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Ethiopia: The New Powerhouse of Africa

by Abdulkarim Hassan Matan
Saturday, July 25, 2015


It is a scene common to most neighbourhoods in the Ethiopian capital


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Ethiopia is bursting with a feeling of unprecedented economic optimism owing to its high economic growth in the last twenty years and the Ethiopian people wherever they are in the world are upbeat about their country’s future. Africa’s second most populous country, with nearly some 100 million people, has achieved spectacular economic growth over the past two decades and is emerging as the new powerhouse of Africa.

The Ethiopian economy is currently the fastest growing economy in Africa and the third fastest growing economy in the world. It grew from roughly three percent in early 1990s to an average of ten percent in the last ten years - an economy that is growing at ten percent a year doubles every seven years. At this rate, by 2030, the gross domestic product (GDP) of Ethiopia, which is now estimated at $51 billion, will grow to $213 billion. And at that level of GDP, Ethiopia will then become a middle-income nation, which is exactly what the Ethiopian government is aiming to achieve in the year 2025.

But without being spurred by oil and gas exploration or the discovery of large scale mineral deposits, how could Ethiopia move its economy in such a short time? I asked that question to Ali Abdi Ise, a former mayor of Jigjiga who is also a former vice president of the Somali Regional State and a former member of the Ethiopian Federal Parliament. Ali is considered by many to be an expert on Ethiopia and Somalia.

According to Ali, "Non-corrupt and able leadership with zero tolerance for corruption; stable government policies; sound economic plans based on successful economic growth models; and millions of hard-working and law-abiding workforce with favourable work ethics and can-do attitude inherited from Ethiopia’s past greatness have enabled Ethiopia to grow its economy at a much faster pace than other African countries."

Ali continued, “Even the Somali Regional State, which was lagging behind the rest of the country not only in security wise but also in economic growth has seen robust economic growth and improved security since the state’s current administration took office.” 

The long-term economic outlook is even much brighter. Many factors that are conducive to economic growth such as experience gained through the years of high economic growth, increasing government budget due to booming economy and enhanced revenue collection system, expanded network of roads and upgraded railroads, and availability of affordable electricity are expected to keep the Ethiopian economy on a path of continuous growth over many years.

Moreover, global investors who have recognized Ethiopia’s potential - cheap workforce, low corruption levels, and new investment policies and laws, which have eliminated unnecessary bureaucratic rules and eased complicated investment regulations - are pouring billions of dollars into the country. Ethiopia’s stability and military strength are also two other factors that have attracted the attention of foreign investors.

To grow its economy, Ethiopia has devised an impressive plan to harness most of its renewable energy resources. And after more than a decade of heavy investments in its renewable energy, Ethiopia is emerging as a leading producer and exporter of clean electricity. Over the last decade a large number of renewable energy projects including Africa's largest hydropower station and Africa's biggest wind power plant have been commissioned. And recently Ethiopia signed an agreement with a US-Icelandic firm to build Africa’s largest geothermal plant.

The Grand Ethiopian Renaissance Dam (GERD) on the Blue Nile River in Ethiopia near the Sudan border gives a good picture about the scale of projects that are currently underway in Ethiopia. The construction of the $5 billion dam started in April 2011 and is expected to be completed by July 2017. The entire cost of the dam is fully financed with Ethiopian government bonds and private donations not with foreign loans or IMF and World Bank loans as one might think. During its construction the dam is expected to create up to 12,000 jobs. And when it becomes fully operational, it will provide Africa’s energy-hungry population with 6,000 MW of power having an estimated annual energy production of 15,700GWh - that is enough power to supply electricity to the homes of 300 cities the size of Jigjiga, the capital of the Somali Regional State of Ethiopia.

GERD, Africa’s largest dam, stands out from all the projects that have been carried out in Ethiopia since the beginning of its three-thousand-year history because of its huge and lasting economic benefits and because of unnecessary controversy surrounding its construction including foreign pressure and threats. Its completion will therefore constitute a victory against the World Bank, the IMF and against all the nations that were opposed to its construction.

