From AID to Trade

Ambassador Girma Birru Geda on Ethio-US Relations

Girma Birru Geda is a familiar name in Ethiopian politics in general and the private sector in particular. This is because of the long years of distinguished public service he had provided.
Before becoming Ambassador to the United States and nonresident Ambassador of Ethiopia to Mexico and Jamaica, Girma served as Minister of Trade and Industry from 2001 to 2010. He had been a Minister of Economic Development and Cooperation for six years before that.
Ambassador Girma started his career as an economist in the Office of the Council of Ministers in 1982. Since then, he also served, representing Ethiopia, as alternate governor of the World Bank and of the African Development Bank and as a board member of the PTA Bank, currently known as the Trade and Development Bank from 1995 to 2001.
Girma had offered leadership to several public enterprises. He had been a chairman and member of the board of directors of the then Ethiopian Electric Power Corporation, Development Bank of Ethiopia, Ethiopian Investment Agency, Ethiopian Roads Authority, and the World Bank-funded Ethiopian Social Rehabilitation Development Fund.
The soft spoken and detail oriented politician holds a master’s degree in Economic Policy and Planning from the Institute of Social Studies, The Hague, Netherlands; and a bachelor’s degree in Economics from the Addis Ababa University.
EBR’s Amanyehun SiSAY visited the Ethiopian Embassy in Washington DC and has the privilege of conversing with the able diplomat on a broad range of issues including the current state of diplomatic, economic, trade and investment relations between Ethiopia and the United States. They have discussed about the need to productively engage the Ethiopian Diaspora in the development of the country and other issues. The following is an excerpt.

You became ambassador of Ethiopia to the USA in 2011; what have you achieved so far in terms of boosting the Ethio-US relations?
The diplomatic relations between Ethiopia and the US base three core issues: maintaining peace, security and stability in the Horn of Africa; boosting economic and trade relations; and enhancing democratic and good governance. The core issues were identified by the two governments in 2009.
In a given agreed time the US Embassy in Addis Ababa and the respective ministries at the Ethiopian side discuss on the core issues. A general framework was established for such discussions before I became Ambassador. So my job has a lot to do with ensuring its sustainability.

Do you usually agree on the three issues?
In terms of peace and security, the cooperation of the two countries is quite well and we have similar positions on ensuring the region’s stability. In terms of political diplomacy, the strategic cooperation between the two countries has been strengthened. The manifestations for this can be the visit of President Barack Obama as the first seating US president and the discussions he had with our prime minister on three occasions.
In terms of good governance and democracy, we agree on the end results which are respecting the human rights of citizens, and advancement of democracy in Ethiopia. But we do not agree on the ways, time, and speed to reach there.

How about the trade and investment relations?
Americans are not known for investing abroad especially in Africa. From the total investments they have abroad, Africa’s share is around 1Pct. Ethiopia’s share in that is obviously little. But in the past five years, the number of American investment has grown and there are signs for more and bigger investments to come. Take for example, the investment on geothermal energy of Corbetti around Shashemene, [in the state of Oromia]. It’s a joint venture of an American and an Iceland companies worth four billion dollars. This is the first investment by a private company in the sector for Ethiopia. The second one is a two hundred million dollars investment on what is thought to be the largest horticulture investment in the country. The third one is a petroleum pipeline construction from Djibouti to Awash with one billion and five hundred million dollars investment, which is still on the process. Apart from that, large companies like PVH and Vanity Fair have shown interest to source from Ethiopia. These are added on the fast growing medium and small scale investments. The opportunity that AGOA offers is helpful in attracting investments. There are also some companies which showed interest in providing equity capital to companies investing in Ethiopia.

I have been closely following the Corbetti Caldera Geothermal Project. It has been rolling since 2013. But so far there seems nothing new, and concrete. In fact, the project budget was cut by half to two billion dollars.
There are indeed basic reasons why it took so long. There was a lack of technical knowledge, skills and experience. In the meantime, a new proclamation was promulgated to govern the generation and use of geothermal energy. We wanted the negotiations to take the proclamation into consideration, which actually delayed the negotiations.

