Ethiopian airline on Saturday made the first commercial flight between Addis Ababa and Mogadishu in 41 years, in yet another sign of warming ties between neighbouring Horn of Africa nations Ethiopia and Somalia.
A plane from the private airline Ethiopia National Airways landed at Mogadishu’s Aden Adde airport, and will conduct four flights per week, officials said.
“It’s a historical day for us as we launch this direct flight between Addis Ababa and Mogadishu. It has never been easy, we have been trying so many times, but finally, we succeeded and this day finally came,” said airline owner Abera Lemi at a ceremony in the capital.
Ethiopian Airlines in July launched the first flights between Addis Ababa and Eritrea in two decades in a whirlwind peace process between the two nations after a bloody conflict and extended cold war.
The peace process led by Ethiopia’s reformist young Prime Minister Abiy Ahmed has been followed by a flurry of diplomacy in the region that has also seen Somalia mend ties with Eritrea and a move to end tensions between Djibouti and Eritrea.
In June Abiy paid a visit to Mogadishu, where he and Somali President Mohamed Abdullahi Mohamed agreed to strengthen relations.
Ethiopia supports the transitional government and has troops in Somalia now forming part of an African Union mission to combat Al-Shabaab.
Ethiopia inaugurated Omo Kuraz III sugar factory this Sunday 14 October. Located in South Omo zone, SNNP regional state, it is one of the four sugar factories under the Omo-Kuraz sugar development project.
The sugar factory, which was built at a cost of over 8 billion birr (290 million USD) through a loan obtained from the China Development Bank and is expected to produce 8,000 to 10,000 quintal of sugar a day. It will serve as best development corridor for the region and create jobs for 12,000 people. It is the eighth operational sugar factory in the country.
Prime minister Abiy Ahmed, former Ethiopian Prime minister Hailemariam Desalegne, Muferiat Kamil (Speaker of the House of representative) and Eritrean President Isayas Afeworki were among the dignitaries present during the inauguration.
Hailemariam Desalgne is credited for initiating the project during his terms of office as president of South regional state and has also contributed a lot for the completion of the project.
The government is also undertaking an irrigation project over the river Omo to cultivate sugar cane on 100,000 hectares of land which will supply the factories with raw material.
Abiy said, “We need to invest more in exponentially exploiting the national potential related to products like sugar, rice, sesame, wheat and maize.”
President Isaias Afeworki of Eritrea who attended the inauguration ceremony as a guest of honour said,” This is an eye opener for us on what we can do and achieve.”
Isaias added that the fruitful completion of Omo Kuraz III sugar factory teaches everyone to unleash potential.
Stating that with rapid population growth rate in East Africa, Isaias stressed countries to focus on regional development spheres.
Italian Prime Minister Giuseppe Conte arrived in Ethiopia on Thursday 11 October for a two-day working visit. After Ethiopia, he will travel to Eritrea where he will meet President Isaias Afewerki.
PM Conte’s mission wants to be a support to the peace deal signed between Ethiopia and Eritrea last July after nearly 20 years of stalemate.
Italy’s prime minister praised Ethiopia as a “pillar of stability” in the Horn of Africa region. Giuseppe Conte is the first Western leader to visit Ethiopia since the restoration of diplomatic ties in July.
Conte discussed migration as well as investment opportunities in Ethiopia, one of the world’s fastest-growing economies.
In a joint appearance at the National Palace, Conte warmly encouraged Ethiopian Prime Minister Abiy Ahmed to continue with the sweeping political and economic reforms that have been announced since Abiy took office in April.
Ethiopia and Italy have also signed a 696-million-birr loan and grant agreement aimed at improving urban water and sewerage services. The agreement targets to improve urban water and the sewerage service at different levels.
158 million birr of the total is in grant agreement and the remaining 538 million birr is in the form of long-term loan.
The agreement will be implemented jointly by Italian Development Cooperation and Water, Irrigation and Electricity Ministry.
Ethiopian Prime Minister Abiy Ahmed has reached an agreement with several hundred members of the special defence forces assigned to control the recent conflict around Addis Ababa who marched to his office to demand pay rises on Wednesday 10 October.
Members of the army claimed that officers at various levels could not address their grievances about the low allowances and benefits they receive. The purpose of the march to the Prime Minister’s Office was to appeal to Abiy Ahmed.
The premier, who stated that their demand was appropriate, noted that it would be addressed after a study of similar complaints of other civil servants such as teachers and medical professionals.
The meeting between the soldiers and Abiy ended with an agreement.
In addition to asking for pay rises, the soldiers also requested that Abiy “review the structure and operations of the military”.
On this occasion, PM Abiy Ahmed, a former military man himself, did ten press ups with some of the elite soldiers who’d marched to his office calling for a pay rise. It was their punishment for causing alarm by bringing their guns. The smiles on the soldiers’ faces as they performed the press-ups suggest the prime minister succeeded in defusing the situation amicably.
