Countries undergoing industrialization in Africa: Ethiopia

Ethiopia is one of the countries whose names keep coming up when it comes to industrialization in Africa.

Helping government policies in this area, a whole country seems to be moving at the rate of sustained technological change. Ethiopians are resolutely turned towards industrialization, and they rely on certain factors such as public policies, education (to ensure sustainable development) or industrial parks.

Focus on the industrialization of a country that will never cease to surprise by moving away from the stereotypes of poverty and misery to which it was once attached.

Ethiopian industrialization policy
Since 1950, until 1960; the imperial government of ethiopia has issued laws promoting foreign investment. Investors thus benefit from tax exemptions, among others.

In 1975, the Derg, the provisional military government, nationalized most companies, which kept foreign investors away.

A new major turning point in Ethiopian industrialization (and in its economy in general) took place in 1990, notably through the speech of the president of the time, Haile Mariam Mengistu. He recognized the failure of socialism and started the establishment of a mixed economy which gave the possibility to the private companies to take part in the local economy, on all the levels.

This was the impetus for industrialization which is today considered to be the key to the structural transformation essential to the development of the country.

A sustained education system
One of the countries with the highest education budget in Africa is Ethiopia. Between 2000 and 2013, the percentage dedicated to education almost doubled, from 15 to 27%; and today the Ethiopian education system is strongly oriented towards science and technology.

In addition, current figures give Ethiopia one of the highest enrollment rates in Africa, from 34% in 2001 to 52% in 2011.

The Ethiopian government wants to develop the skilled labor force necessary to reach the target of 2 million industrial jobs by the end of 2025 in the heart of the country.

The ambitious industrial parks project
In order to attract international investors, the Ethiopian industrialization program wants to be able to compete with the largest, in particular through the provision of an inexpensive and qualified workforce.

Ethiopians have therefore set up industrial parks which give investors the opportunity to benefit from reduced charges and quality infrastructure.

This is particularly the case in Kombolcha and Awasa (the largest), where companies have already established themselves. China has notably invested up to 10 billion USD in the latter and companies like Indochine International (which produces Warner underwear, mainly sold to Wallmart), which hopes to employ 20,000 Ethiopians by 2019, develop there peacefully.

In the space of 9 months, 56 identical hangars for the textile industry have emerged from the ground, thanks to the know-how of a Chinese company, at a total cost of 250 Million …

Since 2014, Ethiopia has opened 4 industrial parks, owned by the government, and plans to open 8 more by 2020. Investors who settle there benefit from 5 years of exemption from certain taxes, including income tax or import tax on capital goods and construction supplies.

With all this momentum, Ethiopia’s industrialization still remains in its infancy. Industry contributes 14.2% of total domestic production, and 0.7% of total employment in the Ethiopian economy. The 7.2% export percentage is also lower than the sub-Saharan average (2015).

Despite the difficulties it may encounter, the Ethiopian government is definitely committed to the country’s industrialization process. The absence of corruption, and the taking of strong measures to stem the revolts and to develop the national dialogue make this ground “fertile” for the investors whose enthusiasm does not cease being excited by the local incentive policies, the sustained education and oriented, and the development of industrial parks at attractive prices.