Archive for January 19, 2012
Ethiopia’s partnership with China
In late November, Habros Seguar, an Ethiopian industry ministry official, told me how the ministry had just landed a major Chinese investment. During his August trip to China, Prime Minister Meles Zenawi had visited the Pearl River Delta, where higher costs are driving manufacturers offshore. He invited the Chinese to visit Ethiopia. Among other things, he wanted them to look at a leather-based industrial cluster Ethiopia is developing to better utilise its livestock population, Africa‘s largest.
Within weeks, a delegation of Chinese had arrived in Addis Ababa. Among them was the privately owned Huajian Group, which produces 16 million pairs of leather shoes per year. By October, Huajian had decided to invest in Ethiopia.
Huajian’s general manager arrived in November, hired 50 Ethiopian technical school graduates and sent them off to China for training. “The machinery is already on its way to Djibouti,” Habros told me, adding that Huajian was leasing a factory site in Ethiopia’s Eastern (Oriental) Industrial Zone.
Ethiopia at the end of 2011 reflects the surprising complexity of Chinese engagement in Africa, how it differs from that of the west and – possibly of more significance to the continent – how central is the role of African agency.
China is no newcomer here. In 1972, China financed the Wereta-Weldiya road across Ethiopia’s Rift Valley. Between 1998 and 2004, the Chinese contributed 15% of the cost of Addis Ababa’s ring road (Ethiopia paid the rest).
But when Ethiopia’s economy began to grow at Asian rates, the Chinese saw increased opportunities. Not all were in the direction stereotypes would have predicted. Yes, China’s state-owned petroleum companies explored for oil, but they departed empty-handed. Rather, the Chinese unleashed a variety of state-sponsored tools for building economic ties.
Most of these do not involve China’s relatively modest foreign aid. The China-Africa Development Fund has made equity investments in a leather factory, a cement plant and a glass factory. The Eastern Industrial Zone is being built and run by a private Chinese company, with performance-based subsidies from China’s economic co-operation fund. Chinese telecoms firm ZTE teamed up with Chinese banks to provide a $1.5bn commercial suppliers’ credit (at Libor – interbank lending rate – plus 1.5%) to roll out cellular and 3G service across the country. Read more: http://www.guardian.co.uk/global-development/poverty-matters/2011/dec/30/china-ethiopia-business-opportunities?newsfeed=true
Source: The Guardian
