotiations.
Many agree that Ethiopia has been among the proactive countries in the process of ratifying the Paris Climate Change Agreement. Though the adoption of the agreement is historic by itself, it does not mean that the mission is accomplished as the continuing climate change is posing threat on the lives of billions across the world. That is why the country has shifted its diplomatic engagement to keeping the momentum of the agreements so that they are swiftly implemented.
In the recent global Cope 23 climate change negotiation which was held in Bonn Germany, Ethiopia successfully led as a Chair, some 47 climate change vulnerable developing countries that are suffering from the severe consequences despite their insignificant contribution to global warming.
Ethiopia is also a member of the group that represented the African continent in global climate change negotiations. The group holds a firm position that the compensation financial support and other technical support to cope with the impacts of climate change should be improved.
One of the success stories of the climate change negotiations is the fact that developed countries agreed to pay 90 million USD as compensation payment for climate change. They also pledged additional 100 million to developing countries that are severely harmed by the impacts of climate change.
Locally, the government has prepared a National Adaptation Programme of Action (NAPA) and Climate Resilient Green Economy Strategy to avert the impact of climate change on the country’s economy.
The government has also demonstrated its commitment to the green economic development through its environment friendly projects such as the expansion of renewable energy for industry and transportation (railways operation). This commitment has also been demonstrated by the extensive rural environmental rehabilitation works.
Various awareness creation programs regarding desertification and environmental rehabilitation works such as reforestation and afforestation have been taking place country wide. As a result, the country’s forest coverage has reached 15 percent, which was at an all time low of less than 4 percent almost two decade ago.
Having such strong commitment, developing countries like Ethiopia still need better economic and technological capacity to upgrade their coping mechanisms. Hence, developed nations need to step up their support as per their promises in the Sendai Framework on Disaster Risk Reduction, the 2030 Agenda for Sustainable Development and the Paris Agreement on Climate Change.
But Ethiopia should exert maximum effort to mobilize local resources, both the public and private sectors and above all its huge human resource potential to further pursueits ambition to become an advocate of green economic development.
Ethiopia is increasingly being recognized as a major investment destination because of its fast-paced economic progress, its unique location, cheap labor and a huge market potential. The industrial park strategy of the country is expected to give a considerable boost of the development of the economy and transform Ethiopia into a light manufacturing hub. This article was originally published in the 8th issue (October 2017) of The Ethiopian Messenger, the quarterly magazine of the Embassy of Ethiopia in Brussels.
Hawassa Industrial Park, inaugurated in 2016
Ethiopia is increasingly being recognized as a major investment destination because of its fast-paced economic progress, its unique location, for the booming business opportunities it provides, the cheap provision of labor and energy, and for its attractive investment incentives. The country is located at the crossroads between Africa, the Middle East and Asia. It has a stable political, economic and regulatory environment. Thanks to its large population, Ethiopia is also potentially one of the largest domestic markets in Africa. By virtue of its membership of the Common Market for Eastern and Southern Africa (COMESA), embracing 19 countries with a population of over 400 million, Ethiopia also enjoys preferential market access to these countries, and it also qualifies for preferential access to European Union market under the EU’s Everything-But-Arms (EBA) initiative and to USA markets under the African Growth and Opportunities Act (AGOA). Moreover, competitive investment incentive packages including tax holidays are offered to investors.
Ethiopia envisions to become a middle-income country by 2025. The Second Growth and Transformation Plan (GTP II), a policy framework which outlines the development and transformation of Ethiopia’s economy between 2015 and 2020, is oriented at this end. Besides the construction of infrastructure, one of the core strategies of the GTP II is the establishment of industrial parks. The manufacturing sector is expected to grow by 25% per year for the next decade and could secure 30 billion USD from the textiles sector by 2030. The goal is that the manufacturing sector would contribute 20 percent of Ethiopia’s GDP and 50 percent of the export volume by 2025.
The development and construction of industrial parks started in 2014 when the Ethiopian Industrial Parks Development Corporation (IPDC) was established. It gained momentum in 2015 with the Industrial Parks proclamation 886/2015. In less than three years, several industrial parks were built, inaugurated and started operations. Bole Lemi I and Hawassa industrial parks were inaugurated in 2016. More recently, on 8 and 9 July 2017, Ethiopia inaugurated two additional parks in Kombolcha and Mekele. Together, these two new sites are expected to create around 40,000 new jobs. About 10 more parks are under construction and are expected to be operational within the next months, and the total number of industrial parks should reach 15 by June 2018. In addition, industrial parks developed by private investors, such as the Huajian Group which developed a shoe cluster industrial park, are being built throughout the country.
