New cement factory opens in Ethiopia - one of Africa's fastest-growing nations

There’s a quite boom echoing across Arica, but nowhere is it louder than in the landlocked country of Ethiopia. The Ethiopian economy is quickly on track to swap its least developed status for a full-scale industrialized economy, with hopes to make it Africa’s leading manufacturer – certainly proving to be a 21st century model in one of the world’s fastest growing continents seeking to escape the lower rungs of poverty.

In its effort to accelerate growth, Ethiopian officials and the business community have agreed to support the country’s transformation into a manufacturing powerhouse, which will require expanding overall industrial output and driving full employment. Already the government has set lofty targets for the country through the Growth and Transformation Plan (GTP), which seeks to increase per capita income of its citizens to middle-income by 2025. In general, the government’s 2025 vision aspires to facilitate the growth of manufacturing by 25 percent a year and create around 200,000 jobs annually to facilitate such growth.

“For developing countries aiming to maintain growth while sustaining job creation,” the United Nations Industrial Development Organization reports, “manufacturing offers an opportunity not only to re-balance the economy towards higher value-added sectors but also to provide a relatively wide employment base with higher than average labour productivity.”

Therefore very few would argue that manufacturing is the heart of economic growth and structural transformation. And Ethiopia has embraced various strategies to drive economic growth, especially as it gradually shifts from agriculture into a robust industrial sector.

To achieve the expansion of the country’s manufacturing sector, the government has put in place an ambitious industrial parks (IP) programme that targets $1 billion of annual investment over the next decade to develop industrial zones in major cities across the country.  “Using this approach, the strategy hinges on attracting FDI in the export-led and labour-intensive manufacturing sector,” according to the World Bank latest ‘Ethiopia Economic Update’. Which is essential to “build on the country’s agricultural foundations by moving toward new tradeable activities in manufacturing that absorb large numbers of young and semi-skilled workers.”

Already we are beginning to see American clothing companies peek into the country’s flourishing industrial sector, such as Phillips-Van Heusen Corp., which owns brands including Calvin Klein and Tommy Hilfiger, who have recently considered using suppliers at an industrial park in Hawassa, located south of the capital. As Bloomberg also reported, “Hennes & Mauritz AB, Europe’s second-largest clothing retailer, already sources from three factories in Ethiopia, where wages can be as little as a tenth of China’s and access to the U.S. market is duty free under the African Growth and Opportunity Act.”

Secretary-General visit to "Connecting Women and Female Youth to the Exports Market".

The government has taken additional steps to lay the groundwork for the expansion of industrial zones in different parts of the country. It has begun revitalizing necessary infrastructure,  (e.g., buildings, roads, and power supplies) needed to address constraints related to access to land and electricity. This summer began the 305-mile rail project connecting Addis Ababa with the cities of Jimma, Bedele, and Ambo – largely financed by Chinese banks. Similarly, as Bloomberg reported, “the government says a Chinese-funded track from Addis Ababa to Djibouti will be completed this year.”

As industrial policies begin to shift in one of the world’s fastest growing economies, Ethiopia vision of economic prosperity may soon be a reality in the coming decade.

For more information:

Brookings Institute: Industrial policy and development in Ethiopia: Evolution and present experimentation

Ethiopia must rethink finance to achieve 2025 vision

4th Ethiopia Economic Update:  Overcoming Constraints in the Manufacturing Sector

Ethiopia urged to ‘improve investment climate to become manufacturing powerhouse’

Ethiopia Plans Export Hubs With $10 Billion Factory Parks

Transforming Ethiopia into a Manufacturing Powerhouse Requires Skills Development and Improved Investment Climate

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