‘Infrastructure breaks down in the end … [real] investment is investing in people’

Patricia M. Haslach, US Ambassador to Ethiopia

With an annual average of USD800 million in support for education, health, and agriculture, the United States has been a leading provider of humanitarian assistance to Ethiopia. The two countries have also established cooperation in matters of peace and security in the Horn of Africa. However, the same can’t be said when it comes to trade and investment. With the recent visit of President Barack Obama, the first sitting United States President to visit Ethiopia, diplomatic relations and economic ties between the two countries are expected to grow further. As Ethiopia has been expressing its keen desire to strengthen business ties with the global superpower, the United States is also attempting to catch up with China, India and Turkey, countries that currently have more investments in Ethiopia.
To this end, the United States’ investment is fast-growing, reaching more than USD2 billion – about half that of China. EBR’s Amanyehun Sisay spoke with Patricia M. Haslach, United States Ambassador to Ethiopia, about how the visit of the President will shape relations between the two countries. She says that the US is investing more in the people of Ethiopia which, according to her, is a more sustainable form of investment. The following is an excerpt.

EBR: Why did President Obama come to Ethiopia at this time?
The President had a couple of agenda items; one of them was to attend the entrepreneurial summit [in Nairobi] and the other was to visit Kenya as a sitting president. Then he also wanted to visit Ethiopia. So he was the first sitting President of the United States to visit Ethiopia and also to address the Africa Union. The United States [President wanted] to take advantage of being in this part of the world by coming to Ethiopia, a country that he saw once while he was a Senator. Ethiopia is our partner within the economic and development area as well as in the security area in the Horn of Africa.

What were the major points of discussion and the takeaways of the conversation between President Obama and Prime Minister Hailemariam Desalegn?
I would say the bulk of the conversation did centre on the economic and business opportunities here in Ethiopia [and how the US can] tap into Ethiopia’s strong growth and youth population. [President Obama and Prime Minister Hailemariam Desalegn also discussed] Ethiopia’s position on the continent and the fact that the country is also going with the new Growth and Transformation Plan…. We hope the Plan will have more space for the private sector. The President really believes that the private sector is really going to be the engine to help continue the impressive growth that Ethiopia already has.

Ethiopia’s growth is more public sector driven. What will the US do so that Ethiopia gives more space to the private sector?
We are very happy to see that the United States Congress approved [to extend] the Africa Growth Opportunity Act (AGOA). This really gives an opportunity for Ethiopian entrepreneurs and exporters that want to export [to the US] as well as [seek] potential opportunities for joint investment. There are potential large companies looking [toward] investing in Ethiopia, especially in the textile area.
The other would be our initiatives; the most important is the Power Africa Initiative. Ethiopia is one of the founding partners in that Initiative. When the President was here, we signed an agreement on the Corbetti Geothermal Project. The hope with the project is that, because it is the first private investment in geothermal in Ethiopia, that will spur additional investment.

How do the US companies view Ethiopia’s potential as a destination for investment? It seems as though the Chinese, Indians and Turks are way ahead.
Well, the Turkish, Indians and Chinese are on to something. I would say this is an excellent potential market not just because Ethiopia itself has a large population, and has a growing economy, but also because of Ethiopia’s location in East Africa. So we want to be part of this. We tend to focus our energies in a slightly different direction. Through development programmes, we are aiming at building [local] capacity here in Ethiopia in agriculture, health and in education and many of our investments are focused on that.
If I [were to] deploy one example of how important we believe Ethiopia is with regard to investment potential, it is the opening of our Foreign Commercial Service Office in December 2014. This Office works with American companies that are interested in investing in Ethiopia as well as Ethiopian businesses and entrepreneurs who are interested in having a partnership with American companies. The Prime Minister has said to me personally that he is interested in getting quality US investment here. I do think that we have a good reputation in certain areas. Already Ethiopia has been an excellent partner for Boeing. Ethiopia has bought over one hundred Boeing aircrafts with GE [General Electric] engines. The potential here is really great for quality US investment. But I might say US investors demand a level playing field; they demand a fair and transparent investment field.

