Brace For Ethiopian dominance

GERD: The largest hydro Dam in Africa

After decades of bad news, Ethiopia, like the proverbial Phoenix is emerging from its ashes, shedding off its poorest of the poor image. The nation, the former by-word for poor governance, misery, and death, has stirred to life and is now trotting to become the leader in Africa.

Her GDP growth rate is the fastest in Africa at 8.5 percent. And it is not in GDP that she is the leader. Ethiopia also leads in aviation and hydroelectric generation. She is the first country in sub-Saharan Africa to complete a standard gauge railway, albeit of lower robustness compared to the Northern Corridor Line in neighbouring Kenya; she also is the first in Light Railway.

It is also the first country to end 20 years of hostility with its neighbor in one week. Africa had better brace for Ethiopian dominance!

The country is beginning to reap the benefits of its “daring” investment programme. We say “daring” because of the colossal amounts involved and the humongous size of the projects, given the country’s dire economic condition just a few years ago.

Ethiopian: Icon Of Ethiopian dominance

 The star project is the US$4.1 billion Grand Ethiopia Renaissance Dam, GERD which will generate 6GW of electricity. The dam is the largest in Africa and the 7^th largest in the world. The Dam will soon begin to generate 700 MW adding to Ethiopia’s 2.5 GW capacity.  There is also the US$ 2.8 billion Koysha Hydroelectric dam that will generate another 2.2 GW, bringing the total generating capacity to more than 10GW once all projects are completed. Ethiopia will soon become the electricity generation hub in Africa, exporting power to her neigbours in Africa and the Middle East.

Other Megaprojects include the 700KM Addis-Djibouti SGR railway connecting landlocked Ethiopia to the Red Sea. In addition, there are two offtakes from the SGR connecting the North and the South of the country to the SGR thus opening the country for exploitation and development. The two Inland Railway lines will cost a whopping US$2.9 billion.  Add to this a US$495 million Light Railway serving the capital City, Addis Ababa.

In total, Ethiopia has invested an estimated US$12 billion in mega infrastructure in the last 15 years or so. And the fruits of the sacrifice are beginning to be seen in the form of robust economic growth which could run into the future. Already Ethiopia has overtaken Kenya as the leading economy in East Africa.

In the 16 -year period between 2000 and 2016, Ethiopia’s GDP per capita grew cumulatively by 227 percent, cutting absolute poverty from more than 50 percent in 2000 to 31 percent in 2016.

 Economic growth has slowed down to 8.5 percent from 10 percent. But it is still the fastest growing economy in Africa and the third in the world among developing countries with more than 10 million people. This growth trajectory is expected to be sustained into the foreseeable future, says IMF.

The First SGR in  Africa

Apart from infrastructure, Ethiopia’s emergence as a giant in Africa is reflected in its flag carrier, the Ethiopian airlines’ growth. In fact, the 73- year old airline, now the leading Airline in Africa in terms of profitability and growth, is the icon of Ethiopia’s dominance in Africa It has in the last five years gobbled up other African airlines enabling it to establish hubs in Southern, Western and Eastern Africa. It has become the benchmark of success in Africa and is drawing the attention of struggling airlines in the continent. So far, it owns a controlling stake in Air Malawi, which has been renamed the Malawian, Zambian airlines and an Airline and Guinea Airlines based in Togo.

And in industrialization, Ethiopia is emerging as the “China of Africa.” Its abundant well- educated and cheap labour force is a major asset, attracting the interest of Multinational companies that are setting up shop in the country’s Economic Zones. This labour force will turn into a major consumer market for local and imported goods.

In Africa, economic growth is being driven by its growing middle class which has become a major market for its industrial goods.  Ethiopia is expected to reap big in this respect given its huge population. No wonder then, the political leadership in the country is focused on industrialization as the way out of poverty. Thus investment in enabling infrastructure enjoys massive political goodwill.

 There is, of course,

the downside that the developments are financed through loans, mainly from China which raises doubts about debt servicing.  For instance, the US$495 million Light Railway, in Addis Ababa, the first in sub-Saharan Africa, suffers low demand.  Studies show that the Railway suffers low demand due to the location of stations far away from densely populated areas.

The Railway suffers from low demand ships only 200,000 people a day in City of six million people. At times the Railway which has 41 cars runs on one or two leaving the rest idle.

Whatever the hurdles, Ethiopia is emerging as a case study of the benefits of decisive management of public affairs. Its sustained robust growth, now in its second decade, is the result of a decisive administration that shrugged off criticism and getting of the business despite seemingly insurmountable challenges.