Fast pace of industrial Park inaugurations
Hawassa Industrial Park was inaugurated in 2016, in the presence of the Ethiopian Prime Minister Hailemariam Desalegn and 18 companies from 11 countries. It is the biggest industrial park of its kind in Africa. It will host textile and apparel industries on a total of 140 hectares once fully operational. 10,000 employees are already working on the site today, but this number could soon reach 60,000 workers. The park is fitted with a Zero Liquid Discharge technology facility with a daily processing capacity of 11 million liters of effluent, a system which is also expected to be replicated to other industrial parks across the country, which could accelerate Ethiopia’s pace in developing a green economy. The industries hosted in the park started to export products in March 2017.
The Mekele and Kombolcha industrial parks, inaugurated in the summer of 2017, were both built by China Civil Engineering Construction Corporation (CCECC) at a cost of 100 million U.S. dollars and 90 million dollars respectively. They also host textile and apparel industries. The Kombolcha industrial park will house 13 factory sheds. It is expected to create a total of 10,000 jobs. The Mekele Industrial Park houses 15 factory sheds, about half of which were handed over to high-profile textile manufacturers. The Tigray Small and Medium Manufacturing Industries Development Agency has recruited over 10,000 job seekers from the region, but the total number of jobs provided in the park is expected to reach 20,000 once the facility is fully operational.
Adama and Dire Dawa industrial parks are expected to be inaugurated later this year. Kilinto pharmaceutical and Bole Lemi II agro-processing industrial parks will be commissioned in January 2018. A few months later, Bahir Dar and Jimma industrial parks will become operational, and in June 2017, Debre Birhan and Arerti industrial parks are expected to start operations.
Positive response from the Investors
The investor’s response has been very positive. H&M is already a stakeholder in the Mekele and Bole Lemi industrial parks, while PVH, which owns brands such as Calvin Klein and Tommy Hilfiger, decided to build a factory in the Hawassa Industrial Park. Carvico S.p.A from Italy, Trybus from USA and Pungkook Corporation from Korea built their factories in Kombolcha and Mekele industrial parks. Yang Nang, general manager of the Wuxi Group, said they chose Ethiopia for their next factory because it has a stable political situation and a peaceful society, because it has 100 million people and is the second biggest country in Africa, which is important for textile business, and finally because production and labour costs is very low.
European companies are also attracted by the newly opened park. Ontex, a Belgian company producing diapers successfully opened a 11,000 m2 factory in the Hawassa industrial park in July 2017 to supply the well-known Canbebe diaper brand to the local market. The new 11,000 m2 factory site is equipped with state-of-the-art technology.
All in all, the country’s industrial policy and its goal to become a manufacturing hub in the region will help the country to transform and expand its economy. By attracting FDIs, the industrial parks have already provided thousands of direct and indirect jobs for the local population, supporting the economic dynamism of the regions as a whole were the different industrial parks are located. The new industrial parks have also started to attract sophisticated technology and introduce it to the local manufacturing sector. This technology transfer and experience gains will allow an acceleration of a homegrown industrial activity and allow the transformation of raw products from Ethiopia, which will allow the Ethiopian economy to produce more value.
The new industrial facilities will also help to absorb the huge workforce of Ethiopia. Every year, about 600,000 young graduates enter the job market in Ethiopia, and the development of labor-intensive sectors like textile and light manufacturing will provide them with many professional opportunities. Universities, colleges and technical and vocational schools are expected to adapt to this development and train more competent workforce, generate amply trained human power and feed the growing demand of investors for skilled human power.
On 13 December 2017, International Monetary Fund (IMF) Managing Director, Christine Lagarde, arrived in Ethiopia for a historic three-day visit, touring new industrial parks and meeting with government officials. This is the first time in the IMF’s 72-year history that a managing director paid a visit to the Ethiopian capital, as a demonstration of Ethiopia’s growing recognition as an economic hub of Africa.
Despite being a developing country, Ethiopia has been playing a leading role in climate change negotiations. It has become a country that is engaged in successful climate diplomacy so that the voice of developing countries is heard in various international arenas. Ethiopia is also a model country in implementing a green economy development strategy.
