Ethiopia: US-Ethiopia Development Partnership – Trends and Potentials –

by Zelalem

With Donald Trump heading for the White House, the American foreign policy including its overseas development cooperation guidelines are likely to be revised. The expected changes may be foretold based on Trump’s campaign motto: Making America Great Again, which imply that America is not as great as it used to be.

With the exception of its military presence, American’s sphere of influence in the world economy and global investment is not as strong and indispensable as it has been. This shrinkage of America’s influence and dissipation of dominance is nowhere more evident than the African continent.

During the imperial Ethiopia, USA was one of the prominent actors in various developments activities along with the Netherlands, Italy, Japan and Greece. At that time Americans were actively involved in health, education, manufacturing, aviation and hospitality and other sectors of the economy.

After 17 years of absence, after the demise of the communist Derg, the Americans were back into the scene of the Ethiopian development landscape. 25 years on, the American presence is not as conspicuous as it has been in the Imperial era. It is over shadowed by emerging economic powers of the east.

With the Chinese in a commanding lead, Indians, Sudanese and the Turks dominate the FDI playground of the Ethiopian economy, leaving the Americans behind. This may sound paradoxical with the fact that America is among the top nations home to the largest population of Ethiopian Diaspora (Ethio-Americans) that are well off both in financial and highly skilled human resources.

However the Americans are now trying to catch up, by increasing the momentum of their investment ventures in Ethiopia. U.S companies have already invested in the areas including horticulture, geothermal and beverage industries. New ones are coming in while those already in Ethiopia are strengthening their presence by increasing their investment capital.

A few months ago a U.S company called, Détente Group has unveiled a three billion dollar plan to invest in generating wind energy. Similarly, Honey Well, a high-tech American company, has recently made announcement that it is about to move in to Ethiopia.

A report released last year indicates that U.S investment in Ethiopia amounted to 4 billion dollars. This figure is not satisfying vis-a-vis the enormous potential American companies have in creating prosperous development partnership. Based on this conviction, the Ethiopian government has been extending invitations, organizing international forums to the American business leaders to enable them scaling up their participation and harness the potential benefits from the booming Ethiopian economy.

Americans would benefit highly if they focus on agro- industry development, an area of investment that entitles them to generous incentives and tax holidays and lucrative returns due to the presence of high regional market demand for the products.

The capital intensive mining sector is believed to be another potential area of investment where the Americans could maintain major presence. With their expertise and state of art technology in the field, the Americans can fill the existing technical gaps in the exploration and extraction of such important metals as tantalum, gold, and copper.

In addition to modernization of the exploration works, Americans can harness high business potential in value addition of gold, opal and other minerals being extracted in Ethiopia. These investment ventures encompass establishment of plant that can refine and process minerals and the supply of simple machineries for cutting, shaping and sorting/grading products.

Even though they did not give as much result as desired, the U.S government has laid several ground works, development initiatives for facilitating growth of trade and investment between the two countries.

The AGOA Initiative enacted in 2000 under the Clinton Administration has entitled Ethiopia, among other African countries to have duty free market access to U.S markets. However, 16 years after the introduction of this incentive, Ethiopia’s export to U.S accounts for a few fraction of its total export volume.

The seven billion dollar multi-national project, Power Africa project, initiated by the outgoing U.S president Obama, is making Ethiopia one of the beneficiary African countries. This program aims at doubling access to electricity for sub-Saharan Africa by 2030. The project backs Ethiopia’s efforts in facilitating the participation of the private sector on electric power development. It also introduces modernization in the management and the techniques of power distribution works in the country.

The historical state visit to Ethiopia by President Obama in 2015, the first ever state visit to Ethiopia paid by incumbent American president would certainly have huge impact in encouraging American business to scrutinize at Ethiopia, and what the country offers as an oasis of untapped and lucrative investment opportunities in the sub-saharan Africa .

The future of Ethio-American development cooperation cannot be be seen separately from U.S policies regarding Africa. Now, as Obama walking toward the exit door of the White House, many analysts wonder what the future may hold for the bilateral trade and investment relation between United States and Africa. Will AGOA get continuation under Trump administration? Will Trump’s expected nationalistic policies would dissuade Americans from taking part in the investment ventures in African counties like Ethiopia? Will Africa be more sidelined than it has been during the Obama era? Will America’s development programmes regress to the direction focusing on aid provisions?

The more probable answer to the above questions may be yes; and many analysts may agree with it, as well. But still there are enough scenarios to answer May Be No. As it is the case other issue, America is currently embroiled in many uncertainties which could have wider ramification that could go way beyond its borders. Remember the old saying: When America sneezes, the rest of the world catches cold.”

The working class silent majority of American citizens who voted Trump to the White House expect him to accomplish one thing above all else. They want him to create jobs by revitalizing the ailing manufacturing sector.

In the globalized economic system, maintaining a competent and vibrant manufacturing sector entails finding the right development partners, and creating value chain and market outlets on global scale. Countries like Ethiopia that have already built development partnership platform with U.S and are aspiring to become a manufacturing led economy, would hopefully get Trump’s prior attention.

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