busy traffic of economic diplomacy to Ethiopia
Bereket Gebru 1-26-15
tremendous economic development strides Ethiopia has taken over the last decade
have increasingly cleansed the country’s image in the international system.
Instead of the gloomy perceptions of the international community towards the
country in relation with recurring drought, Ethiopia has increasingly become a
symbol of African renaissance.
country is nowadays regarded as a favorable investment destination drawing in large
Foreign Direct Investment. Various companies from around the world have increasingly
invested more in the country. These moves have helped speed up the development
of the country.
the international system, economic development helps build up the negotiation
capacity of states. By pronouncing the rewards and threats a nation can exert
during negotiation, economic development helps improve a country’s diplomatic
capabilities. As the achievement of economic development during this period of
globalization demands strong economic and political relations with major world
powers, these strong relations would also be brought to the negotiating table
Ethiopia’s diplomatic power has increased significantly through the years of
its double digit economic growth. This can be corroborated by the large number
of foreign ministers and heads of states and governments of economic
powerhouses paying a visit to the country. The US Foreign Secretary, John
Kerry, and the Foreign Minister of the Russian Federation, Sergey Lavrov, are
two of the numerous high ranking foreign officials who visited Ethiopia this
stark contrast to the conditions a couple of decades ago when Ethiopian
government officials would have limited access to the most powerful people in
the world, they regularly consul with such individuals these days. Ethiopian
delegations are often chosen to share their experiences in universalizing
health and education along with reducing poverty, child mortality and other
issues that the country has excelled at in international forums.
reports also state that Addis Ababa, the Ethiopian capital, has become the
third largest seat of the United Nations in the world next only to New York and
Genève. According to Fortune Newspaper, an Ethiopian weekly, Addis Ababa also
boasts the fourth largest presence of diplomatic corps, following New York,
Washington DC and Brussels. It further states that Addis Ababa hosts close to
25 UN agencies, with their army of employees bordering on 3,000. These facts
are clear indications of the immense increase in the diplomatic stature of the
country in recent years.
the Foreign Affairs and National Security Policy and Strategy document of the
country states that the goal of the country’s foreign and security policy is to
ensure international conditions that are conducive to achieving development and
democratic objectives. It further states that the country needs extensive
market opportunities, investment and technical support to bring about
development and realize it in the framework of globalization. It also
acknowledges the country’s yet unresolved need for grant and loans to finance
development endeavors. It also recognizes the need for technical and financial
support to build and strengthen institutions of democratic governance. It then
clearly states that the approach is mainly economic diplomacy.
increased diplomatic capacity of the country geared further forward by the
development of the country has positively influenced the efficacy of its
economic diplomacy. Accordingly, in addition to the Foreign Ministers of the US
and Russia, this week saw visits by the Japanese Prime Minister Shinzo Abe and
Turkish President Tayyip Erdogan.
first look into the visit by the Japanese Prime Minister Shinzo Abe as his was
the first of the two. Abe visited Ethiopia on January 13 and 14,
2014. During his two-day visit, the premier met and held fruitful talks with
Ethiopian government and AU officials. The Ethiopian Ministry of Foreign
Affairs stated that Shinzo Abe’s visit was a very successful one. The Ministry
stated that the PM held very productive talks with Ethiopian officials.
news reports state that PM Abe also pledged to fulfill all the commitments that
his country made at the fifth Tokyo International Conference on International
Development (TICAD), which took place last June. PM Abe also pledged to provide
a total of more than 17 million US dollars to support refugees in Ethiopia,
Ethiopian returnees from Saudi Arabia and South Sudan. Other reports also
stated that the PM was expected to commit some 10 billion
yen (about 93.4 million US dollars) for the construction of a geothermal power
plant in Ethiopia but the information has not been verified.
his talks with PM Hailemariam Dessalegn, PM Abe expressed his desire to support
Ethiopia’s development efforts through Industrial Policy Dialogue. Accordingly,
Round of the Policy Dialogue on Industrial Development was held in Addis Ababa
from 12 to 17 January, 2015 as a follow up to the Prime Minister’s visit. Professor
Kenichi Ohno and Professor Izumi Ohno, from the National Graduate Institute for
Policy Studies (GRIPS), have led the Dialogue since June 2009. Under the Policy
Dialogue, the two professors have held talks with the late Prime Minister Meles
Zenawi eight times, and with Prime Minister Hailemariam six times, including
the just concluded one.
