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Old December 30th, 2011, 06:24 PM   #1
abnet
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The China Thread | Africa & China relations

Ethiopia's partnership with China.

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China sees Ethiopia as a land of business opportunities, but the African country remains in charge of any deals




Ethiopian prime minister Meles Zenawi (left) and Chinese premier Wen Jiabao during a meeting in Beijing in August.

In late November, Habros Seguar, an Ethiopian industry ministry official, told me how the ministry had just landed a major Chinese investment. During his August trip to China, Prime Minister Meles Zenawi had visited the Pearl River Delta, where higher costs are driving manufacturers offshore. He invited the Chinese to visit Ethiopia. Among other things, he wanted them to look at a leather-based industrial cluster Ethiopia is developing to better utilise its livestock population, Africa's largest.

Within weeks, a delegation of Chinese had arrived in Addis Ababa. Among them was the privately owned Huajian Group, which produces 16 million pairs of leather shoes per year. By October, Huajian had decided to invest in Ethiopia.

Huajian's general manager arrived in November, hired 50 Ethiopian technical school graduates and sent them off to China for training. "The machinery is already on its way to Djibouti," Habros told me, adding that Huajian was leasing a factory site in Ethiopia's Eastern (Oriental) Industrial Zone.

Ethiopia at the end of 2011 reflects the surprising complexity of Chinese engagement in Africa, how it differs from that of the west and – possibly of more significance to the continent – how central is the role of African agency.

China is no newcomer here. In 1972, China financed the Wereta-Weldiya road across Ethiopia's Rift Valley. Between 1998 and 2004, the Chinese contributed 15% of the cost of Addis Ababa's ring road (Ethiopia paid the rest).

But when Ethiopia's economy began to grow at Asian rates, the Chinese saw increased opportunities. Not all were in the direction stereotypes would have predicted. Yes, China's state-owned petroleum companies explored for oil, but they departed empty-handed. Rather, the Chinese unleashed a variety of state-sponsored tools for building economic ties.

Most of these do not involve China's relatively modest foreign aid. The China-Africa Development Fund has made equity investments in a leather factory, a cement plant and a glass factory. The Eastern Industrial Zone is being built and run by a private Chinese company, with performance-based subsidies from China's economic co-operation fund. Chinese telecoms firm ZTE teamed up with Chinese banks to provide a $1.5bn commercial suppliers' credit (at Libor – interbank lending rate – plus 1.5%) to roll out cellular and 3G service across the country.

A preferential export buyer's credit is paying more than half of the $612m cost of a toll road that will cut travel time between Addis Ababa and Djibouti, whose port now provides landlocked Ethiopia access to the sea. The tolls will help repay the loan over 20 years.

In a twist on a financing mode popularised in Angola, where infrastructure loans were repaid with Angola's main export, oil, China's Eximbank has provided commercial loans for electricity distribution lines, cement factories, and other projects, secured (and repaid) out of Ethiopia's exports to China: mainly sesame seeds. These credits are known (in Chinese) as hu hui dai kuan, or "mutual benefit loan". A Chinese company gets the business, Ethiopia gets finance for development: at Libor plus 2-3%.

To the west, Ethiopia typically conjures up images of drought and starving children; we want to save Ethiopia. To the Chinese, Ethiopia, with a fast growing economy and 90 million consumers, looks like good business. While western official engagement with Ethiopia's authoritarian but development-minded government is still largely limited to foreign aid, the Chinese offer multiple ways to make co-operation economically attractive.

Of course, there are downsides to China's engagement. Chinese banks continue to show interest in financing large hydro-power projects with daunting environmental and social challenges. Reportedly, working conditions were so onerous at the enormous African Union complex being built by a Chinese firm that some Chinese workers went on strike. Ethiopians complain about the quality of ZTE's technology.

At the same time, observers sometimes accuse China of sins it has yet to commit. In July, Günter Nooke, German chancellor Angela Merkel's Africa adviser, said that in Ethiopia, China's "large-scale land purchases" were partly to blame for a devastating famine. Ironically, the California-based Oakland Institute had reported just a month earlier, after an exhaustive four-month "land grab" study, that the Chinese were "surprisingly absent from land investment deals" in Ethiopia.