Is Ethiopia attractive for American investors?
Yes, there are hundreds of investors who have gone to Ethiopia to assess the suitability of the environment; to get into action after finalising their assessment and preparing their projects.

Do you think they can tolerate the bureaucratic bottlenecks?
You should not be surprised if you hear about such challenges. I am also not surprised since successful investment projects in the past that contributed to the fast growth of the country have passed through numerous challenges. But the question should be, what have we done to solve these challenges? Several of the challenges are being addressed in many aspects. So when [investors] tell us about the challenges they face, we ask them whether they got support from high level officials or not. The good thing is they tell us that they really got good support from higher level government officials. This is a good assurance for any investor. It is like getting a sledge hammer.
Of course, there are some investors who turned down their plans due to the challenges they faced. There is no challenge free investment process.

I recently spoke to a CEO of an international company which acquired an enterprise from the Ethiopian Privatization Agency and invested about half a billion dollars for acquisition and Expansion. He said “when we came to Ethiopia we were welcomed by a red carpet; as we stayed longer, we feel the carpet is fading.” The company has worked for five years; and the CEO told me that the tax authority is still sending bills that should have been collected when the company was state owned. “I think Ethiopia has forgotten the fact that it is in stiff competition with Kenya, Tanzania and others to attract FDI” he concluded. I also hear similar complaints from other investors.
I won’t be surprised if an investor says this to me because I have involved in the implementations of most of the investments in Ethiopia or have visited them. I do not believe all the challenges that investors face will be solved. I do not think we will reach to that level [easily].
I think the very reasons that make Ethiopia a competitive investment destination in the world should be taken into consideration. The first one is the issue of land and the time it takes to get it. Especially for the manufacturing sector, the government is working on reducing the time and the bureaucracy to get land and related facilities. No African country competes with Ethiopia in this. The second factor is labour. Ethiopia has young, educated and cheap labour force. The third factor is energy. No country in the world provides energy with low cost as Ethiopia does with three USD cents per kilowatt-hour (KWH). Here in the US, it is more than nine cents per KWH. The fourth factor is, though Ethiopia is a country facing capital shortage, it is the only country in Africa that channels loans with low interest rate to the private sector.
Whatever study investors make to decide in which country to put their money, these four fundamental factors will be taken seriously into consideration.

There are complaints about the competence, discipline and manner of Ethiopian labour force which Prime Minister Hailemariam Desalegn himself admitted in public by saying “we cannot continue producing half cooked graduates anymore”. Most graduates do not demonstrate the right sets of skills, knowledge and attitude. They are not well trained, they are just certificate holders. Some of the investors I encounter say we just want to start production immediately; we are here to plug our socket and start production, not to train labour.
I only agree with this statement partly. What our education institutions teach students is largely theoretical. For example, an employee in a textile sector will get the skill and practical knowledge of the whole process of production while working. When I was [a minister], we asked those investors who were investing in this sector if the government should train the potential labour force for them. But they made strong points that they want to hire employees and train them by their own way. A person who has learnt in educational institutions may have the knowledge but not the skills. Knowledge and skill are different. Skill is the craft which enables one to do something. It develops through practice. I agree with you, we need to improve the quality of education in the country but this does not mean the investment should stop and wait until the quality of our education is improved. The gap can be filled with various trainings.

So you are saying Ethiopia will continue to be a good destination of investment with all these challenges?
There is no doubt about it. The questions that you are raising are valid and they should be addressed. Ethiopia did not achieve its double digit economic growth for over a decade with a labour force from elsewhere. The goods that are produced by this labour force are now becoming competitive globally. Of course, there are a lot to be done to upgrade our education system so that our graduates acquire better knowledge, skills and discipline.

