On a visit to Addis Ababa five or six years ago, I heard the name of Arkebe Oqubay. He was being widely praised for, as mayor, transforming the capital of Ethiopia – in much the same way as Babatunde Fashola, then the governor of Lagos State, Nigeria, was credited with improvements to life in Nigeria’s commercial capital.
Oqubay’s fame has been further enhanced in that acclaim for this book was such that the wait for a paperback has been greatly shortened by the publisher. It is a book that has been described by Carlos Lopez, UNECA’s executive secretary, as ‘a good case study for other countries to emulate: a must-read for Africans engaged in structural transformation’.
It would be difficult to argue against that recommendation, but it has to be acknowledged that Ethiopia has certain advantages when it comes to developing and exploiting an industrial policy.
Firstly, it has exceptional energy prospects, particularly with hydroelectric generation. The Ethiopian Grand Renaissance Dam on the River Nile will be Africa’s biggest hydroelectric facility.
The ability to tap onto affordable and reliable energy resources is deemed a vital precondition for any successful move towards industrialization, and Ethiopia has that ability in spades – even before you consider the potential oil and gas, solar, wind and geothermal resources that might be developed.
One of the big lessons from Made in Africa is that countries must play to their own strengths. However, that is no watertight guarantee of success, as the example of Ethiopia’s leather goods industry illustrates. Despite Ethiopia having Africa’s largest livestock herds, Oqubay writes that ‘the performance of the sector has been disappointing.’
What is more encouraging is Ethiopia’s determination to learn from its mistakes. Oqubay writes that despite various failings, ‘recent policy on value addition and new entrants is helping to break the logjam in the sector. Moreover, there is recent evidence of more investment, better quality and increased exports of higher-end products.’
Floraculture is one sector where there is simply no doubt about the success of the industry. Oqubay states: ‘It emerged in 2004 and has since shown sustained growth.’ He says that cut-flower industry has generated close to $1bln in export earnings and created direct employment for about (higher than the combined employment in cement and leather sectors).
But the author does point out explanations for the sector’s growth and success do vary. ‘One widely shared explanation,’ he asserts, ‘has been the comparative advantage which emphasizes natural endowments as the key sector, rather than policies or the role of the state.’
Alternative views also persist, such as that expounded in the UNIDO/UNCTAD Economic Development in Africa Report 2011 that states: ‘In Ethiopia, state activism played a critical role in the development [of the industry].’
Value chain spin-offs also includes air freight, which comprises over 50% of floriculture’s cost component. With Ethiopian Airlines, that cost becomes mainly a domestic expenditure, valuable to the economy as a whole.
[African Business]