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Ethiopian PM eyes Chinese, Indian investment boost

4831 Views 26 Replies 10 Participants Last post by  BUTEMBO21
Meles wants to industrialise agricultural economy
* Reiterates 11-15 percent growth prediction
* Ethiopia to export power within two years
By Barry Malone
ADDIS ABABA, Nov 23 (Reuters) - Ethiopia is hoping to attract more investment from Chinese, Indian and Turkish companies as part of efforts to industrialise its largely agriculture-based economy, Prime Minister Meles Zenawi said.
Though still one of the world's poorest countries, Ethiopia says it has posted double-digit growth rates for six years in a row making it Africa's fastest growing non-oil producer.
"Our hope is that industry will grow faster than agriculture over the next five years," Meles told Reuters in an interview. "We will maintain an export-led industrialisation strategy. The main approach will be to try to attract investment."
Meles said his government would target Chinese, Indian and Turkish firms who wanted to invest in the country's fledgling textile and leather industries.
"We expect more investment from Turkey," Meles said. "We also expect more investment in the textile sector from Indian companies. In the leather industry, a lot of Chinese companies have shown an interest. Some Europeans, too."
Ethiopia's new five-year plan, unveiled in August, predicts a "base-case" scenario of 11 percent average annual growth and a "high-case scenario" of 14.9 percent growth for the period.
Meles said the economy would grow this year at between the 11 percent predicted by his finance ministry and a more ambitious 15 percent.
Ethiopia is Africa's biggest coffee exporter and the world's fourth largest exporter of sesame. It is also one of Africa's biggest potential markets -- with a population of 80 million -- and most of its people have no telephones or bank accounts.
But Meles stood firm on his long-held position that there would be no liberalisation of telecommunications or banking.
Despite that, the 55-year-old said he hoped talks for Ethiopia to enter the World Trade Organisation, would finish soon: "The negotiations are beginning to pick up momentum now."
The former rebel said foreign reserves, which fell to $850 million earlier in 2009, had recovered on booming exports.
He dismissed concerns that a 16.7 percent devaluation of the Ethiopian birr, the fourth since January 2009, could spur inflation. The year-on-year inflation rate hit 10.6 percent in October -- way over the government's target of single figures.
"The impact of the devaluation programme is going to be a one-off affair because the massive devaluation was a one-off affair. So we believe the average yearly inflation rate will be in the range of 6-7 percent this year," Meles said.
Inflation in Ethiopia hit a high of 64.2 percent in July 2008. After that peak, the government halted state borrowing and increased bank reserves to drive down the rate and it had been in single digits this year until after the devaluation.
Meles said that power shedding -- which the government says cost the Ethiopian economy 1.1 percent of gross domestic product last year -- should end when a hydroelectric dam that suffered a tunnel collapse is repaired in three months.
Ethiopia, with ambitions to generate 10,000MW, is building Africa's biggest hydropower dam and Meles said the country could become a power exporter within two years.
"I think by the end of the five-year plan we'll be very significant exporters but we should start exporting in a year or two," he said. "Djibouti will probably the first country to get power supply from Ethiopia."
Meles rejected claims from the opposition and some foreign analysts that his government inflates growth figures to attract investment.
"Our economic growth is evaluated very carefully by the IMF and they have never said that we have cooked the outturn figures," Meles said. "They have accepted them as facts. And cooking figures is a very dangerous thing to do."
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First time ever that I agree with you.

They may liberalize them in 10 years time, but I'd be shocked if it happened before 2015.

The banking is one thing, but telecoms is killing the country.
There will never be any liberalization of the banking and telecommunications sector under the current government, without these key sector’s they(TPLF) wouldn’t be able to have a strangle hold on the country
^^ Just saw that on Nazret. Awesome, especially since Ethiopia is the only one out of the top 4 that is non-commodity driven: Qatar (gas and oil), Ghana (oil), Eritrea (mining).. So basically we will be the fastest growing non-commodity economy in the world next year. :cheers:
I always see it in Borders but I never bothered to buy it. Might have to make a trip today to go and get it.

The Economist's "The World in 2011" edition is always the best read of the year of any publication. It has facts and figures from most countries and articles written by world leaders. It's also interesting to see predictions made by the magazine of what will happen next year.
Eritrea's economy will grow 10%?

wow, i am suprised by that?
It's due to the anticipated mining boom. The economy is tiny and was even contracting for a few years so a few millions from gold will create large booms (in numbers at least). It's not going to have much impact though unless it's used properly over several years and the government stops its anti-business mentality.
^^ Yes, that's what The Economist and AfDB project for Ethiopia. The IMF (which always underestimates) says 8.5%.
Yeah Ghana is only second to Qatar.

It comes out at the end of this week I believe. They forecast Ghana to being one of the fastest growing economies with 11% growth.
Mining industry is so garbage , trust me. You've been to Zambia. You know facts there. It almost like South east DRC. only thing is Congolese are more business minded than Zambians.

Once the prices go up. economy gets impressive. let the prices fall. Its a night mare.

I think what Eritrea has problem is their anti business minds from government. That will cost the country dearly in the future.

If they open up the business pipe. They will have even an ever booming economy.
Exactly. Mining booms have to be really carefully managed.
Eritrea could do a lot if only their government wasn't so moronic. If they stopped the hostilities with neighbors and became a friendly state, liberalized their economy, stopped hunting their youth out of the country or into jail/army, etc, they can do a lot. Mining, tourism and ports alone can be more than enough to develop the country. There's only 4 million of them.

I doubt these proceeds will do much good though since the economy is still highly controlled, and trade with the outside world is extremely limited.

8.5% is great.

I am not ecomomist, but that growth rate is something that only handfull of countries in Africa or the World at large are capable of achieving.
I think a lot of African countries can achieve that easily actually. However, there are too many stupid governments, too many restrictions on business, and in some cases, the country really has nothing to offer the world (e.g. CAR, Burkina Faso, Chad, etc).

Those growth rates should be very easily achieved by Kenya, Tanzania, Uganda, Rwanda, Mozambique, Angola, Zambia, Zimbabwe, DRC, Congo Rep., Ghana, Nigeria, CIV, Senegal, Sudan, etc. Any of the above countries are underperforming if they're not reaching at least 8%.

North African countries and South Africa are generally quite developed so those rates may be a big stretch for them though.
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