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Heralding a higher stage of Ethio-American relations

By Bereket Gebru
Tigrai Onlne - August 29, 2014

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The African continent has long been described as “the dark continent” for all the poverty, backwardness and war that have until recently become its essential characteristics. Marred with a bleak colonial past and an unstable post-colonial period of “self rule”, Africa has served as the resource pool of the world though it has only got more trouble for it in return. The result has been its categorization by the rest of the world as an outcast in international relations with its resources acting as the only points of attraction.

That trend has been in place until recently with the western ruled international system preferring tied aid as the major way of interaction between the world and Africa. Through the provision of aid on a set of strong economic, political and social conditions that skew the transaction heavily on their part, the developed world has perpetuated a system of African dependence. With international media reports of largely negative developments in the continent giving a blind eye to the tight grasp and involvement of western countries in the stories, the continent has effectively taken its reference as the Dark Continent in the eyes of the international society.   

The result has been a long period of marginalization of the continent from major international economic activities. The economic ties that exist between various regions have seen huge investment by companies of one country in the economy of another and vice-versa. The marginalization of Africa has, however, hampered that reciprocal effort towards mutual benefit. Therefore, foreign investment in Africa and the general share of Africa in the international market is very negligible.   

This general trend, however, seems to be changing in recent years as Africa has become the most rapidly growing continent in the world in the new millennium. The assertiveness that accompanies economic growth along with the increasing involvement of China in the continent finally seems to convince the western world that Africa is not so dark a continent after all. In 2011, the bulk of China-Africa trading amounted to $160 billion while that of US-Africa trading was a meager $60 billion. After a long time of skepticism on whether there was that big a market in Africa, the US and the rest of the western world want to have a piece of the pie now that they are sure of the existence of an “African market”. Although a long overdue, Africa does not seem to mind the fresh interest of western countries to establish a meaningful economic cooperation with it.     

As one of the front runners in Africa’s rejuvenated effort to escape poverty, Ethiopia has witnessed closer economic relations with the western world in recent years. The last few years in particular have seen numerous western companies establish business relations or branches in Ethiopia so much so that the country is tipped as one in a group of countries projected to replace China as the epicenter of international manufacturing.

Towards enhancing its economic relations with the world, Ethiopia has embarked on various economic diplomacy schemes over the years that have paid off quite well. Efforts to draw investment into the country have been mainly carried out through Ethiopian diplomatic missions around the world and investment soliciting missions by government officials.

Numerous government envoys led by high level government officials have solicited investment from various countries in Asia, Europe and the rest of the world. Various bilateral and multilateral forums used to strengthen relations between other states are also used for the same purpose. The latest of such efforts set its sights on American investors and it was led by none other than the head of state, President Mulatu Teshome and head of government, Prime Minister Hailemariam Desalegn.

The bilateral Ethio-American investment forum held in Houston and Los Angeles was attended by a group from the Ethiopian government led by President Mulatu Teshome. The forum was an opportunity for Ethiopia to exhibit its rapidly growing economic arena and hopefully draw some major American companies and Ethiopians in Diaspora to invest in an even stronger future.

As the report by the Government Communication Affairs Office has shown, Ethiopia has successfully managed to lure major American companies to invest in Ethiopia despite their long history of neglecting smaller economies. That in turn is a demonstration of the maturity of the economy or its expected sustained growth and development in the long haul. The efforts to provide Ethiopians in Diaspora with the accurate information on the ongoing developmental activities in the country have also paid off.

Accordingly, some huge multi National Corporations (MNCs) have consented to invest in Ethiopia for the first time in the near future while others already operating in the country have vowed to expand their businesses. Considering these companies would invest considerable amount of capital towards the utilization of our resources and provide jobs for tens of thousands of Ethiopians, their decisions to have business and trade relations with Ethiopia is considered good news.

The most notable of these MNCs is Chevron. The company has made plans to conduct research and identify potential areas for petroleum exploration in Ethiopia. It is expected to send its experts to the country to kick start activities geared towards that end very shortly. The involvement of one of the biggest and most experienced firms in the world in oil exploration in Ethiopia would only help our chances of culminating the long history of unsuccessful efforts towards bringing the resource to use. 

Another one of these MNCs is KKR – a company engaged in floriculture. The company operates in 16 African countries including Ethiopia. In a bid to expand the Rose flower garden it operates in our country, the company has requested for an additional 200 hectares of land. It has also shown interest to diversify its investment to other sectors of the economy.

