Fresh Development Plan for Ethiopia

Currently Ethiopia’s economy seems to be at a crossroads. Due to the unrest that began in the state of Oromia and spread throughout the country, and the existing ethnic conflict in some parts of Ethiopia, people seem to be losing hope in the new government bit by bit. Massive amounts of capital are fleeing out of the country. If this situation is not controlled in a timely manner, and urgent action is not taken, irreversible physical, social, economic crises might be on the horizon.

Of course, everybody should give the government some room to work, and trust in the peace process. But it is the time for the government to develop a fresh business development plan, which will enable everyone to contribute and benefit from the country’s development.

The peace and development of the country depends on the economic progress. My stay in Ethiopia for the last seven years enabled me to understand the political, economic and social fabrics of the country and recommend ways to renew Ethiopia’s business development profile, with experience from the models put into place in China.

Triangular Core Area
The Triangular Core Area economic development model enables to redistribute economic functions from the center to other areas. Addis Ababa is currently the center of the country’s main activities. It is the political center, air transport center, the center of Ethiopia’s thigh-tech industries, a hub for the IT and research and development industries, and the country’s education center, as well as a huge tourist destination. Nowadays, Addis Ababa is starting to become very crowded, as around 70Pct of Ethiopia’s economic activities happen here. Many useful sources are concentrated in a limited area.

So using Triangular Core Area economic development model it is possible to reallocate the country’s economic functions to three main economic hubs: Addis Ababa, Adama, and Hawassa. In this way, the three cities will create a triangular core area from which Ethiopia’s economic activity will radiate and promote the coordinated development of the villages and towns located along their routes like nodes.
If Addis’ trading market function was moved to Adama, trade activities would be eased: for instance, if major resource markets were shifted outside Addis to close to Adama, a lot of capital would automatically be invested there. The area would develop and remove the crowds from Addis Ababa. Adama could become a logistics, trade and leather processing area. Modjo especially is an ideal place to be a logistics hub. It can be a center for transported goods with good planning. Since it is near the capital, it will significantly support Addis in its economic development.

Hawassa has the potential to be a huge ecotourism center, with large grain and grain product processing and sales centers, and function as a mainly tourism focused city, taking advantage of its beauty, climate and geography.

Especially in the face of environmental concerns industries and factories would have to be built in scattered location to reduce environmental issues. Addis Ababa is already starting to see environmental effects from the clustered industry. Instead of scrambling to fix the problem once it is created, government officials should try to address the problems before they are created. Moving industries away from the capital will be a stepping stone to address environmental change and protection. Addis itself should focus on developing tertiary industries and focusing on being a political center for the country.

This model would also help address issues of rural development. The cities and towns along the expressways can be turned into industrial and economic corridors. The experiences of China, where towns are empowered to produce accessories and resources for larger industries, can be a model here. Each Ethiopian town could be given the resources to hold one special production line, and support the development of the production of accessories in each specific town based on their main products. Modjo should be a top priority, relying on its advantages regarding dry ports, to build the area into a transport hub, and a national first-class logistics park.

The federal government’s investment policy prioritizes big investment. Micro and small enterprises are ignored. The government should give advantages to micro and small enterprises and support them, rather than big investors who have the power to develop themselves.

Special Economy Zone
Ethiopia needs foreign currency to develop its economy, but doesn’t have suitable environment to establish exported oriented enterprises. Part of the problem is the transport costs from Djibouti to Addis Ababa, which are extremely high. Inland transport costs can double depending on the customer’s needs. All these cost can be reduced in a massive scale if Dire Dawa becomes a special industry zone where all the raw materials can be imported duty free. Duty free policy is one of the important considerations when investors select location before they build their factories. Mostly, the area near ports should be more developed than cities residing far from ports.

MDB Triangular Area
There should also be concentration of the economic development in the northern part of the country. As Mekelle is already a fairly industrial city, it should be considered as a leading position due to its key location near to borders. Similar to Hawassa, Bahir Dar is also a lake city. It has plenty of sources and markets to support the development of Mekelle and Dessie.

AGJ Economic Corridor
In the western part of the country, where there are plenty of sources, a corridor between Assosa, Jimma and Gambella will help to exploit those advantages and support the area’s development.

Establishing the Economic Cycle Mode of the Reciprocal System
If the above mentioned plan is put into action, the 3A Triangular Core Area will become the heart of the country, and strongly influence national economics, politics and social issues. It will be more powerful than just Addis Ababa on its own. The development of the other three areas in the east, north and west, will feed back into the core area, supporting the growth of the whole country, with no areas being left behind and all businesses being supported. In this way, the economic cycle mode of the reciprocating system will be established. In addition, it is also necessary to enact an economic development-centered policy. An evaluation system must also be established to assess the efficient of the performance of local town officers. If the towns’ GDP is used to evaluate officers’ performance, their passion and motivation to create a good business environment will increase, and their behavior and support will attract more investors and more production.

8th Year • May.16 – Jun.15 2019 • No. 74