Policy Dialogue has been conducted as a technical assistance project by the
Japan International Cooperation Agency (JICA), and thus, has been closely
coordinated with the “Kaizen” initiative that the Ethiopian Government is
implementing across the country with the assistance of Japan. This platform is
credited for the creation of the ‘Champion Products approach’, which is a tool
for promoting trade and increasing exports.
the high level Forum held on 14 January, participants such as Newaye Kiristos
Gebreab, Economic Advisor to the Prime Minister,. Ahmed Abtew, Minister of
Industry, Tolesa Shagi, Minister of Mine, Tadesse Haile, State Minister,
Minister of Industry, Genachew Adem, Deputy Commissioner, National Planning
Commission, and other relevant high officials from economic development related
ministries, commissions, and institutions of Ethiopia exchanged views on two
major themes: the positioning of productivity and competitiveness in the next
GTP and the direction of industrial development, and the development of
industrial parks and inviting Japanese companies into Ethiopia.
the first major theme, a cross-cutting whole picture related to the improvement
of product quality, productivity, competitiveness, in particular, the
relationship with “Kaizen”, which is a key element to improving productivity
and competitiveness in the manufacturing sector, as well as target setting and
priority setting in the industry sector, and industrial policy and the role of
FDI were intensively discussed by both sides.
the second major theme, the Japanese provided explanation on the experiences
and examples in Asia where the development of industrial zones for Japanese
companies already took place, the development of infrastructure and related
laws which are critical for inviting Japanese companies and their decision
criteria. Both sides have exchanged views on various issues such as one-stop
service and other preferred environments by Japanese companies for industrial
zone development and marketing strategy.
one of the heads of state and government who visit Ethiopia this week is the
Turkish President Tayyip Erdogan. Turkey's President Recep Tayyip Erdogan
arrived in Addis Ababa on January 21, 2015 on the first stage of an official
visit to countries in the Horn of Africa. President Erdogan is accompanied by
his wife and daughter, Emine and Summeye Erdogan, as well as ministers
including Deputy Prime Minister Numan Kurtuand, a delegation of officials and
businessmen. The President was received by Ethiopian Prime Minister Hailemariam
Desalegn and Osman Riza Yavuzalp, the Turkish ambassador in Ethiopia.
January 22, President Erdogan held meetings with President Dr. Mulatu Teshome
and Prime Minister Hailemariam Desalegn as well as other officials. President
Mulatu was Ethiopia’s former ambassador to Ankara. Ewnetu Belata, State
Minister of the Government Communications Affairs Office said "President
Erdogan is most welcome in Ethiopia at this time when the partnership between
the two countries has reached a record high." He said "Turkey leads
the pack of industrialized countries in terms of foreign direct investment in
Ethiopia, with more than 350 Turkish companies operating in Ethiopia to date
and they have created jobs to more than 50,000 Ethiopians," as well as
providing for technology and knowledge transfer.
to the Turkish Ambassador to Ethiopia, Osman Riza Yavuzalp, Turkish investment
in Ethiopia stands at US$3 billion. President Erdogan’s three-day visit to the
Horn of Africa, which will include a visit to Djibouti where he will hold talks
with President Ismail Omar Guelleh, is part of Turkey’s efforts to strengthen
trade, economic and investment ties in the region. According to Turkish
government data, the volume of trade between Ethiopia and Turkey reached US$422
million in 2013, and in the first 11 months of 2014 it was US$360 million,
seven percent down on the previous period in 2013.
statement from the Turkish Presidential Palace said Turkey had “increasing
economic, trade and investment ties with the countries in the region especially
with Ethiopia." It added that President Recep Tayyip Erdogan’s visit aimed
to further strengthen and deepen the continued growth of these business ties as
well as long-standing relations with Ethiopia and the region.
