How Africa could become the new Asia
By Hans Gerard Moleman
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 now has more than one hundred million people, and by the end of this century there will be a quarter of a billion Ethiopians on this 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. This GTP aims at attracting investors and factories that will produce goods for the entire world. It is an experiment in rapid industrialization that has not been seen before on this scale in Africa.
Can the second country of Africa -only Nigeria has a larger population- make the transition from poverty, hunger, war and maladministration to prosperity?
Misery and miracle
To some it may sound like a mirage. But consider this: the Chinese, the South Koreans, the Vietnamese also succeeded against considerable odds. Anyone who looks up the misery and adversity these Asian countries have endured in the past century can be sure: economic miracles do exist. As long as you organize them.
Take China: in the twentieth century it had to contend successively with an ancient empire collapsing from corruption, an assortment of warlords, civil war, invasion and partial colonization, Mao’s red terror, famine and economic mismanagement. Nevertheless, around 1980 smart people led by the pragmatic Deng Xiaoping saw a chance to make a new start.
In 2018 China is back as a world power -you may remember, it was already a world power centuries ago.
Now, together with Europe and the US, it can play a vital role in the industrialization of Africa. China, like the West, is getting older and expensive. In Africa, there are still plenty of young people willing to work for lower wages – just like the Chinese when Deng reformed Chinese society almost forty years ago, or the Europeans when industrialisation begun there more than a century back.
HIP: underwear from the Rift Valley
Ethiopia is indeed beginning to industrialise. It now boasts of dozens of new outfits that employ thousands of Ethiopians. Companies like Huajian, a large Chinese shoe manufacturer, or Dutch Afriflora, the largest rose farm in the world. New industrial parks are added every year; helped by both the Chinese, other Asian countries and the European Union -which is pumping hundreds of millions of euros in Ethiopia to dampen unwanted migration from the region.
The largest industrial cluster was opened last year 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. 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 will be ten times that. All of them are young Ethiopians producing clothes and textiles for export, for global brands like H & M and Levi’s.
Made in Ethiopia
The first containers full of goods have left HIP, with some five million pieces of underwear in them. Anyone who buys undies from H & M this year in Europe will for the first time have the opportunity to come across a label that says Made in Ethiopia instead of Made in China, Bangladesh or Indonesia.
Is Ethiopia now close to becoming the China of Africa? No, many daunting tasks are still ahead.For example, Asian managers and European consultants will tell you productivity must increase considerably. Wages are another challenge. They should go up, to make them more like living wages. So far there has been a lot of turnover of staff at Ethiopia’s new factories – no wonder with monthly pay often between 800 and 1500 birr, or 25 to 45 euros.
“I’m not going to work in a factory for so little money,” said a fishermen on Lake Hawassa to me. His explanation is practical: on a good day he earns easily double fishing -as a free man without a team 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. The park has endless rows of brand new factory warehouses, fresh asphalt roads, new apartment buildings 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. 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 pressure for change. Hundreds of young Ethiopians have been killed by federal riot police, thousands, including prominent opposition leaders, journalists and bloggers, were arrested.A number of foreign companies were attacked by demonstrators, and a second state of emergency was declared in 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, the two main groups who together are a majority of the population, have felt short changed for decades.
The ruling EPRDF now seems to realise it must move to avert disaster -the worst case being civil war and disintegration of the country. In April the Popular Front for the first time appointed an Oromo as prime minister- Dr Abiy Ahmed.
The 42-year old Abiy Ahmed, 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 he is employing all his skills and experience to resolve the current tensions -and they are plenty.
The new leader of Ethiopia has to get the opposition on board, manage ethnic and religious tensions with the Somali minority in the south-east and finally deal with the border dispute with Eritrea. He is now working hard to resolve these formidable challenges -and the first indications of hopeful changes in Ethiopia are emerging.
The urgency is clear for Addis Ababa. “If social and political tensions remain, then a few years from now the H & M’s of this world will have packed their bags”, a manager of a foreign textile company near the capital warned earlier this year. “That would mean the millions of jobs this country needs will be a fata morgana.”
If Abiy Ahmed pulls it off, Ethiopia could reach its full potential within the next ten to twenty years. It makes 2018 a key year for Ethiopia -and for Africa.
When Ethiopia succeeds, It can set an example for Zambia and a slew of other countries on the continent: how to escape from a spiral of poor governance and poverty through smart planning of economic development. It could become a country with thousands of factories and important agricultural industry, providing a much needed perspective for millions of young Africans who are looking for a better life in their own country or abroad.
So what may the future Ethiopia look like? It will not be a copy of China, of course. But it can achieve moderate prosperity for tens of millions of people, as the only African country so far that is seriously looking for practical inspiration in Asia. That means building new industry parks with real factories that churn out real consumer products for the domestic market and export -not just lots of talk and largely theoretical national development plans, as seems to happen often in Africa.
What a leap forward, what a great inspiration it would be. Imagine a continent transforming from a place where many people want to flee from, to a part of the world where you want to be. Because of the great opportunities. The Century of Africa would finally start in earnest.
Bring it on, Dr Abiy Ahmed!