Ethiopia is clearly in charge in this engagement. Chinese traders and shopkeepers, who are fixtures across many African cities, are absent on Ethiopia's streets. These positions are reserved for locals, and Ethiopians enforce their rules.

And China listens. A decade ago, Chinese companies building the ring road complained they couldn't find enough local skilled workers. The Ethiopian government asked China to establish a college that would focus on construction and industrial skills. The fully-equipped Ethio-China Polytechnic College opened in late 2009, funded by Chinese aid. Chinese professors offer a two-year degree with Chinese language classes alongside engineering skills. Chinese companies are waiting to hire its first crop of graduates.

• Deborah Bräutigam is senior research fellow at the International Food Policy Research Institute, and professor at American University's School of International Service, international development programme. She is the author of The Dragon's Gift

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Last edited by abnet; December 30th, 2011 at 06:47 PM.
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Old December 30th, 2011, 07:07 PM   #2
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Great article!
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Old December 30th, 2011, 07:09 PM   #3
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Great article. I've said this over and over throughout SSC, whether China's engagement in Africa is beneficial or not will depend completely on each African country.
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Old December 30th, 2011, 07:27 PM   #4
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Here's an article published a couple of days ago about that shoe factory mentioned above:

Chinese Footwear Company to Begin Operations in Ethiopia

Quote:
Chinese footwear company, Hujuan, is to begin operations in Ethiopia. Hujuan commenced investment activities in Ethiopia two months ago and is in the final stages of constructing a factory in Dukem. The factory is expected to produce 3000 pairs of shoes daily for export.

Hujan anticipates that production will begin in its Ethiopian factory early in the New Year according to Berhanu Nigus, Head of Quality Testing and Certification Services at the Leather Industry Development Institute.

The institute was involved in selecting 100 Ethiopian leather professional who traveled to China for training by Hujan said Berhanu.

It is expected that the Chinese company will help develop the export of footwear from Ethiopia he said.

New Wing, another Chinese company, is also expected to invest in the Ethiopian leather sector said Berhanu. The new investor has a significant international presence that will further enhance Ethiopia’s finished leather industry he added.

It is to be remembered that Ethiopia prohibited the export of crust last month. The new ban was targeted to further strengthen the export of finished leather towards securing a more significant share of the global leather market explained Berhanu.

Investment in the finished leather products sector was limited in the past but the ban on crust exports has led to more interest in the sector he noted.

The changes are not yet expected to be significant however as this is a period of transition explain experts at the LIDI.
http://www.2merkato.com/20111229725/...ns-in-ethiopia
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Old December 31st, 2011, 06:23 AM   #5
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Originally Posted by abnet View Post
Thank you Abnet. What a fantastic article. So proud to see that we are in control and not being exploited like the many others throughout the continent. I guess it helps to have that true Ethiopian mentality, Kurat, from not ever being colonized
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Old December 31st, 2011, 04:02 PM   #6
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Thank you guys Indeed very informative and positive article from a British news outlet
Quote:
Originally Posted by abesha View Post
Here's an article published a couple of days ago about that shoe factory mentioned above:

Chinese Footwear Company to Begin Operations in Ethiopia

http://www.2merkato.com/20111229725/...ns-in-ethiopia
This company is really fast and agressive,it already secure 160 hectare of land from the Addis Ababa city administration to build the shoe factory ,hotels and real estate. The west specially the United States were pushing China to outsource 20 million labor intensive jobs to Africa .I don't know if this is part of that program but if we get two million jobs out of that could be a miracle to our country .
Anyway back to the news and its in Amharic.
Quote:
በአዲስ አበባ ለቻይና ኩባንያ 160 ሔክታር መሬት እንዲሰጥ ተወሰነ

Wednesday, 28 December 2011 10:00
By WUDINEH ZENEBE


በከንቲባ ኩማ ደመቅሳ የሚመራው የአዲስ አበባ ከተማ አስተዳደር ሊዝ ቦርድ ለቻይናው ግዙፍ የኢንዱስትሪ ኩባንያ ሁጃን ግሩፕ 160 ሔክታር መሬት እንዲሰጥ ወሰነ፡፡ የከንቲባ ጽሕፈት ቤት ኃላፊ አቶ ሞቱማ መቃሳ ለሪፖርተር እንደገለጹት፣ የከተማው መሬት ልማትና ግንባታ ፈቃድ ባለሥልጣን በቅርቡ ለኩባንያው ቦታውን ያስረክበዋል፡፡ የቻይናው ኩባንያ 160 ሔክታር መሬት ለምን ያህል ጊዜና በምን ያህል ገንዘብ በሊዝ እንደሚሰጠው ለማወቅ አልተቻለም፡፡