As the world’s fastest-growing economy last year, Ethiopia is expected to continue its spectacular economic performance under its new prime minister, Abiy Ahmed. However, he must address the country’s inherent problems with energy supply and infrastructure to sustain this success
Ethiopia’s economy has made utterly remarkable progress over the past decade. The country has achieved double-digit GDP growth on average for the last ten years. Yes, Ethiopia has come a long way in a relatively short period, and yet, it’s still just at the start of its extraordinary story.
Perhaps what had been missing from the tale until now was a charismatic protagonist. Enter Abiy Ahmed, as of April 2, Ethiopia’s 15th prime minister. Abiy has taken the country by storm, and in just a few months has achieved what most leaders could only hope for during an entire tenure: establishing peace with neighbouring Eritrea; rousing a disenchanted population; pushing forward with key infrastructure development; opening up the economy to further financial investment; and winning support from the Ethiopian diaspora.
A unifying force
Heading up the Oromo People’s Democratic Organisation – one of four parties comprising the Ethiopian People’s Revolutionary Democratic Front coalition – Abiy is Ethiopia’s first prime minister from Oromia, the country’s biggest ethnically based state.
At 42, he’s the youngest leader on the African continent. His youth is reflected in his style of leadership, his stirring rhetoric and the speed with which he is taking action – in short, Abiy is a breath of fresh air. Since coming to power, he has made moves to modernise the economy and loosen the monopoly of key sectors. This news is a boon to the aviation industry in particular, given Ethiopian Airlines’ status as Africa’s largest and fastest-growing airline. Competition for a 30 to 40 per cent stake in state-run Ethio Telecom is also heating up.
A decade of growth
Naturally, a number of the successes sparking international admiration were already underway before Abiy came onto the scene. Indeed, last June, the World Bank labelled Ethiopia the world’s fastest-growing economy. According to a new report by the organisation, its GDP growth for the 2017 fiscal year reached an excellent 10.9 per cent, while growth for the period from July 2017 to June 2018 is forecast at 9.6 per cent.
It’s very important to stress that it is not only a sustained period of very rapid growth, but it was also achieved in a country that is not resource-rich. It’s not a matter of being driven by oil, diamonds and so on. So it is quite an unusual record and very important in the context of sub-Saharan Africa. Despite this lack of resources and the fact that it is landlocked, Ethiopia has managed to increase its GDP tenfold since 2000. Extreme poverty, meanwhile, dropped by over 20 per cent between 2000 and 2011.
Ethiopia’s shift from recurrent to capital expenditure has formed the foundation of the country’s socio-economic transformation, its focus on infrastructure development, in particular, being instrumental.
“Many orthodox economists tend to criticise high government spending in lower-income countries, but what you notice is that to some extent grudgingly, many people have come to accept that it has been really important in Ethiopia. So you’ll see World Bank economists, for example, acknowledging that a set of heterodox policies, combining around a programme of large-scale public spending, has been at the basis of this period of growth.”
Filling the transport void
Despite its rapid GDP growth, Ethiopia’s woeful transportation infrastructure has acted as a stranglehold on the economy for decades. In 1990, the country – which is around twice the size of Texas – had just 19,000km of roads. Transforming this situation has been crucial. Thanks to the government’s refocused spending ($11bn has been spent on roads over the past two decades) together with a growing inflow of foreign investment (FDI has increased fivefold from $814.6m to $4.17bn between FY 2007/08 and FY 2016/17), by 2015 Ethiopia’s roads stretched 100,000km around the country. Showing no signs of abating, today foreign investment continues to bolster the network, while 20 per cent of the government’s infrastructure spending is dedicated to road building, equating to $1.7bn annually.
Railway construction is another symbol of the government’s determined strategy. In September 2015, a new 32km light rail system opened in the country’s capital, the first of its kind in sub-Saharan Africa. The Chinese-funded project has enabled some 60,000 citizens from the city’s suburbs to travel into the centre for work – and affordably, too. Further plans are in the pipeline to connect the electrified network with the national train system by 2025, earmarking the government’s plans to become a transportation hub for neighbouring countries.
The 750km-long electric railway connecting Addis Ababa to the Red Sea via the Port of Djibouti best encapsulates this aim. Inaugurated in October 2016 and beginning commercial operations in January 2018, the line reduces transit time from two-to-three days to around 10 hours. With faster and cheaper access to the sea through Djibouti, the railway is a boon to the country’s burgeoning manufacturing sector.
Behind such assertive plans is a coherent approach to leadership, which is pivotal in the economy’s transformation.
