May 19, 2020

City Focus: Addis Ababa

Ethiopia
Addis Ababa
agribusiness
Olivia Minnock
4 min
City Focus: Addis Ababa

This month we are focusing on the Ethiopian capital of Addis Ababa and the changing economic landscape of the nation.

A top destination

In 2015, the European Council on Tourism and Trade named Addis Ababa the top tourist destination in the world. It does not disappoint the visitor, offering up numerous visual delights and cultural surprises to anyone who has not visited previously. As the capital of modern Ethiopia, the city is home to approximately 3mn people and qualifies as a state in its own right, with a wealth of commerce and government office located here.

Addis Ababa is the hub of the United Nations Economic Commission for Africa as well as the headquarters of the African Union. In addition, the city boasts a modern airport, Addis Ababa University set on the grounds of former Emperor Haile Selassie's Palace, a respected museum, the second-largest cathedral in Africa, a major sports centre and Merkel Square, an important site for public gatherings and exhibitions.

The copper-domed tomb of Haile Selassie is not only a tourist attraction, but a testament to the vision and the efforts of the last emperor to move the country forward in the years following World War II and Italian domination.

Economic development

There is a vast disparity of resources and opportunity in Ethiopia. Despite having one of the world's fastest-growing economies, nearly a third of its citizens live below the poverty line, and it is still considered a ‘third world country’ because of its recurring problems with drought, hunger, crime and political unrest.

Emperor Haile Selassie mounted a campaign to modernise the country, educate its citizens and achieve a measure of stability after World War II when the nation threw off the yoke of Italian domination, but when his reign ended in 1974, Ethiopia once again was plagued by political and economic uncertainties, poverty and famine.

Today the country is moving forward once again, both in governmental stability, social stability and business.

Challenges to overcome

Its geographical features, high altitude and lack of consistent rainfall make farming difficult, even though Lake Tana in the Ethiopian Highlands marks the source of the Blue Nile. Downstream, it is joined by the White Nile in Sudan to flow through the Egyptian Delta to the Mediterranean as the legendary Great Nile River. 

A huge population, approximately 102.4mn in 2016, places the country at 16th on the list of most populated nations in the world, further challenging the resources of a developing economy.

In 2012, the country spent nearly 40% of its budget on infrastructure development, and inflation reached 26% annually. At the time, life expectancy was under 60 years for the average citizen, and there were more than 12,000 homeless children in the capital alone. The poverty level had declined by approximately 10% during the previous 10 years, but Ethiopia received more than $3bn of donor aid annually.

Business opportunities

The International Monetary Fund (IMF) was prescient in noting that growth and development must centre around IT and trade manufacturing in order to stimulate jobs and private sector growth, which has proved to be true. Today, investment opportunities are growing as the economy continues to expand at an annual pace that, by some estimates, approaches 11%. Even though the IMF puts annual growth at a more modest 5-7%, it remains consistent, pointing to a more viable future for Africa's ninth largest economy and second largest population.

While the best market prospects are still centred around government projects, there are at least five other areas of interest for business investors: education, agribusiness, financial services, telecommunications and heavy construction.

Nearly identical views are echoed by export.gov, which notes that primary US exports to Ethiopia include aircrafts and parts, vehicles and parts, machinery and medical equipment as well as construction and agricultural equipment. 

The Government of Ethiopia, according to all reports, welcomes partnerships and investments that will help move the country forward, contribute to a better life for its citizens, help develop sustainable business, industrial, educational and health models, and contribute to both public and private advancement within the country.

Energy, agribusiness and education

A massive energy initiative, with an emphasis on renewable hydroelectric power sources, is currently underway. The nation's energy capacity will be expanded more than fourfold in just a three-year period between 2017 and 2020.

While enhanced agricultural practices and better distribution ability should help to alleviate hunger and boost the standard of living, the government recognises that education is key to future growth, and that the current literacy rate of 42% is unacceptable for a modern nation. There are more than 30 universities throughout the country, and primary schooling has been initiated by mandate in most villages. 

Moving from the severely disadvantaged economy that characterised the Ethiopia of the past will take time, but government officials and private business are determined to work together to boost the standard of living, provide employment opportunities and allow this ancient land to prosper both now and in the future. 

It is a hopeful and exciting time for Ethiopia, and visitors to Addis Ababa cannot help but be impressed by the changes that have taken place, even in the last decade.

The city that was recognised for its beauty may be facing a future where it will be lauded more for its ingenuity and foresight, moving into an enviable position as a business centre and a developing jewel of the African continent.

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