Turkish investment in Ethiopia is focused on textile and garment manufacturing.
Textile products do not yet make the top list of Ethiopian export items. The
2002 data from the Central Statistical Authority shows that the country earned
28.8 million birr from the export of textile, clothing and apparel in 2000/01.
The country has come a long way from that as it made 98 million USD (about 1.8
billion birr) in the fiscal year that just ended. This figure, however, still
runs short of the one billion USD export earnings planned at the end of the
Growth and Transformation Plan (GTP).
has enjoyed increased attention from various textile and garment factories
located all around the world. The biggest milestone in this context was the
inauguration of Ayka Addis in April 2010. Built by Turkish investors, Ayka
Addis is the biggest textile factory in Ethiopia. The factory has a daily
spinning capacity of 20tn and knitting and dyeing capacity of 40tn. It is
expected to make up to 100 million USD per year at its optimal operational
capacity. Ayka was first established in Istanbul, Turkey, in 1998. It
dismantled its plant in Turkey completely in order to move to Ethiopia. Part of
the 140 million USD needed to build the factory was provided by the Development
Bank of Ethiopia. The factory has provided employment opportunity for 10,000
four years of operation in Ethiopia, Ayka Addis has facilitated the relocation
of over 50 Turkish textile and garment companies. Accordingly, Capital
newspaper reported, Ayka Addis is expected to build an industrial zone of
several five-story buildings that it plans to rent out to the relocating
factories. The report further indicates that Ayka Addis is carrying out project
preparation and feasibility study. The government, the report further states,
is allocating land around Addis Ababa for the construction of the industry
project aims to export value added textile products which are considered to be
sources of strong export revenue. The relocation of these companies is
projected to generate two billion USD in export revenue for the country per
annum, surpassing the one billion USD goal set at the end of the last year of
the GTP by an astounding 100%. In so doing, the whole package is expected to
create more than 60,000 job opportunities.
manufacturing sector in Ethiopia has expanded very noticeably during the past
decade. The World Bank reported a growth rate of 12.3% in the sector as far
back as the year 2009. Aggressive efforts to draw investment from both outside
and inside have these days pushed investment activities in the sector to an
unchartered territory in the history of the country. Recent international
studies have further put Ethiopia among the countries poised to become heavy
weights of international manufacturing.
decades of economic growth putting the abundant and cheap Chinese labour force
into relative expensiveness, the large influx of companies from all over the
world to China has, as a result, been affected negatively. A report entitled
“The PC16: Identifying China’s Successors” by Stratfor (Strategy Forecasting
inc.), an intelligence think-thank, explains “as the process
matures, low wages rise — producing simple products for the world market is not
as profitable as producing more sophisticated products — and the rate of growth
slows down in favor of more predictable profits from more complex goods and
services. All nations undergo this process, and China is no exception.” Stratfor
founder and Chairman George Friedman notes that there is a continual flow of
companies leaving China, or choosing not to invest in China.
study further argues that China is too big of a manufacturer to be replaced by
a single country. Therefore, the study goes on to denote, a combination of
sixteen countries would take over as the global manufacturing hub. It is these
countries that the study named PC 16 – Post China 16. Ethiopia has been
identified as one of these countries.
noticeably intense diplomatic engagement Ethiopia has been pursuing has been
highly directed towards strengthening its economic development over the coming
years. Accordingly, high profile world leaders along with businessmen have
increasingly made themselves busy trying to engage with Ethiopia in the area of
trade and investment promotion. The highly improved conditions for doing
business in the country have made their efforts worthwhile as can be
corroborated by the increase in the flow of investment.