THE skyline of Addis Ababa is a sea of high-rise construction projects that stand alongside the new buildings and hotels that dot the city centre. They are rapidly squeezing out the shanties and informal shops that crammed the city when I last visited it nearly a decade ago. The herds of goats that used to roam the streets of the city quite freely are now herded onto rickety pavements to avoid the traffic nightmare that snarls up the streets from dawn to dusk.
Addis symbolises the high growth rates Ethiopia has experienced over a decade and there is no doubt the country is an attractive investment proposition. With the second-biggest population in Africa at 85-million people, it typifies the type of market the myriad reports extolling Africa’s rising consumer markets talk about.
Global drinks company Diageo recently won the bid for a privatised brewery against some of its biggest international competitors — Heineken and .
The experts are predicting growth of 5,5% this year. The government is much more bullish. Its five-year growth plan has built in average real growth of at least 11% a year up to 2015. Prime Minister Meles Zenawi basked in the glow of his economic achievements when about 700 visitors flocked to Addis Ababa for the recent World Economic Forum (WEF) meeting held at the Sheraton Hotel, once an island of luxury in an otherwise impoverished city but now being joined by other big-ticket hotel names, such as Radisson Blu.
The service sector is the biggest driver of growth. The country is Africa’s bureaucratic hub, with a chunk of its services industries driven by business generated by the African Union (AU) and United Nations agencies, which have their headquarters there. As the political talk-shop headquarters of Africa, Addis Ababa in particular benefits from a considerable sums of African taxpayers’ money as the great and the good congregate in Addis Ababa to pontificate on the continent’s problems.
Zenawi has been busy. After years of Ethiopia being seen as a poverty-stricken land in a dangerous neighbourhood, he has driven economic restructuring, highlighting the benefits of inclusive growth. Last year, the WEF global competitiveness rankings put Ethiopia at 106, up from 119 in 2010 based on its strengthened institutions, labour market, macroeconomic environment and market size. Zenawi’s ambitious infrastructure programmes swallowed 59% of government spending last year. Zenawi has also prioritised agriculture development and voiced his determination to make Ethiopia self-sufficient in food.
Ethiopia spends 14% of its budget on agriculture — higher than the 10% the AU is pushing all African governments to spend on this key sector.
Zenawi came off well at the WEF event and at others where I have heard him speak. He is articulate, considered and engaged. Then again, he has had nearly 21 years in power to fine-tune his performance. His strong focus on development may set him apart from other African leaders who have overstayed their welcome — but his political practices do not.
He has little stomach for freedom of speech and has jailed thousands of journalists and political opponents. In the 2005 election, nearly 200 demonstrators were killed and at least 30000 people were detained. In 2010, with political opposition severely weakened, he won by a landslide. He relies on ethnic divisions to maintain his grip on power. Sound familiar?
The internet infrastructure is state-owned and the government blocks opposition websites and independent news sites reporting on the country.
More than 1-million Ethiopians live abroad and the country benefits from nearly $1bn a year in remittances, but a lack of trust in the government has undermined the success of using remittance bonds to fund new infrastructure. Zenawi’s style has become known as “developmental authoritarianism”. He scoffs at the suggestion that growth requires democracy and models himself on Asian leaders who have built successful economies while curbing political freedoms.
A looming problem is potentially the 30-million young people who make up Ethiopia’s population. As the continent changes, will they continue to accept the violation of their freedoms? Zenawi is clearly banking on the fact that they will, as long as he can create jobs at a fast enough rate to dilute this potential threat to his political survival.