ለሁጃን ግሩፕ እንዲሰጥ የተወሰነው መሬት በንፋስ ስልክ ላፍቶ ክፍለ ከተማ በማስፋፊያ ክልል ውስጥ ይገኛል፡፡ በአሁኑ ወቅት መሬቱ በአርሶ አደሮች እጅ የሚገኝ ቢሆንም፣ የከተማው የመሬት ባንክና ከተማ ማደስ ጽሕፈት ቤት አርሶ አደሮቹን በማንሳት ሥራ ላይ ተጠምዷል፡፡

የባለሥልጣኑ ምክትል ሥራ አስኪያጅ አቶ በቀለ ገብሬ ለሪፖርተር እንደገለጹት፣ በአንድ ወይም በሁለት ወር ጊዜ ውስጥ ቦታው ለልማት ዝግጁ ይደረጋል፡፡

ቦታውን በቅርቡ ይረከባል ተብሎ የሚጠበቀው የቻይናው ግዙፍ ኩባንያ ሁጃን ግሩፕ በዚህ ቦታ ላይ ግዙፍ የጫማ ፋብሪካ፣ ሪል ስቴትና ሆቴል የመሳሰሉ ግንባታዎችን የሚያካሂድ ሲሆን፣ ፕሮጀክቱ ለከተማው ዕድገት ትልቅ አስተዋጽኦ እንደሚኖረው አቶ ሞቱማ ገልጸዋል፡፡

ሁጃን ግሩፕ ለእነዚህ ግንባታዎች በቢሊዮን የሚቆጠር ብር ኢንቨስት የማድረግ ዕቅድ ሲኖረው፣ የቻይናው ኤግዚም ባንክ ኩባንያውን ፋይናንስ ያደርገዋል ተብሏል፡፡

ከሁጃን ቀደም ብሎ ሌላኛው የቻይና ኩባንያ ሲጂሲ ኦቨርሲስ ኩባንያ ከአዲስ አበባ አስተዳደር ሰፊ ቦታ በመረከብ የመስታወት ፋብሪካ ገንብቷል፡፡

ግንባታው የተካሄደው ጀሞ አካባቢ ሲሆን፣ በኢትዮጵያ ብቸኛው የመስታወት ፋብሪካ ነው፡፡ ሀንሰም መስታወት በሚል የሚመረተው መስታወት በአሁኑ ወቅት ለኢትዮጵያ ገበያ ተዋውቋል፡፡ ሁጃን ግሩፕ በኢንዱስትሪ ዘርፍ ቦታ የተከለለት ሁለተኛው የቻይና ኩባንያ ሆኗል፡፡

የኢትዮጵያ መንግሥት በሚቀጥሉት አምስት ዓመታት በኢንዱስትሪው ዘርፍ ለውጥ ያመጣሉ ካላቸው ዘርፎች አንዱ የቆዳና የቆዳ ውጤቶች ዘርፍ ነው፡፡ መንግሥት ከቆዳና ከቆዳ ውጤቶች ዘርፍ በ2007 ዓ.ም. በዓመት 500 ሚሊዮን ዶላር የማግኘት ዕቅድ አለው፡፡ መንግሥት ይህንን ዕቅድ ለማሳካት በዘርፉ ለመሰማራት ለሚፈልጉ ባለሀብቶች የተለያዩ ማበረታቻዎችን ሲሰጥ ቆይቷል፡፡

የቻይናው ኩባንያ የሥራ ኃላፊዎች ከወራት በፊት ጠቅላይ ሚኒስትር መለስ ዜናዊ ቻይና በጎበኙበት ወቅት ስለ ጫማ ፋብሪካ ኢንቨስትመንት ውይይት አድርገው ነበር፡፡ ኩባንያውም በኢትዮጵያ የጫማ ፋብሪካ ለመገንባት ማቀዱን ገልጾላቸው እንደነበር ይታወሳል፡፡ በውይይቱም ጠቅላይ ሚኒስትር መለስ የኩባንያውን የኢንቨስትመንት ጥያቄ በደስታ ተቀብለዋል፡፡