Ethiopia’s recent economic success can also be accredited to pragmatic – rather than ideological – leadership. They are very willing to learn from a range of other countries’ experiences and to talk to all manner of people – from western investors, the IMF and the World Bank to the Chinese Communist Party. They study the record of industrial paths in Vietnam, Mauritius and elsewhere before making their own strategic choices. That pragmatism goes with a willingness sometimes to learn from mistakes and to adjust direction and move forward.
An enticing investment
Such infrastructure development has obvious effects on the economy, but there is another reason pushing the momentum forward so rapidly: Ethiopia’s vision to become a manufacturing hub. In recent years, the nation has boasted formidable success in using its very competitive rates to persuade foreign manufacturers to set up shop in the country.
One of the first such manufacturers was Huajian Group, a Chinese shoe manufacturer that employs around 4,000 people in an industrial park outside the Ethiopian capital. Big-name clothing brands have since followed suit, including the US’ Gap, Germany’s Tchibo and Sweden’s H&M. In 2017, the industry received another windfall when not one but three fashion giants set up factories in the country: PVH, of Calvin Klein and Tommy Hilfiger fame; Velocity Apparelz Companies, which boasts the likes of Zara and Levi’s; and Jiangsu Sunshine Group, the manufacturer for Hugo Boss and Giorgio Armani. According to Ethiopia’s investment commission at the time, a further 150 companies from China and India would soon begin sourcing production from Ethiopia.
The government itself is very focused on industrialising and is serious about developing Ethiopia as a manufacturing destination.
Its goal, former prime minister Hailemariam Desalegn told reporters when Hawassa became fully operational in July 2017, is to create “millions of new jobs in labour-intensive and export-oriented light manufacturing”. He added: “The Hawassa industrial park is the most evident and concrete example yet towards achieving our national vision, and marks a milestone in our quest for industrialisation.”
Being one of the country’s greatest assets, Ethiopia’s enormous population is at the core of this mission. Importantly, the people are ready and willing. Many of them think that the concept of working in factories is good for the country – there is that sense of patriotism and wanting the country to succeed.
Quenching the power thirst
Though Ethiopia is the rising star of light manufacturing, challenges remain, ranging from those of bureaucracy to issues with cotton quality. However, the most pressing is the issue of energy stability.
For too long, energy apartheid has stifled countries in sub-Saharan Africa – Ethiopia is no exception.
While many investors are hopeful that the country’s new industrial zones will result in large-scale garment assembly and manufacturing, the unreliable supply of electricity is a concern.
The government is aware of the importance of overcoming this particular challenge. Fortunately, it is taking advantage of the country’s hydroelectric potential and has built several dams in recent years, including the GERD, whose potential is tremendous. With an expected generation capacity of 6,450MW, the GERD project is set to become the biggest dam in Africa.
These kinds of projects have the potential to start to overcome the power shortage.
Significantly, the GERD will also act as a driving force for exporting electricity to neighbouring nations, which in turn will prove crucial to generating foreign exchange. Indeed, the dam has become a powerful symbol for the country. Costing a whopping $4.7bn, the GERD has been funded and constructed almost solely by Ethiopians, marking a monumental step in the state’s ability to stand on its own two feet and demonstrating its status as a regional power.
The best is yet to come
Ethiopia is now on the cusp of a complete transformation. Its remarkable economic growth makes it a beacon of inspiration for the entire region; indeed, it holds a number of lessons from which other developing nations can draw. First, it highlights the importance of government spending – even in low-income countries – particularly in areas that are stifling the economy. In Ethiopia, the government has maintained a determined focus on improving transportation and energy infrastructure, and it has done so through a combination of local financing, the facilitation of foreign investment, securing loans from international entities and the help of the diaspora.
Now with Abiy at the helm, the economy has received yet another boost, thanks in large part to his quick work and charisma. Today, the country is more stable than it has been for years – foreign investors are further motivated, while the population is amply inspired. The time is ripe for the country to firmly push itself into the next phase of its development: becoming a hub for sub-Saharan Africa in terms of manufacturing, transportation, energy and economic leadership. With more reliable energy soon to follow, the country’s grand ambitions are actually within reach. Ethiopia’s economic story is truly extraordinary – and the best part is, it’s not over yet.
The African Union’s promise of easy travel for Africans throughout the continent is still some way off, but Ethiopia is taking a step towards helping that become a reality.
Speaking at the opening of parliament and outlining the government’s legislative program, President Mulatu Teshome said that African nationals would be able to get visas on arrival in the country this fiscal year (2018/19).
The country is doing this to contribute its part to the African Continental Free Trade Area Agreement, Mulatu said. All African countries are expected to allow African travellers to enter their respective countries by issuing visa on arrival by 2023.
The PM’s chief of staff tweeted at the time that: “A relaxed visa regime will enhance both Ethiopia’s openness and will allow the country to harness the significant stopover transit traffic of Fly Ethiopian.”
He further said the government would do more to accelerate Ethiopia’s move to join the World Trade Organization (WTO).