Let’s talk about Ethiopian commodities in the US market. What have you done to exploit the big opportunities that the American market offers?
There are supply constraints. There is a challenge of producing the right quality and quantity of goods with the standard and price acceptable in America. In fact; this is a major problem that explains our entire economy. Take coffee for example, we are one of the prime producers globally but we produce small amount. The amount of our industrial products is also very low. We can solve this by upgrading our industrial and agricultural system. For example, Ethiopian shoe are currently competing with Chinese made shoe in the American market. This means, our productivity in the sector has increased after some Chinese and local companies invested in the industry. The success can be replicated in other sectors.
The American market is so big. Every developing country in the world, be it China or other up and coming nations, have benefitted very much by selling their products in the US. Now, the companies that are starting operations in our industry parks have sought to get the opportunity the American market offers. Some of them secured markets even before they began production.

For long humanitarian assistance was a primary agenda in the bilateral relations between the two countries. As Ethiopia is experiencing a worst drought, how is that evolving?
America has been assisting Ethiopia for long. But currently our relation is not entirely dependent on aid. The USA has strengthened and increased its assistance in capacity building in the health and education sectors. Ethiopia has hugely benefited in these sectors.
Our interest is to further strengthen trade and investment relations. The drought that Ethiopia faced recently is the worst in the past 60 years. But Ethiopia has already built its capacity to bear up the adverse effects. The government covered most of the finance to procure wheat and distribute to the drought affected citizens. That way, we prevented starvation and death. The assistance from America, Europe and others came only next to that; and in fact it is less than the budget that the Ethiopian government allocated.
The long standing policy objective of Ethiopia towards the USA is promoting trade and investment. The orientation of the US government is also moving from aid to trade.

How about promoting Ethiopia as a destination for American tourists?
The number of American tourists to Ethiopia is increasing. We have been connecting the tour operators of the two countries to facilitate smooth operations. Recently, we sent tour operators and journalists to visit the major tourist destinations in Ethiopia. They were impressed and advised us to develop the tourist sites. If these tasks are done, Americans are consumers, they spend too much money.

The image of Ethiopia is changing in the US Medias. How did it come to be so positive in recent years?
For long Ethiopia was defined by foreign media as a country of famine, drought, and war. Ethiopia was never defined as a country of rich history. This had distorted the tourist flow [and investment]. These days, the narratives about Ethiopia are changing. The Media write about the continuous development growth, peace and stability. Hence, the opportunity that drives the flow of tourists and [investment] is increasing.

The majority of Ethiopian Diaspora in the US live in Washington DC, Maryland and Virginia. There are many well educated and economically better off Ethiopians among them. What have you done to productively engage them?
More than 20Pct Ethiopians in America live below poverty line. So the first thing they need to do is become self-reliant and then transfer any remittance they may have to their relatives back home. We facilitate a fast transfer of the remittance.
They have to live in peace to one another and teach their children so that they live better life and compete with the local people here in America.
Although it is low compared to other countries, remittance revenue is more than the export revenue in Ethiopia. Billions of dollars is remitted every year. We facilitate the legal transfer so that it contributes for national development. The remittance from North America is greater than other regions.
We also assist those who want to put their money in foreign exchange accounts in Ethiopia. We also assist those who want to build residential houses. This creates material connection with their homeland.
The other area is investment, whether it is in private or group, we promote investment. For instance, more than 250 North America medical professionals started building an American standard hospital in Ethiopia last April. Similarly, 162 businesspersons established a share company to build a world class mall. There are also individuals who want to invest privately. Whichever way they come, we support them. The amount of the investment they have made so far is very low compared to their potential. Most of them are engaged in construction and machinery rental and other small scale businesses. Recently, the Ethiopian Diaspora Investment Council was established to tap this huge potential.
However, the negative and elusive propaganda has been one of the hindering factors for the underutilisation of the business and investment opportunities. We are using various means to create awareness about the reality on the ground.

What exactly are you doing to curb what you identified as negative propagandas?
We provide updated and factual information about the current status of Ethiopia through radio, website and social media. We facilitate opportunities for the Diaspora so that they visit their country regularly. The Diaspora day is one such opportunity.

We see turbulent situations in the social media; abuse and harassment of Ethiopian officials when they visit the USA. Why do these happen and what have you done to stop such actions?
The cause is the anger, frustration and grudges against the incumbent government by some extremist individuals that have lost hope in their lives. They cannot lead a good life if they return to Ethiopia. But they are few. The majority of the Diasporas are not extremists.
We need to distinguish these 10 or 15 individuals or militants from the majority of the peaceful Diaspora. These extremists will be questioned by the USA’s law. We are beginning to file legal actions against them.

