Ethiopia, boasting the second largest population in Africa, is garnering attention as a new manufacturing hub. Ethiopia is also one of the only two African countries which have experienced a consistently growing economy for the last 10 years without relying on natural resources. The other country which has achieved this feat is Rwanda.
Ethiopia’s growth is attributed to many factors including the growth in manufacturing, which has increased by about 11 percent annually. In fact, Arkebe Equbay, special adviser to the Ethiopian prime minister, has told Chinese Xinhua News Agency that the current manufacturing growth stands at 25 percent. He also hopes that manufacturing, which comprised a share of only 5 percent of the country’s GDP, will grow by four fold in the next decade.
Chinese-built Hawassa Industrial Park is set to play a key role in realizing this plan. Inaugurated in July 2016 and located some 275 km south of the capital, the industrial park is the country’s largest. The Ethiopian state news agency has reported that the park cost 250 million USD and was built in less than one year. The China Civil Engineering Construction Corporation (CCECC) was responsible for the design and construction .The park is said to be “eco-friendly,” and will recycle 85 percent of the its water sewage.
As discussed before, there is a fear that Africa inheriting Asia’s manufacturing industry will lead to a massive environmental crisis. With this in mind, the Ethiopian government has initiated a plan to create a “Climate-Resilient Green Economy,” which it says will help protect the country from adverse effects of climate change and realize the country’s ambition of reaching middle-income status before 2025.
With Africa housing the world’s youngest population, manufacturing companies that require cheap labor are already flocking in. Textile companies are especially attracted to the continent. Ethiopia’s Hawassa industrial park is already housing 15 textile companies hailing from the United States, China, India and Sri Lanka. This does not mean that apparel manufacturers will soon depart from China en masse. But parts of the production requiring the lowest skill level would be outsourced to countries like Ethiopia. With Ethiopian wages reported to be 15 times lower than those of China, Chinese workers are said to continue to do more sophisticated production while basic cutting and sewing will take place in low-wage nations.
The Hawassa Industrial Park would therefore be a boost for the country’s youth employment. When fully operational, it would offer 60,000 jobs. It would also increase the country’s textile and garment industry revenue from 150 million USD a year to 1 billion USD.
The recent political climate, however, maybe a huge obstacle for Ethiopia. Anti-government protests and unrest that has erupted along ethnic lines threaten the manufacturing potential of the country. With China increasingly concerned about political stability when it invests in Africa, Ethiopia’s credentials may be greatly compromised.