Ethiopia: is Africa’s ‘lion’ ready to pounce? – Deutsche Welle

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Yinager Dessie Belay, Ethiopia’s Minister of Planning and head of his country’s business delegation to Germany, did not waste time in his lobbying efforts. “Ethiopia has many things that you need to look into,” the Minster told his German interlocutors. “A conducive business environment, political stability, sound economic policies, macroeconomic stability, abundant natural resources, a trainable workforce, low-cost energy and, above all, a sizable and captive market.”

His words were echoed by Zemedneh Negatu, Managing Director of Ernst & Young and an Ethiopian government advisor. “The biggest economy in Africa is Nigeria; South Africa got dethroned two years ago by Nigeria. Third is Angola, and guess that who is number four: Ethiopia,” Negatu told the audience.

For the past five years, Ethiopia, Africa’s second-most populous country and one of the West’s most strategic partners in the continent, has indeed been enjoying rapid growth. Germany enjoys a strong trading relationship with the East African nation, ranking the fifth largest buyer of Ethiopian goods, behind Somalia, the Netherlands, Saudi Arabia and China. According to official figures, the total value of Ethiopian exports to Germany, mainly coffee and textiles, is set to increase to 185 million euros ($209 million) in 2016. On the other hand, German exports to Ethiopia are worth much more, amounting to 238 million euros ($268 million).

Passengers wait at a tram stop in Ethiopia

Ethiopia boasts Sub-Saharan Africa’s first light rail system, inaugurated last year

However, the International Monetary Fund (IMF), in its recent outlook, said overall growth in Ethiopia was projected to slump to 4.5 percent, down from 10.2 percent the previous year. One of the contributing factors is said to be the
drought that has gripped the country. Figures compiled by the Ethiopian government and its humanitarian partners suggest that more than ten million Ethiopian are now critically short of food.

El Nino expected to dent growth forecast

Asked by DW whether the drought affects German investors in Ethiopia, Germany’s Economic attaché to Ethiopia, Patrick Wegner replies: “Not so much.” According to the diplomat, not many German companies are active in the agricultural sector yet, instead mainly sell machinery and vehicles.

Michael Frick, CEO of German company INPROCON International, has come to Munich to call on business leaders to invest in Ethiopia. “There is huge potential for business opportunities. The country enjoys a very good business environment,” he tells DW. His company has been active in Ethiopia since 2007. It is among the foreign firms involved in Ethiopia’s ambitious dam construction plans, set to generate much-needed energy for economic growth.

Ethiopian business delegates joined their German counterparts at the conference in Munich

Critical voices

But critics have time and again pointed to the flipside of Ethiopia’s economic success story. It’s capital is home to the African Union’s headquarters, but political stability in the country remains elusive, as crises in the Oromia and Gambela regions continue to pop up. Political activists are handed harsh penalties for daring to speak out openly, and the parliament is made up exclusively of politicians of the ruling EPRDF coalition (Ethiopian People’s Revolutionary Democratic Front), in power since 1991.

Wegner stresses that the German government is “in a close reform dialogue with the Ethiopian government,” and is “attempting to improve the investment climate in the country.” Investors speak positively about the relative absence of corruption in comparison to neighboring countries, but echo concerns of IMF and World Bank about red tape in the telecoms and banking sectors.

The challenge to flag Ethiopian as a safe investment destination became all too obvious for delegates in Munich when demonstrators pushed past security guards to protest against a lack of democracy, large scale eviction, land grabbing and politically-motivated killings in the country.

Protestors outside the conference in Munich

Protestors demonstrated outside the conference center in Munich

One of the protestors, who had travelled several hundred kilometers from the city of Leverkusen to join demonstrators outside the venue, and who would give her name only as “GG” for fear of repression, told DW that while she knew about the crucial benefit of foreign investment for development, appropriate compensation was needed for farmers evicted from their homesteads. “If you do not pay compensation and rather let the farmer face the problem alone, then what will be the fate of that person in a country like Ethiopia?” she wondered.

In investment as in marriage, it takes two to tango, as the saying goes. Only then will the Ethiopian ‘lion’ be ready to jump.

Ethiopia: is Africa’s ‘lion’ ready to pounce? – Deutsche Welle