ኩባንያው ቻይና በሚገኘው ፋብሪካው በዓመት 15 ሚሊዮን ጥንድ ጫማ የማምረት አቅም አለው፡፡ ኢትዮጵያ ውስጥ በሚገነባው ፋብሪካ በመጀመሪያው ዙር አንድ ሚሊዮን ጥንድ ጫማ የማምረት ዕቅድ ሲኖረው፣ በሦስት ዓመት ጊዜ ውስጥ የማምረት አቅሙን ከአምስት እስከ ስድስት ሚሊዮን ጥንድ ጫማ ያሳድጋል ተብሎ ታቅዷል፡፡

ኩባንያው ቦታውን ከአስተዳደሩ ተረክቦ ግንባታ እስኪያካሂድ ድረስ፣ በጊዜያዊነት ዱከም በሚገኘው የቻይናው ኢስተርን ኢንዱስትሪ ዞን ውስጥ ማሽኖቹን ተክሎ ማምረት የመጀመር ዕቅድ ነድፎ እየተንቀሳቀሰ መሆኑን ለማወቅ ተችሏል፡፡
http://www.ethiopianreporter.com/new...-160-----.html
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Old December 31st, 2011, 11:50 PM   #7
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Investments from anywhere in the world are welcome but some things like shopkeepers and other elementary things are already abundant in ethiopia/africa. I dont believe in a Law or rules to keep the chinese out. If they provide better goods/service then the locals then let it be, you dont have to support them if you dont want. We dont need more laws on capitalism in ethiopia.

The whole colonial thing is a bit over exaggerated but the Indians are buying up land. NOT land that is uninhibited as the gov lies about but stolen by the guns of the gov to give to foreigners????
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Old January 27th, 2012, 12:01 AM   #8
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China and the African Drought






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Old January 27th, 2012, 02:15 PM   #9
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Interesting stuff.
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Old February 4th, 2014, 06:29 AM   #10
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Is Ethiopia the Next China?

The Next Shanghai May Be in Africa
Africa could see its cities become global centers of trade and investment.

Quote:
Stephen Hayes is president and CEO of the Corporate Council on Africa.

In 1987, I visited Shanghai for the first time. As I walked the streets, it was as if I were walking on a movie set that focused on 1930s China. Vendors were cooking along the streets, and there wasn't much you couldn't buy if you were hungry or looking for cheap goods. The hotel in which I stayed had been built in the 1920s of brick, and the bare rooms were adequately but simply furnished. I was shown the plans for Shanghai of the future and thought them highly imaginative and hopeful, but in my mind they were dubious.

Seven years later I returned to Shanghai and I could not believe that any city anywhere, even with the most modern technology, could possibly change in such ways and in such a short time. The plans I had been shown in 1987 had not only been realized, but the city had pushed beyond them. There were new cities within cities, giant throughways, and where there had been thousands of bicycles there were now thousands of automobiles, so many that one imagined they had been hidden all along.

Now, more than a quarter century later, the transformation of Shanghai, and really most of eastern China, remains the most spectacular feat I have witnessed in my lifetime. Although I think they would have been far better off using bicycles instead of so many automobiles, the transformation was simply overwhelming. Shanghai in a decade became one of the greatest cities in the world. Impossible to imagine and almost as hard to believe.

[See a collection of political cartoons on the economy.]

I say this thinking of Addis Ababa, Ethiopia. If one goes outside the city to the hills around, and looks down at the bowl into which most of the city fits, I think that this too will be a very different city in less than ten years, as will many African cities. In Abuja, Nigeria, they are enacting a twelve-phase development plan, and are now in phase four. For nearly all the development work for phase five, the Chinese have invested, ensuring that phase six is not so far away.

Addis Ababa, at 8,000 plus feet above sea level, is the third highest capital in the world, but because it sits in a bowl, at times of thermal inversion it will be a city increasingly hard to see from the hills, just as Mexico City and Los Angeles are on some days now. The pollution of progress will wash over the city, and what one will see will be the peaks of buildings that have yet to be built. Addis Ababa will be a very different city than even the hub of activity and perceived chaos it is today, a mix of old and new, just as Shanghai was thirty years ago.

