Ethiopia, one of the world’s poorest countries, has produced a hopeful, optimistic generation. Its new leadership is pushing through ambitious reform: Ethiopia has regained access to the sea, settled ethnic conflict, and will open up the economy. By building on its tradition of a highly centralized government, Ethiopia could overcome ethnic strife to benefit from rising global interest in the region.
- Ethiopia is the only African country that was never colonized, one of the oldest Christian countries in the world, and rather than merely a country, also a civilization (like China, India and Iran) that traces back its heritage to King Solomon from biblical times. As such, proud Ethiopians cite their country as the inspiration for Wakanda, the Afro-futuristic kingdom from the 2018 blockbuster Black Panther.
- The 2018 election of Prime Minister Abiy Ahmed, a personification of tribal unity (his father from the Oromo community, his mother from the Amhara), is a positive sign for Ethiopia’s democratic development. Like many African countries, Ethiopia has long been haunted by ethnic strife. Since 1995, the Tigray community (a mere 6% of the population) has controlled the federal government. The two largest ethnic groups, the Oromo (32%) and the Amhara (28%), have long been excluded. But this finally changed when Abiy Ahmed won the elections.
- Nonetheless, ethnic tensions remain a threat as Ahmed pushes through ambitious reform which will confront vested interests. The powerful Tigray minority is critical of his rule, and a group of soldiers recently marched to Ahmed’s office allegedly threatening to kill him, a situation he defused by doing push-ups.
- Ahmed already has an impressive track record of reform in his first year of rule. He has ended the 20-year border war with Eritrea (regaining landlocked Ethiopia’s access to the sea), released political prisoners, declared press freedom and granted political groups the freedom to mobilize and organize. He is now exploring how to privatize state-owned enterprises.
- Ethiopia’s GDP per capita (with more than 100 million people) is one of the fastest growing in the world (albeit still one of the world’s lowest). Future growth will be driven by rising manufacturing activity and infrastructure investment. Manufacturing remains at a low 5% of GDP since the previous governments prioritized agriculture and rural development, decreasing manufacturing from 13% to 4% of GDP in 2004. However, Ethiopia’s Vision 2025 plan aims to turn the country into Africa’s leading manufacturing hub by boosting manufacturing (primarily by raising FDI) to 20% of GDP by 2025. Infrastructure investments include the Grand Renaissance Dam and the first electrified metro system of sub-Saharan Africa.
- Ethiopia could benefit from rising global interest in East Africa. China and the U.S., among others, have established military bases in Djibouti. Kenya is a hub for China’s Belt and Road Initiative and India’s Asia-Africa Growth Corridor. The U.S. has ended sanctions on Eritrea, while Russia is building a logistics center at one of the country’s Red Sea ports.
Connecting the dots
The Horn of Africa, stretching from East Africa to the Arabian Peninsula, has long been one of the most chaotic places in the world. To be sure, it will remain so for the foreseeable future. Somalia has been devastated by civil conflict for decades, and Yemen is still the battleground of brutal warfare. However, Ethiopia is emerging as an isle of hope. Its young population believes that Abiy Ahmed could be a transformational leader. In fact, there may be sufficient reason for this hope.
Ethiopia, unlike many African countries, has the capacity to stabilize ethnic conflict through highly centralized institutions. Today, Ethiopia’s government steers much of the economy by means of key institutions such as the National Planning Commission, which prepares 5-year and 15-year plans. These institutions, including their powerful leader, originate from Ethiopia’s ancient tradition of a highly centralized (imperial) government. Interestingly, Ethiopia has often bridged ethnic divides by centralizing institutions that are strong enough to maintain tribal unity. This is also why Ethiopia was never colonized: while during the colonial period many African societies collapsed due to tribal conflict (which is something the Europeans had aimed to achieve, i.e. “divide and conquer”), the Ethiopian emperor managed to maintain unity among the tribal chiefs even while he was in exile in England. (This is also a reason why Ethiopians argue Black Panther is based on their country). Furthermore, as early as in the 19th century, after Ethiopia defeated Italian invaders (1896), its leadership looked to Japan and its Meiji Restoration to learn how to modernize its society. While in the 20th century, Ethiopia entered a volatile period (another invasion and oppressive military rule), its leadership did lay the foundation for a modern state by increasing literacy, abolishing feudalism, and centralizing government institutions. In recent decades, Ethiopian governments have
done little to bridge ethnic divides, and these conflicts have contributed to Ethiopia’s 20th century stagnation. However, Abiy Ahmed’s recent efforts indicate that he might be the leader Ethiopia needs. Indeed, he is not merely a young ambitious reformer: instead, he is building on the ancient Ethiopian tradition of a highly centralized government. His biggest challenge will be managing ethnic tensions. Nonetheless, the future looks bright for Ethiopia, as Ahmed has already ended the conflict with Eritrea (which will go a long way towards increasing Ethiopia’s global connectivity) and brought optimism to the marginalized Somali state of southern Ethiopia.
Looking ahead, Ethiopia will continue to benefit from rising East African connectivity. Kenya and Ethiopia are benefiting from increased integration in trade, security, and transport. Additionally, like its neighbor, Ethiopia could become a hub for China (which is already Ethiopia’s largest foreign investor and trading partner, and will launch Ethiopia’s first satellite) and India – especially as Ethiopia has improved its access to the sea. After all, China’s BRI and India’s AAGC seek stable footholds for global trade flows and resources. As such, ancient trade networks which connected East African civilizations to the people of China and India are now being revived. These future linkages are also becoming apparent through the East African fiber optic cable system, which is connected to India and the Arab Gulf. As such, East Africa more broadly, because of its strategic location in the future Indian Ocean economic geography, may become the first region in the world in which the two Asian giants compete without meaningful Western competition (as in Southeast Asia and South Asia).
- In the short term, Ethiopia will focus on building basic infrastructure (ports, transport, logistics) and manufacturing activity. The logistics sector is being privatized and telecom and airlines are next on the agenda. Additionally, by opening up to FDI, Ethiopia will try to raise its low level of manufacturing (5% of GDP) to 20% by 2025.
- While international cooperation in Ethiopia is now focused on China, this will increasingly extend to the rest of the world (i.e. India, Japan) as the country will chart an independent course.
- In some parts of East Africa (e.g. Djibouti, Eritrea), interest from foreign powers will remain merely based on security and military purposes. Interest in Kenya and Ethiopia is based more on their relatively strong institutions and economic potential.