Centuries ago, the Abyssinian Aksumite Empire which occupied the current geographical location of modern day Ethiopia was a big giant which lasted for generations. Together with Egypyt and Sudan, these economies traded wide with the whole of Arabia as well as Europe. It was the southern-most known civilization for ages, until Vasco Da Gama took a ship around continental Africa.
So famous was the empire that it provided much of the construction material for the Solomonic temple as mentioned in the Bible as well as probably producing controversial Queen of Sheeba. It was a feared country, with emperors getting great respect and influence. These included Emperor Tewodros II, Menelik and Haile Sellasie. The country even managed to remain uncolonized until the sustained inherited crown was disrupted by socialist regimes.
However, years of misrule during post independence Africa quickly crumbled the power and influence of the country, even after being renamed Ethiopia.
However, the trend is surely turning for the country of 100 million people- the second highest in Africa. In less than a decade, Ethiopia has seen its economy bounce back to one of the most sustainable in Africa and the biggest economy in Eastern and Central Africa. A mention of the country ten years ago brought an image of civil unrest, droughts and despair. Not anymore.
World Bank notes that although it is the fastest growing economy in the region, it is also one of the poorest, with a per capita income of $783. Ethiopia’s government aims to reach lower-middle-income status by 2025. Ethiopia’s economy experienced strong, broad-based growth averaging 10.3% a year from 2005/06 to 2015/16, compared to a regional average of 5.4%.
The World Economic Forum recent report attributes Ethiopia’s rise largely driven by an increase in industrial activity, including investments in infrastructure and manufacturing. The report notes that much of the investment in Ethiopia has come from overseas.
According to the IMF, foreign direct investment growth was 27.6% in 2016/17, with investments going into new industrial parks and privatization inflows. Ethiopia has been selling its state-owned businesses to outside investors like China.
Ethiopia has also encouraged foreign investment in its manufacturing industry, hoping to compete with India and China with. Fashion brands like H&M, Guess, J Crew, and Naturalizer have already established manufacturing centres there.
According to World Investment Report of the United Nations Conference on Trade (UNCTAD), despite Ethiopia registering a slight dip in the amount of Foreign Direct Investment for 2017, it still was able to absorb half of all $7.6 billion investment for East Africa.
The government of Ethiopia is aware of the growing appetite of foreigners in the country’s development. To picture this, key events occurred early in the year. One, the country announced the rise to helm of a new leader in Abiy Ahmed who took over from Hailemariam Desalegn as Ethiopia’s new prime minister after his unexpected resignation in February. The new premier embarked on key trips to the Eastern Africa region that did not pass the eyes of economic experts.
First trip was in Nairobi, the biggest economy of the region before Ethiopia overtook it. In Nairobi, Abiy held meetings with Kenyan government with an assurance of Ethiopia purchasing a stake at the Lamu port by purchasing a piece of land in Lamu.
Aware of its landlocked nature, after it lost its coastline to Eritrea leading to a bloody war of several decade, Abiy moved fast to ensure Ethiopia will be leading influence in the construction and operation of the Lamu port as well as the trade corridor from Lamu to the southern part of Ethiopia commonly known as the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor.
With a firm grip of the Kenyan route, Abiy moved to more challenging interventions. First, the Ethiopian premier moved to Somalia where after lengthy meeting came to announce that Ethiopia will jointly develop Somalia ports in a move that seemed to correct an earlier Ethiopian fray into Berbera port in the semi autonomous Somaliland.
Finally, Abiy made peace with the country that stole its coast, Eritrea. Formal relations have been restored between the countries and the premier has admitted that reopening of roads to Eritrea will be a priority.
With the foray in to the region, Ethiopia has evaded a major trade lockdown. Seventy percent of the cargo at the port of Djibouti is shipped to or from Ethiopia, accounting for over 95% of Ethiopia’s foreign trade. More trade happens in Port Sudan which is more expensive to ship.
The country is now in conversation with United Arab Emirates and Saudi Arabia with an intent of establishing trade links with the Arabian gulf just like in its time of the Abyssinian empire.
As it stands, Ethiopia will be required to feed an extra 25 million people by 2030 with a projected 125 million people. The government is aware that if it needs to feed this population, provide jobs and opportunities, it has to have an influence in the region. This has been evidenced by increased investments in energy, water, irrigation and transport infrastructure.
With a smooth road and rail linking Addis Ababa with either Nairobi or Lamu; a reliable connection to Djibouti, Somalia, Somaliland, Sudan and Eritrea, the country will be in reach of catchment area worth billions of dollars. This coupled with international link through its profitable airline, Ethiopian, the country is about to rule Africa.