[See a collection of political cartoons on energy policy.]

There are several similarities to China of 1987 in the Ethiopia of 2013, though it seems difficult for Americans to comprehend. The standard of living for the people is rising and there is slowly, cautiously, a creeping openness in public discussions. By American standards, political control is too heavy-handed, but one must realize what the country's recent past has meant. China had the Cultural Revolution and its aftermath into the early 80s, and Ethiopia had its own horrific oppression in the 70s and 80s. Both countries took a giant leap backwards before beginning to come out of the abyss.

It is difficult to have perspective if you haven't ever been through these type of experiences. We can look at how our own Civil War affected our nation and see some of those wounds still affecting us more than 150 years later.

In ten years, Ethiopia may be the most changed nation on the continent. Its investment in building a national power grid is greater than any other nation in Africa. This alone presents major opportunities for American power companies large and small. China, and to a lesser extent Japan, are building its road and rail infrastructure. The Ethiopian Government is investing $5 billion in the light railroad project between Djibouti and Addis Ababa, as Djibouti serves as the major port for landlocked Ethiopia. Of its total annual budget, Ethiopia is allotting ten percent to infrastructure development, the highest such percentage in Africa. A $1.2 billion dollar power line to Kenya is also in planning.

[Read the U.S. News Debate: Given The Current Deficit Crisis, Should Foreign Aid Be Cut?]

Ethiopia is challenged by a population of 90 million people, and as a country with one of the highest population growth rates in the world, there will be a younger and growing population, a potential reservoir of discontent without jobs. This was not so different from Shanghai and the surrounding area in the 1980s.

Telecom and IT investors such as Samsung are also entering Ethiopia, and as noted in a previous blog, dialogue and debate will slowly open up in the country, just as it did in Shanghai and throughout China in the 1990s. Ethiopia, just as China, will see that they have no choice but to ease communication restrictions if they want even more investors and a supportive nation.

Not all changes will be improvements, of course. Pollution will likely increase significantly, and global warming may be accelerated because of all that we call progress. We can only hope that greater investment in clean energy and a careful examination of our transportation schemes worldwide will also be considered carefully. The great cities of the future, of which Addis Ababa could easily become one, depend on forward thinking. These are also great opportunities for investors and entrepreneurs.
http://www.usnews.com/opinion/blogs/...-next-shanghai
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Old February 4th, 2014, 06:20 PM   #11
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The transformation is breath taking I left Ethio 13 years ago and I went back again after 8 years I couldn't believe the change I witnessed,, I went back again after 4 years it was even more unrecognizable,, now i am a firm believer in the total transformation of our country in a very short time,,
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Old February 4th, 2014, 07:20 PM   #12
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The transformation is breath taking I left Ethio 13 years ago and I went back again after 8 years I couldn't believe the change I witnessed,, I went back again after 4 years it was even more unrecognizable,, now i am a firm believer in the total transformation of our country in a very short time,,
Thats what I like to hear.
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Old February 6th, 2014, 10:08 AM   #13
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The transformation is breath taking I left Ethio 13 years ago and I went back again after 8 years I couldn't believe the change I witnessed,, I went back again after 4 years it was even more unrecognizable,, now i am a firm believer in the total transformation of our country in a very short time,,
Very true... the question is, whether the transformation is sustainable and benefits the general public.
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Old February 6th, 2014, 09:15 PM   #14
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Very true... the question is, whether the transformation is sustainable and benefits the general public.
At the moment it looks sustainable our productivity is growing every year both in agriculture and manufacturing, employment is growing along with productivity, I believe also the new roads, the new railway, and the electricity projects, the new universities, the list can go on and all this will translate into better standard of life for people,
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Old February 9th, 2014, 08:53 PM   #15
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I think with out any doubt Ethiopia will become the next china in the coming decades. For one what made China stand out as a economic growth launchpad was it's massive infrastructure development. Infrastructure can have profound effects from Healthcare,Education,tourism,sera felega,movement of goods as well as population having access to more resources leading to consumerism = bigger economy, as well as less cost to produce stuff.

And with Ethiopia spending 10-15% of it's GDP in Infrastructure (the highest on the continent) it will make Ethiopia stand out from many many many African countries in the coming years or decades.

