• KiAfriqa

How this African state learned to play the West off China for billions.

Prime Minister Abiy Ahmed Ali accepting the Nobel Peace Prize |©Erik Valestrand/Getty Images

For the past four years, China built a new national sports stadium in the heart of the Ethiopian capital. Located deep in Addis Ababa’s commercial center, the soon-to-be-finished structure towers some 130 feet above the ground, and will have a capacity of 62,000 people.

The roughly $160 million construction project is one of many highly visible, Beijing-backed mega-projects — from hydropower dams to skyscrapers — that have helped make China Ethiopia’s largest trading partner.

The Export-Import Bank of China put up $2.9 billion of the $3.4 billion railway project connecting Ethiopia to Djibouti, providing the landlocked country access to ports. Chinese funds were also instrumental in the construction of Ethiopia’s first six-lane highway — an $800 million project — the metro system, and several skyscrapers dotting Addis Ababa’s skyline.

But recently, efforts by Ethiopia’s firebrand prime minister, Abiy Ahmed, to modernize the economy, privatize state-owned companies and reduce the country’s debt burden are shifting the power dynamics in the country.

Abiy, analysts say, is positioning the country to leverage competition between the West and China to attract even greater investment — and reduce the country’s dependence on Beijing.

In December, Ethiopia received a $9 billion injection of financial aid from Western donors, the International Monetary Fund and the World Bank. The influx of cash could upend 15 years of Chinese dominance and spark unprecedented interest from Europe and America, investors, economists and political analysts say.

For Europe and America, Ethiopia — one of Africa’s fastest growing economies and the continent’s second most populous country after Nigeria — has become too big of a prize to ignore.

The IMF’s disbursement was the first time in over a decade the Fund lent money to Ethiopia. The amount — $2.9 billion — also represents one of the highest levels of financial assistance that can be provided under the organization’s lending rules.

A core part of Abiy’s agenda is an effort to overhaul the country’s economic model of heavy state investment, which economists widely agree has run out of steam.

As part of that push, the prime minister has surrounded himself with a tightly knit group of young, liberal-minded technocrats with international experience to raise private capital and privatize key sectors such as the telecommunications market.

Abiy’s efforts haven’t gone unnoticed. In October, he won the Nobel Peace Prize for his efforts to end Ethiopia’s long-running war with Eritrea and to bring greater political and economic freedoms to a country that had suffered for decades under oppressive regimes.

In December, Abiy received European Commission President Ursula von der Leyen, who laid out plans to forge a new relationship with Africa beyond just development aid and strategies to prevent the flow of migrants into Europe.

The previous month, Adam Boehler, the CEO of America’s International Development Finance Corporation, the investment branch of the U.S. government, said Washington is “prepared to make multibillion-dollar investments in Ethiopia.”

Such high-profile visits, analysts say, shows that Western economies have finally arrived at the table alongside China, the Gulf States and Russia, which have all been maneuvering for influence in Ethiopia since its economy started to boom about a decade ago. One of the most visible pledges came in 2018 through a $3 billion package of aid and investment from the United Arab Emirates.

With a population of over 105 million people, Ethiopia has one of Africa's fastest expanding economies; its GDP grew an estimated 8.5% in 2018.

The Gross Domestic Product (GDP) in Ethiopia was worth 84.36 billion US dollars in 2018.

The GDP per capita in PPP (purchasing power parity) was 1794.29 USD.

Source: Politico

Kiafriqa Logo -Colored1.png

© 2019 by "KiAfriqa"