At the IMF’s Africa Rising Conference held in Maputo last year, Christine Lagarde said that Africa faces three challenges: infrastructure development, institutional development, and human resource development. Please discuss Ethiopia’s efforts in this regard and how your ministry plays an important role in it.
I think this is a very important point for developing countries. In the case of Ethiopia, when planning a strategy, it is necessary to ensure that the plan is implemented. A key point on the agenda was capacity building and the implementation of capacity building plans. So when we talk about capacity building, we are talking about human resources, systems development, and functional structures in place. Because the sum of these three issues provides the definition of an institution’s implementation capacity.
So, in relation to this issue, we started by gaining a national consensus that even though we have good weather, a comfortable working environment all year round, very fertile land, abundant rivers and water, and a population of over 90 million, we are still a poor country that lags behind many other countries. Therefore, having all these potential resources for development, we lag behind other countries in terms of economic development. We did our best to reach consensus on these issues, and that consensus and change in attitude became the starting point for starting development initiatives. It’s because of this consensus that we’ve created and this shared understanding of this issue that we’ve had double-digit economic growth over the past 12 years. In this case, since 80% of the labor force is in rural areas and only 20% in urban areas, the country has decided that the development of rural livelihoods and agriculture is essential.
This is the background of Ethiopia. We must persuade farmers to maximize the returns they can get from their land, to devote their labor to working the land, to practice water conservation, and to use selected seeds and fertilizers. Convincing them to utilize their workforce to improve productivity is one of the main emphasis points and we are continually working on this. That is human resource development. In urban areas where small and micro businesses exist, we sought to help them understand that they have the capacity and resources of their own to use as start-up capital to develop their businesses. Land belongs to the people, so whenever people are ready to produce, the government makes land and workshops available. We also provide one-stop services for microfinance, machinery leasing, and all other related support. So, persuading people to unleash their power and unleash their entrepreneurial potential has also been our focus. It is still human capital/human capital/development.
On the government side, there have been many initiatives to reform the civil service system. We needed to change the attitude of our people. The attitude of civil servants had to change. That was another point that we set out to first discuss, then find national consensus, then clarify support and strategy, and do a lot of training for civil servants. And it’s also about human resource development.
Regarding universities, previously there were only two or three universities, but now there are about 33 universities. More than 30 universities have been established in the past 10 years, and GTP II plans to establish 10 more. Great emphasis has been placed on human resource development to ensure the availability of a skilled workforce and professionals to support the continued and sustainable growth of the economy. Therefore, human resource development, system development, and technology transfer are very important points for us. As I have pointed out, providing farmers with access to the right fertilizers, selected seeds, and tools provides an opportunity to increase productivity.
Another thing that was mentioned was infrastructure development. Building the necessary infrastructure and making it more accessible to the private sector, farmers, and small and medium-sized enterprises has been fundamental to economic development. Road construction, telecommunications expansion, electricity expansion, railway expansion, water supply, all these issues have been considered fundamental to a country’s economic development. In parallel with economic growth, investments in infrastructure accounted for the largest portion of the budget allocation. It is with this understanding that the government approaches infrastructure development.
Another point you raised is the issue of urbanization and housing development in Ethiopia and the function of urban institutions for the economic development of the country as a whole. In this case, urbanization is at an early stage compared to sub-Saharan countries and other developing countries. Although Ethiopia is at a fairly early stage of urbanization, the growth rate of urbanization is fast at 5.4% per year, with 30% of the population expected to be settled in urban areas by 2025.
This will lead to an increasing role for urbanization in the coming years as we move towards industrialization, expansion of telecommunications, expansion of education, expansion of civil service services and expansion of tourism. As you said, housing is going to be an important issue when we talk about industrialization. Because when we talk about labor, labor productivity, availability, and supply are comparative advantages. High productivity and efficiency are required to be competitive. If you want to achieve high productivity and efficiency at your production base, you need a more comfortable living environment and housing conditions for your workers. This means that the housing issue becomes a very important point as it is a basic human need. The housing issue is becoming a key point of intervention and that is why we are intervening with a large scale housing provision in Addis Ababa and the same mega projects will continue for years to come.
GTP II will deliver approximately 750,000 housing units across the country, the majority of which will be in Addis Ababa. We plan to bring in foreign direct investors in our real estate development and partner in the form of joint ventures to transfer technology and increase the supply of housing. In order to increase productivity, not only housing as a shelter, but also other issues such as transportation are very important. For example, we are working on the infrastructure development of Addis Ababa, where we provide railway services and road construction, a lot of road construction and highways, connecting rural and urban areas and urban and urban areas. There are also projects to develop industrial parks in urban areas. In GTP II, the involvement of the private sector is very clear and vivid. Without private sector partnerships, we cannot achieve sustainable double-digit economic growth.
When we talk about transformation, we are talking about moving labor from agriculture to industry, moving people from rural centers to urban centers. It also means that the share of agriculture in gross national product will decrease and the share of industry will increase. This is a key performance indicator of our economic success and transformational achievements, remembering that change is also occurring within our industry. Urbanization in the coming years is very imminent and we are striving to manage this urbanization and build well-planned, resilient and viable cities in our country. My ministry’s role is to lead and coordinate urban planning, resilience issues, infrastructure issues, housing issues, industrialization issues, based on the plans we have developed, so that all these areas can develop without one becoming a bottleneck for the other. You need to ensure that this process runs smoothly and sustainably.
What can you tell the international community about Ethiopia’s new economic situation?
The message I want to convey is opportunity. As you said and aptly defined, Ethiopia is the home of the African Union. Foreign direct investors are competitive in Addis Ababa, or in Ethiopia in general. It is a demonstration for them to push other African countries and show their competitiveness and efforts to bring about change in the developing world. Investing in Ethiopia does not mean investing in one country. They will be investing across Africa. That’s one message I want to convey.
The second point I would like to make is that Ethiopia has worked over the years to make its working environment suitable for investment, with suitable conditions and an abundant young and productive workforce. Our employees are welcoming and inclusive people. This is an opportunity for foreign direct investors, especially those in labor-intensive industries and manufacturing, to come here and invest and make the most of this opportunity to increase their competitiveness.
The third thing I would like to convey is that investors who participate in the early stages of economic development may have a presence in the country. Therefore, foreign direct investors coming today will have a better opportunity to have better positioning, have better understanding and have a base to compete with other latecomers. With the size of the population, the large market, the demonstration for African countries, our commitment to expand all the infrastructure, ease of doing business and creating an investment-friendly environment, and the commitment of the government, there is no doubt that African countries will be competitive in other countries if they want to export and also produce for the domestic market.
As Minister of Urban Development and Housing, and as a member of this country’s leadership team that is working to bring about significant changes to the standard of living of our people, I would like to express my readiness to say ‘Welcome’.
