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Old December 30th, 2011, 06:24 PM   #1
abnet
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Ethiopia's partnership with China.

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

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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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