17 May 2017

Ethiopia: Chinese Initiative - Push Factor for Manufacturing Industry

The Hawassa Industrial Park was constructed in a record time of nine months by the Chinese Company.

The new Chinese Belt and Road Initiative is believed to give impetus for the ever growing manufacturing industries in Africa that demands huge capital for infrastructure development. Ethiopia as one of the African countries working to be hub of light manufacturing in the coming few years and part of the initiative, the initiative would be an arm for the realization of this aspiration.

The contribution of the manufacturing industry to the general economy and its foreign trade share is limited to five and ten percents, according to the National Planning Commission. To change this scenario, the government is endeavoring to transform the manufacturing industry taking various measures including the development of industrial parks across the nation.

Considering Ethiopia as a strategic country to China, the new initiative would offer critical opportunities to deepen Ethio-China relations specially for the evolving manufacturing industry being spurred by Chinese government active engagement.

The Ethiopian Premier's Special Advisor Dr. Arkebe Oqubay said with the annual 20 percent average industry growth of which medium and big manufacturing industries have taken the lion share, the industry sector envisaged increasing its export share to 50 percent and creating considerable jobs in ten years time.

As the government is focusing on the manufacturing sector tasked with enhancing product and productivity, export share, technology transfer and job creation, he said and highlighted, the role and contribution of Chinese government and companies in the country's aggressive engagement of industrial parks and other infrastructure developments.

The construction of three industrial parks have already been completed among which the Hawassa Industrial Park completed in a record nine months time by the Chinese company. For the planned and ongoing construction of industrial parks, the involvement and support of the Chinese government is immense, Dr Arkebe told Xinua.

The Chinese Ambassador to Ethiopia La Yifan reveals efforts underway to enhance the capabilities of Ethiopia to increase its manufacturing goods. As part of this efforts, the Chinese government is encouraging companies to relocate their resources to Ethiopia's industrial parks.

Chinese engagement in the construction of Addis - Djibouti Railway line where the country's 90 percent import-export activities being carried out is expected to enhance the manufacturing industry. The ambassador said China is committed to support Ethiopia's development drive that center manufacturing sector and therefore, it continues supporting the railway route to be vibrant economic corridor.

Chinese FDI in to Ethiopia is well diversified across sectors covering road, industrial parks , railways , dam construction as well as telecom services, he said and adding, these projects have so far created over 700,000 jobs for Ethiopians.

For instance, the Huajian Shoe Manufacturing Company is doubling Ethiopia's shoe export, he said and adding, the Belt and Road Initiative is anticipated to lever the expansion of other manufacturing industries.

According to Chinese Ministry of Foreign Affairs, launched about three years ago, the Belt and Road Initiative aims to promote the connectivity of African continents and their adjacent seas, establish and strengthen partnerships among the countries along the initiative, set up all-dimensional, multitiered and composite connectivity networks, and realize diversified, independent, balanced and sustainable development in these countries.

Covering 60 countries starting from South Pacific through South and Central Asia to Europe and Africa, the initiative embraces the infrastructure projects including the Addis Ababa-Djibouti Railway that connects Addis Ababa with the port of Djibouti.

Prime Minister Hailemariam Dessalegn, who attended the Belt and Road Forum in China and held sideline bilateral talks, had discussions with Chinese President Xi Jinping on ways of elevating the relations to a Comprehensive Strategic Partnership of Cooperation.

Looking more Chinese FDI specially in manufacturing sector, the Premier had discussion with anchor Chinese companies in Beijing engaged in textile, leather and agro-processing sectors reaffirming his government's commitment to support the companies if they invest in Ethiopia.

As the manufacturing industry highly requires capital intensive infrastructure, the 8.7 billion USD pledge by Chinese government for developing countries and international organizations under the Belt and Road Initiative, would help Ethiopia benefit from the initiative finance.

The acceptance of Ethiopia by the multilateral development bank, Asian Infrastructure Investment Bank would support the development of infrastructure in the country. The Bank also finances other productive sectors such as manufacturing and mining as well as capacity building assistance that will have direct implication on development.

Since, Ethiopia is revolutionizing its economy towards industrialization joining the Bank as member could be an opportunity for its huge financial need for the cause. The attention given by Chinese government, Ethiopia's favorable investment climate and commitment for the new initiative would also be instrumental in expanding the manufacturing sector which is the center piece for its economic transformation.

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