The power production from dams and other renewable sources that are already completed or under construction is projected to increase Ethiopia’s power production from 1,000 MW in 2008 to more than 15,000 MW by 2018.The huge increase in electrical energy production will allow Ethiopia to meet the power supply demand in its country and export considerable amount of energy to many countries in the region. Currently, Ethiopia exports electricity to Kenya, Sudan and Djibouti. There are also plans to export vast quantities of electricity to Tanzania, Rwanda, South Sudan, Egypt, Yemen and other countries. The energy export will make Ethiopia a regional energy superpower and will afford it the leverage to influence the foreign policies of the countries that import its electricity. It will also contribute to the stability in the region by creating economic and security interdependence between energy trading partners.

Besides being an emerging energy power, Ethiopia is also becoming a military power. The Ethiopian Defence Force has about 250,000-strong well-equipped, well-trained and well-disciplined army making the force one of the strongest military forces on the continent. The Ethiopian Defence Force does not only defend the nation, but it also contributes to the country’s economic growth. As reported by Tewdage Bekele of the English language news channel of China Central Television (CCTV), Ethiopia manufactures different kinds of military equipments such as guns, military vehicles, armoured vehicles, tanks and other military gadgets for both local use and export.  According to Bekele’s CCTV report “A rare access to Ethiopian Military Industry”, most of the armoured military vehicles used by the African Union peace keeping mission in Somalia are manufactured in Ethiopia.

Ethiopia has also expanded and modernized its state-owned corporations to make them more competitive around the world. The Ethiopian Airlines for instance has become the most reputable and profitable airline in Africa. It has received many international awards including this year's award of the Best Regional Airline of the Year award among airlines of all regions in the world by Air Transport World (ATW). Since its inception, the Ethiopian Airlines has continued to expand and modernize its fleet to expand its global reach. Currently, it’s the fastest growing airline in Africa and the largest carrier on the continent. It serves 91 international destinations on five continents presently and has a young and modern fleet of 74 aircrafts. In addition there are 45 aircrafts on order. The aircrafts in service include thirteen Boeing 787 Dreamliner and fourteen Boeing 777. The over $300 million Boeing 777 plane and the over $220 million Boeing 787 Dreamliner jet are the most advanced and latest aircrafts manufactured by Boeing, the world’s leading commercial aircraft manufacturer. When Ethiopian Airlines acquired its first Boeing 787 Dreamliner in August 2012, it became the second airline in the whole world to own and operate the advanced jet. The aircrafts that have been ordered by Ethiopian Airlines include fourteen A350-900 from Airbus, six 787 Dreamliner and four Boeing 777. The over $310 million A350-900 jet is the latest aircraft manufactured by Airbus, the leading European aircraft manufacturer and world's second largest aircraft manufacturer. 

After centuries of economic stagnation, Ethiopia is finally on the path to prosperity. Today’s construction boom in Addis Ababa is reminiscent of the construction boom in the Gulf countries during late 1970s to early 1980s when oil prices skyrocketed. However, Ethiopia’s meteoric economic rise was spurred not by oil and gas exploration or by the discovery of large scale mineral deposits but by the determination of forceful leaders eager to restore their country to its past glory and to pull their people out of poverty and misery. Good leadership indeed makes a significant difference in the life of a nation. The transformation of Singapore from a sleepy third world country into one of the world’s richest and most advanced countries is a good case in point. The world agrees that there would not be modern Singapore without the leadership of its late prime minister, Lee Kuan Yew and his team. Likewise, it agrees that Ethiopia’s rapid economic growth in the last fifteen years wouldn’t be possible without the leadership of its late former prime minister, Meles Zenawi, and his brilliant colleagues notably Hailemariam Desalegn, the current prime minister of Ethiopia.


Abdulkarim was born in Aw Barre (Teferi Ber), Ethiopia; grew in Borama, Somalia and presently lives in Ottawa, Ontario, Canada.


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