Made in Africa - Ethiopia the new factory of the world?

9th July 2015

In 2013 I stood in the middle of a major construction site at Bole Lemi on the outskirts of Addis Ababa. It was a more than one hundred-hectare hive of activity with sewers being laid, concrete being set and wiring being routed. I was told the site was set to become one of the first steps on Ethiopia’s road to mass job creation in the manufacturing sector. I took a look inside one of the almost finished warehouses and was hit by a smell I hadn’t experienced for over a decade. It was the same brand new smell as I had experienced as a student in Jiangmen, Southern China where I was studying the explosion of China’s manufacturing sector. The story of the Asian Tigers and African Lions is not a new one but could this finally be tangible progress?

Ethiopia’s jobs challenge is acute.

It is a country with a population approaching 100 million where almost 80 million are reliant upon agriculture. With a significant youth population the country needs to create jobs every day just to keep pace with demographic change and avoid rising unemployment. To meet the challenge requires ambition on the scale of Bole Lemi and beyond, which is why the government is aiming to build up to ten such parks as part of its long-term vision.

A year after my trip to Bole Lemi I met Justin Lin, former Chief Economist of the World Bank, and a leading Chinese economist over a coffee in an Addis Abeba hotel. Justin was explaining that as many as 80 million jobs in light manufacturing in China are bound to leave the country in the coming years. Chinese labour costs have tripled over the last 10 years, forcing businesses to consider whether Chinese production is sustainable. If China’s labour market is no longer as competitive as it has been then those jobs will fly somewhere else. Ethiopia, with a large potential workforce, cheap electricity and access to raw materials has the potential to be a strong candidate especially for garment and leather products.

Fast forward to 2015 and the scene at Bole Lemi has changed.

Thanks to the focused work of the Government of Ethiopia’s Industrial Parks Development Corporation (IPDC) investors have begun to get a grip on the opportunity Ethiopia’s ambition presents. When I parked my car inside the entrance to the park there was less obvious activity. The builders were gone and the signs of building work had disappeared. It caused a nervous moment. I was worried that this would be a similar scene to what I had witnessed in West Africa - empty industrial parks where money ended up wasted and jobs never materialised.

As we walked around the industrial park, taking photos in the Addis Abeba heat, we saw two people by one of the factory shed. They turned out to be Taiwanese tenants of one of the enormous hangars. They agreed to open the door for us and show us their factory. One or maybe two thousand people were inside assembling leather shoes for the American and the Europe markets. One of the government officials who was accompanying us, explained that already the majority of sheds are rented out for use by manufacturers who will create jobs for people in Addis Abeba.

This silent industrial park may well have 50,000 workers in the next five years – that’s tens of thousands of households benefitting from wages. Now the government plans to build tens of similar parks over the next ten years and create millions of jobs in light manufacturing. In the next few years is it quite possible that the T-shirts and shoes seen on the high streets of London, Paris and New York will have been made in Ethiopia.