US investments in Ethiopia grow despite Chinese juggernaut


A graffiti of US President Barack Obama is seen on a wall in Nairobi on July 25, 2015.

ADDIS ABABA - When US President Barrack Obama arrives in Addis Ababa on Sunday, it will be hard for him to ignore the Chinese-funded and built $475 million Addis Ababa Light Rail Project (AALRT), the Chinese-financed new African Union headquarters and the many road construction projects that are also being undertaken by the Chinese.

While locals in Addis Ababa frequent American movies (as well as movies in Amharic, the official language of Ethiopia), eat at American-lookalike eateries through locally owned Pizzerias and Burger joints and chat on their i-Phones, the Chinese have made inroads in infrastructure, from hard infrastructure like hydro-electric power plants and telecom projects to soft ones like the Huawei Smartphone.

Many feel that the US has lost ground in Ethiopia and generally across Africa to the rising economic superpower China and to a lesser extent to newcomers like India and Turkey.

That’s’s not a feeling shared, at least publicly, by US government officials.

Michael A. Battle, who served as US Ambassador to the African Union (AU) until 2013, admits that while Chinese projects may be the most visible ones because of their focus on infrastructure, when it comes to health and education, the US helps a lot, working in partnership with countries like Ethiopia.

“The US has been showing commitments to Ethiopia with various initiatives made by former and current US Presidents, with the Power Africa scheme being the latest example,” said Battle.

Indeed about half of Ethiopia’s health budget comes from external financial sources, including the European Union and the US.

Ethiopia has immensely benefited in cutting mother-to-child HIV/AIDS transmission rates especially as a result of the President’s Emergency Plan For AIDS Relief (PEPFAR), a US governmental initiative to address the global HIV/AIDS epidemic and help save the lives of those suffering from the disease, primarily in Africa launched by ex-US President George W. Bush and continued by Obama.

Ethopia has also benefitted, though far more modestly, especially in the textile and leather sector, from the African Growth and Opportunity Act (AGOA) which was introduced by former President Bill Clinton and also continued by Obama.

It gives qualifying African countries duty-free access to the lucrative US markets for most of their exports.

Ethiopia is also expected to be a one of the first five African countries to benefit from the Power Africa scheme which Obama announced during his previous trip to the continent two years ago, to light up the electricity production capacity of the continent.

The scheme gives financial and other help to power companies based in the US or run by US nationals to invest in the continent’s power infrastructure.

Ethiopia has recently lifted its 50 Megawatt cap on private investors generating power and selling it to the government, partly in order to benefit from Power Africa.

While most US investments are larger ones involved with the government, there is a small but growing private sector investment from smaller US companies.

One is Juniper Glass Industries Private Limited Company (PLC) a subsidiary of Roha Ventures owned by US national Brooks Washington which is investing close to $50 million for a glass bottle factory to meet the demands of Ethiopia’s rapidly increasing alcoholic and beverage industry.

Washington, an African American investor, which is itself unusual, said the factory located about 110km north of the capital city Addis Ababa was part of his company’s plan to invest in greenfield and early stage manufacturing companies.

“I think for us the future is we’re going to keep growing,” he said, adding that he was planning to construct a furnace to manufacture glass.

Last year another US firm made the largest investment so far by a US company into an Ethiopian firm, $200 million in Afriflora, a flower company that grows 730 million flowers a year in Ethiopia for export.

Ethiopia is competing in the floriculture and horticulture sector with neighboring Kenya, enticing foreign investors with cheap labour, better infrastructure and better security.

The flagship national carrier Ethiopian Airlines is also the biggest customer in Africa for Boeing the American manufacturer of large passenger jet aircraft such as the 787 Dreamliner.

According to Zemdeneh Nigatu, managing partner of the accounting firm Ernest and Young Ethiopia, himself a former resident of US of Ethiopian origin, the aviation sector, which heavily depends for its aircrafts and supplies from the US, was the country’s top revenue earner at 4.2 USD billion last year, easily heavily beating Ethiopia’s most famous agricultural export, coffee.

Obama will undoubtedly want to boost his trip with even more US investments and partnerships with Africa’s second most populous nation at 94 million plus and one of the continent’s fastest growing economies.

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