In his speech, the President also presented a motion detailing on government’s plan for this fiscal year.
“Due to political unrest, our last year performance was not as expected,” the President said while speaking about government’s last year achievement.
However, as part of the efforts to widen the political space and protect human rights of citizens, thousands of prisoners were released, he noted.
Ethiopia and Eritrea restored relations after 20 years of stalemate and exiled political parties have returned home following the ratification of an amnesty law by the Parliament, he added.
As a chair of the Intergovernmental Authority on Development (IGAD), Ethiopia has played the leading role to resolve problems between South Sudanese conflicting parties and to mediate Eritrea and Djibouti, the President said.
He further noted that the government would take the necessary measures to ensure the rule of law and contain contraband trade at border areas.
He added the government would make economic reform and attract more investment by encouraging the private sector through policy and legal reforms.
He further said the government would reform democratic institutions and various laws.
The President called on competing parties to pursue a peaceful path and be responsible for their political activities.
He also urged the media to play a vital role in the democratisation process in the spirit of accountability.
The construction of seven industrial parks being built around the country is anticipated to be completed in this Ethiopian fiscal year, according to Industrial Parks Development Corporation.
Ethiopia is developing international standardised industrial parks across the country to contributes to the nation’s development endeavours.
The industrial parks in Dire Dawa, Kilinto, Bole Lemi II, Jimma, Bahir Dar and Debre Birhan are expected to be completed in this Ethiopian fiscal year, according to Dr Arkebe Equbay, Board Chairperson of IPDC.
Arkebe said the government is committed to develop such parks that will contribute to the country’s aspiration of becoming industrial hub, earn foreign currency and create massive job opportunities.
Besides completing the ongoing projects, the government will also launch construction of industrial parks in Aysha, Asosa, Arerti, and Semera, he added.
Hawassa, Bole Lemi I, Kombolcha and Mekele industrial parks have already started production and the Adama industrial park inaugurated on October 7 is expected to commence operation soon.
Chief Administrator of Oromia Regional State Lemma Megersa said that the park is equipped with necessary facilities which enable investors get a single window service.
Beyond increasing the number of parks, Adama industrial park showcases the country’s effort on developing industrial parks is on the right track, he added.
He also said that the park would serve as a centre of practice for higher education institutions and play an important role in transforming technology.
The Horn African nation has planned to have 30 industrial parks by 2020 with the aim of attracting more investment and realise structural reform.
The Adama Industrial Park, located about 100 kilometres to the south-east of the capital Addis Ababa, was officially inaugurated on Sunday 7 October. The site is situated close to the Ethio-Djibouti railway line.
The Adama Park joins others like the flagship Hawassa Industrial Park and the Bole Lemi I Industrial Park. Its scope will be the textile, apparel, vehicle assembly and food processing cluster.
Prime Minister Abiy Ahmed and Lemma Megersa, chief administrator of Oromia regional state, attended the inauguration of the first phase of the park.
The construction of the park started two years ago and took over 4.1 billion Birr ($140 million US). It is expected to create jobs for 25,000 individuals and generate more than 38 million USD from the export of goods.
The first phase of the park that lies on 102 hectares land has developed the Industrial Parks Development Corporation.
Antenx Textile PLC and Charter Ventures Apparel Ethiopia PLC are among the two big companies already occupying some of the sheds.
In addition to these companies, the famous Japanese accessory manufacturers WKK is under preparation to commence production.
Jiangsu Sunshine Wool Textile PLC and Kingdom Linen Ethiopia PLC are also developing their own factory sheds over a lands size of 8 and 32 ha to produce integrated wood Fabric and garment close.
As part of the first phase, a Chinese industrial park known as Adama-Hunan which specialises on machinery and equipment production is also being developed by Hunan province.
Enterprises that will rent the sheds in the park will be supplying their textile and apparel products to globally renowned companies such as PVH, H&M, ZARA, DECATHLON, CALZEDONIA, WALMART and COSTCO.
The project is part of the effort to make Ethiopia the leading manufacturing hub in the continent of Africa.
Apart from their contributions to job creation for the youth, industrial parks are essential for technology transfer, PM said in his speech at the inaugural ceremony.
Ethiopia has appointed Kifle Horo as the new general manager of the country’s hydro-dam on the Nile – the Grand Ethiopian Renaissance Dam (GERD), worth $4.8 billion.
The engineer was given the assignment after the tragic death of the former GERD Project Manager Simegnew Bekele. Bekele was the prominent face of the GERD project, which upon completion is set to be the biggest hydro-electric facility in Africa.
It is to be recalled that Eng. Efrem Weldekidan had been leading the construction of the Dam following the death of Eng. Simegnew Bekele who served as project manager.
Eng. Efrem Weldekidan and Fikadu Kebede will serve as deputy project managers.