One of the reasons that China is light years ahead of India is because of rapid Infrastructure development. If Ethiopia continues to develop infrastructure then with out doubt it will become the next china in Africa and the world.
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Old February 10th, 2014, 03:54 AM   #16
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If we can create a modern political environment or If EPRDF is 'too big to fail' (haha) like the Chinese communist gov. If we don't get our act together in the next 2 elections...well. Gov wants to pretend like they can satisfy everyone and most of the opposition thinks sabotaging Ethiopian progress is sabotaging EPRDF (that logic is part of political science/engineering but it cant take you that far- it works somewhat in developed countries--but look at the problems its bringing in those places).
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Old February 10th, 2014, 04:03 AM   #17
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Too small to be the "next China"

But yes, the most changed country on the continent (together with Angola).

I think Ethiopian industralisation will be export oriented like China while Nigeria's will be domestic driven like Brazil.
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Old February 10th, 2014, 05:38 AM   #18
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yeah, Ethiopia has changed a lot ! keep moving forward !
but, it is not about what you personally have seen through your eyes once we got back there after many years... I mean it is not about the "cosmetic" perception: buildings, roads, lights etc. I think it is more about people ! more about their personal life and well being, about their life expectancy, about the level of education and the ability for parents to offer affordable education and school to their kids, the quality of health care and availability of reliable doctors and nurse across the country...you focus too much on Addis. just keep in mind, over 90% of Ethiopian currently live outside Addis. Because of its capital status, the gov. is pouring billions dollars in local projetcs. I think to really measure the development of the country, just go to the countryside and see the reality : how do farmers deal with their every day life ? how do women manage their life in a predominantly patriarchal, conservative Ethiopia ? what about child marriage in the villages ? (60% of marriage of Ethiopia) and Electricity, telecom, etc...
I'm not pessimistic, but Ethiopia has a very long way to go before catching up with China in the 90s (or even 80s).
we still have huge challenges, I hope we won't have to deal with anymore wars, fights, ethnical cleansing, religious or holy crimes, military coup....that's the worst thing to kill and shut down all previous effort. Sadly too many African states are still experiencing such atrocities, preventing them from any development....
there is no growth possible if our neighbors are failed states ! no development if surroundings countries get collapsed : regional stability is key to success !
So guys, don't think only as an Ethiopian, but as an AFRICAN.
we cannot growth alone, we need our brothers from Kenya, Somalia, Rwanda, Sudan, Tanzania, Uganda and so on ! African integration matters. Look at the European Union.
As African, we seriously lack on regional cooperation, business partnership : we need a free trade market ! for the stake of Africa. take care. I'm done now.
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Old February 10th, 2014, 08:37 PM   #19
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Too small to be the "next China"

But yes, the most changed country on the continent (together with Angola).

I think Ethiopian industralisation will be export oriented like China while Nigeria's will be domestic driven like Brazil.
It is true Ethiopian economy will never be as big as China's economy ,, but we are at list as big as some of the big Chinese provinces in population and even bigger when it comes to resources or landmass, few more years we can for sure be like the Henan Province which has a GDP of 525 billion at the moment,,, or perhaps if we succeed to score a very high growth level ,, we might even surpass Henan to be like the Shandong province which has a GDP of 900 Billion at the moment,, any how at the moment the outlook for the future looks very optimistic.
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Old February 10th, 2014, 10:17 PM   #20
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It is true Ethiopian economy will never be as big as China's economy ,, but we are at list as big as some of the big Chinese provinces in population and even bigger when it comes to resources or landmass, few more years we can for sure be like the Henan Province which has a GDP of 525 billion at the moment,,, or perhaps if we succeed to score a very high growth level ,, we might even surpass Henan to be like the Shandong province which has a GDP of 900 Billion at the moment,, any how at the moment the outlook for the future looks very optimistic.
I would say on average Ethiopia can probably achieve to be be the size of South Korea's GDP around 1 trillion. If we do REALLY GOOD then Japan around 6 trillion. But in any case 1 trillion USD GDP is not only China but American economy in African standards where the average GDP stands around 30-40 billion. In an International level I believe that Ethiopia will probably be seen as South Korea in the coming decades.
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