But the US seems to be late in recognising Ethiopia’s investment potential.
I wouldn’t say late, I would say that US investors are choosy. You know there are a lot of markets they can invest in, such as Vietnam and other growing markets. Countries have to prove that they have a great market that is open to US investors. We have very strict rules about how to operate in other countries; we have rules on how we can participate. [But still], we are the fastest growing of the new investors. So I would see the US overtaking those partners hopefully in a couple of years.

In general the governments of the US and Ethiopia have had very good relations. But these relations are mainly based on humanitarian assistance and cooperation on counter-terrorism. I am wondering why these relations haven’t transcended into a robust economic partnership?
I think that is the stage we are at right now. If I have to divide the subjects we discussed with the government and with the ministers here, the majority was on the economic and investment side. We are very interested in engaging with Ethiopia on how it could become more attractive for US investors. It is no secret that there are challenges here in the telecommunications and financial sectors, and again our companies are looking for a level playing field. [With that], we can bring the quality and the experiences to this market.
And I would say our focuses are also on creating jobs. We don’t import workers. We want to create jobs [for local people]. So our development programmes have actually been focused on capacity building. The future is focused on taking Ethiopia’s products, not just raw products, but processing them into higher value products. For example…a lot of focus has been on improving the quality of the traditional products [the country] already exports, like coffee. We assisted in setting up the [Ethiopia] Commodity Exchange. And we are [investing our resources] to improve the quality of coffee. So we are investing in agriculture, in health and education.
We are not going to see a lot of investment in a country that doesn’t have an educated population. And Ethiopia is committed [to education] with the opening up of universities to educate its population; we tend to [focus] on primary education. We believe that if you are not literate, if you don’t have a good foundation, you’re never going to be able to succeed.
The final area would be health; the country needs a healthy population. I think Ethiopia already, through the PEFAR [President’s Emergency Fund for AIDS Relief], is trying to combat HIV/AIDS, malaria, [and] tuberculosis. That is [part of our] focus on creating a healthy population here. It also opens up Ethiopia to be a potential market for creating a robust health sector that is not only for the citizens of Ethiopia but potentially…can be a regional training centre for nurses, doctors and technicians and others in the medical field. With the setting up of the Centre for Disease Control here under the African Union, [I think] this is a great opportunity for Ethiopians. I have been to the University of Gondar and am very impressed with the quality of medical training there [which the US financed].

Higher education is expanding in Ethiopia. It seems that the government is prioritising access first and the issue of quality comes later. How would the US assist to improve higher education in the country?
This is not just a role for the US government; rather, it is a role for our private education institutions. Many of them already have exchange agreements with the universities here. There has been [a large] focus on quantity but I know the government is very much focused on quality [too]. Again, I go back to our focus on our development programme, which is [about] creating the basic foundations that are so critical for succeeding at the university level.
But there is room here for the private sector. When Ethiopia hosted the Financing for Development Conference here, the focus was on what the role of the private sector [could be]. When companies invest in Ethiopia, we hope that the companies are also going to be not just investing in infrastructure but investing in the most important assets the country has which is the people, and the youth. That has been our focus.

Has there been any time since 1991 where the United States questioned its relation with Ethiopia?
We have a partnership here; we respect each other and sometimes we have differences. We would like to see the economy open up a little bit faster and that is a discussion we had and we will continue to have. I would like to see the political space open up more for opposition [parties] as well as a little bit more space for freedom of expression for journalists. We had these discussions with the government. Our President was very public [about this] and these are what friends do. We have talked about how we can cooperate [on these issues]. The President’s visit just shows how much the potential is [to work together] and I think the future is quite bright with regard to our relationship.

Some of the countries investing in Ethiopia such as China, Turkey and India, are very much supported by the export-import (EX-IM) banks from their respective countries. Yet, the same can’t be said about the US.
I would just disagree with your word investment. I don’t count investment on just building a bridge or a road [only]. I count [real] investment is investing in people. All of our development assistance has been focused on developing people. Close to 800 million dollars on the people of Ethiopia, on the youth, in education, health and agriculture. And that is an investment that is sustainable. Infrastructure breaks down in the end. One point I just want to add is our EX-IM bank is active in Ethiopia and in fact a number of big deals have been done with Ethiopia through EX-IM bank financing. I am hoping that funding will be continued for Ethiopia. EBR

3rd Year • August 16 – September 15 2015 • No. 30