On one side you invite the Diasporas to invest in Ethiopia, but on the other side many Ethiopian origin foreign nationals were obliged to return the bank and insurance shares that they bought even when they were Ethiopian citizens. The financial and telecom sectors that are still closed for investment to foreign nationals won’t remain closed forever. I thought that government would see the case from the point of view of encouraging the Diaspora to invest in the country.
No, the government has also considered the point that you raised and took time before deciding on it. But let me start from the case of the bank shares because I thought you want to ponder under it because you might have discussed it with those who have been affected by the decision. There is a law which prohibits non-Ethiopians to participate in the financial sector. It is a crime to participate in the sector while not being an Ethiopian citizen.
Two things happened regarding this. Some people bought shares when they were Ethiopian citizens but they declined their shares. While others bought shares despite being non-Ethiopian. The government tried to figure out how to handle this case. If the law is directly implemented then, these 700 people would have been treated as criminals and their shares would have been confiscated by the government. But the government did not choose to do that. Therefore, the money together with the interest it yielded since the share was bought was refunded for the owners.

You could have allowed them to transfer their shares to their Ethiopian brothers and sisters.
No, it is not possible because that involves a transaction. Letting them sell their shares means to let them transfer what they possess illegally.

What about the banks? They knew the National Bank prohibits ownership of a bank and insurance share by foreign nationals. But they did sell the shares. Those who bought the shares would have benefited had they invested their money in other sectors. In fact, many of them though they use other countries’ passports, they believe that they are still Ethiopians.
I think it is a matter of choice. You may not get two good things at a time. They choose to be another country’s citizen and to have permission to involve in a prohibited sector. In life you may wish to have two good things but you may have to choose one. The government was generous to return their money.

While you were a trade minister, there used to be a rumor that you would succeed Prime Minister Meles Zenawi. I am sure you have heard about it. That’s why the news of your assignment as an ambassador surprised many. Tell me about the turn of events that led to your assignment.
I have also heard about this issue. However, it was unfounded. All officials that were assigned as ambassadors were part of the discussion and appointments were not done without our willingness. We have to ask, is it legitimate and necessary for any executive to serve for more than 18 or 20 years on similar post?

Are you saying that these people who stayed in the Council of Ministers for nearly two decades did not carry out their responsibilities effectively?
No, what I am saying is this. Those executives who served the country for 18 or 20 years, [had already] the chance of giving whatever they can in terms of providing leadership for their country and their people. If you ask me about myself, I had every chance to do everything that I thought was good for the country especially in the economic development and even in political and party [leadership]. I had 20 years. After working in the front line for two decade, I found working in other areas as a privilege. Staying in power for any longer [time] than I took would be blocking the chance of newcomers.

In Ethiopia, it’s very rare to prepare farewell to a public official. But you had one; the private sector prepared a reception to say thank you and good bye for your services. Do you have any message for them?
Though the private sector prepared a farewell to me when I step-down, we used to quarrel on a number of issues; we used to argue when things lag. But we had a common goal which was to develop the country. I really thank them on that. [They have to know] – Ethiopia’s development would mainly be realized by the private sector. Nobody can take their role; not even the government, or the NGOs. They are the motors of the country’s development.
The other thing is that when they face challenges, they need to look into themselves and solve their side of the problem and ask the government to help them in solving the balance. They should not externalize their problems. I have a big faith in the business community in my country. If they work hard and follow the right way, the hopes of the country is in their hands.

A new leadership, which promised to give much attention to local issues than global affairs, has taken over America. Do you think this would affect Ethio-US relations?
Ethiopia is ready to work with any leadership that American people elect. The driving factor for our cooperation is our national interests.

Do you think America will continue its generous offers like AGOA and Power Africa Initiative, they announced to cut aid even to climate change?
I hope they will continue them. I do not think America will [lose] if it maintains AGOA. But we shall see what they will decide on the other initiatives. EBR

5th Year • June 2017 • No. 51