Other numerous organizations have also taken the sustainably growing economy of Ethiopia, its progressing image, the growing purchasing power of its people and the brighter future awaiting the tourism sector in consideration and have decided to invest in it. Accordingly, various investors have proposed building five star hotels with some expected to carry out preliminary action shortly.

Therefore, the forum has been used to create an understanding among major US companies that the Ethiopian economy has put on enough muscle to become a vibrant and profitable one at the highest of stages. Obviously, those efforts have paid off as has been discussed above with the expected arrival of some major companies.

The other major benefit that came out of the forum is that local and Ethiopian Diaspora owned organizations operating in the country have been provided with the opportunity to network with US based potential buyers and partners in their respective businesses. In this regard, some Ethiopian coffee exporting companies have identified investment options from the US that would help them export processed coffee. Through such schemes, the companies would grind and roast the coffee in Ethiopia instead of exporting it unprocessed.

Such a move is considered a success as Ethiopian companies would draw managerial and technological lessons from their engagement with huge international companies operating in the sector. That in turn would help Ethiopia’s efforts of adding value to the products it exports increasing its export earnings and pushing its plan to transform its economy from an agrarian to an industrial one along.

The third major benefit of the forum has to do with Ethiopians living in the US who have a considerable amount of wealth and those who play key knowledge based roles in major companies. Such people can play a tremendous role in promoting a better image of Ethiopia besides coming up with something important for their country along their line of work. Accordingly, there has been interest to invest in Information Technology (IT) and medical services such as dialysis and others that require treatment abroad. There has generally been interest on the part of Ethiopians and those of Ethiopian decent to motivate themselves and the companies they work for to invest in Ethiopia.

The US-African Leaders Summit was a multilateral forum attended by an Ethiopian group led by Prime Minister Hailemariam Desalegn. The Summit is an unprecedented move by the US to forge a strategic partnership with Africa. Therefore, it clearly represents the change in the foreign policy of the US to adopt African states as political and economic partners rather than peripheral actors who only deserve its attention on a vertical line of communication.

The Summit has proved to be a testament to the international acknowledgment the sustainable growth registered over the past decade in Ethiopia is receiving. One of the major topics up for discussion by the Summit was rapid economic growth and resilience of that growth to climate and disaster situations. The topic also dealt with the sustainability and inclusive nature of the economic growth registered.

As Ethiopia was identified as the leading example in successfully achieving such a growth, the President of the host nation, Barack Obama, invited it to share its experience to those in attendance. Accordingly, Prime Minister Hailemariam Desalegn briefed participants on basin development, environmental protection, capacity building for smallholder farmers, efforts in areas of rain shortage and the safety net program for farmers. The Prime Minister’s briefing had a positive reception.

The other major topic dealt with by the Summit was health investment. This topic also saw Ethiopia become identified as the front-runner is registering commendable success. As a result, Ethiopia was chosen to co-chair the discussion on health investment along with the host – US. It was also picked once again to share its experience in the sector with the rest of the representatives of African countries. Similarly, Ethiopia’s success was positively appraised and taken as a lesson for others to intensify their efforts.  

The third major topic raised by the Summit, deployment for rapid response to ensure peace and security, also had Ethiopia at the center of the discussion. Ethiopia’s long history of active participation in peacekeeping missions has endured the test of time. Therefore, it was identified as one of six countries in Africa that have performed tremendously towards that end. Ethiopia’s efforts were once again acknowledged by its peers.

The forum has generally been one in which Ethiopia’s developmental efforts that have sustainably and inclusively lingered for the past decade have been promoted. It has also served as a stage for the reaffirmation of Ethiopia’s foreign policy direction of working in collaboration with its regional and international partners to promote regional and international peace and development.

Both the bilateral and multilateral forums in the US have helped update Ethiopian and foreign investors on the big leaps the country has taken towards making itself better to start and run business. By providing updated information on the economic achievements and political stability of the country, the economic diplomacy efforts have been able to draw considerable investment. 

According to the U.S. Ambassador to Ethiopia Patricia Haslach, “there are 470 U.S. companies with an aggregate capital of $1.5 billion operating in Ethiopia since the last two decades in the areas of technology, agriculture, hotel and tourism, health, construction, manufacturing, power and textiles, among others. These companies benefited over 100,000 employees. A number of other U.S. companies are also interested to invest various sectors including the manufacturing giant General Electric (GE) that is planning to establish a medical equipment assembly plant in Ethiopia. The company is planning to assemble various medical equipments and machines in Addis Ababa and distribute them to African countries.”

With more coordinated efforts set to follow in the future, the increased trade and economic ties evident recently between the two countries are just strong indicators of the more pronounced bulk to follow.

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