Arkebe Oqubay: “Manufacturing must lead the economy”

Ethiopia has gained global attention for a state-dominated development model that has dragged millions out of poverty and drawn comparisons with the rise of China. 

Dr Arkebe Oqubay, a former mayor of Addis Ababa and contributor to government policymaking for 25 years, has released a new book on this meteoric rise, Made in Africa. He talks to Darren Moore about Ethiopia’s emergence. 

AB: When and how did you begin this book and undertake its research?

AO: The genesis of this book was following the Ethiopian government adoption of new policies, in some ways different from the paths taken by many African countries. For instance, after 2002, the government adopted comprehensive policies and strategies which resulted in astonishing economic growth for 11 years, sustaining an average 11% annually, driven by the growth of production in various sectors.

This raised many questions from observers. So the policies were important contributions and the book set out to explain how this success was achieved. The second point was as we moved forward, the challenges became much more difficult. We saw good progress in agriculture, but in terms of a structural transformation of the manufacturing sector, we haven’t yet fully achieved our targets as we were first focusing on agriculture.

We have to make sure that manufacturing leads the economy. The first five- year plan, the Growth and Transformation Plan or the GTP 1 as we call it, was initiated in 2010, and focused on the structural transformation of manufacturing where exports would play a leading role.

So this required a different approach because we are talking about industrialisation, we are talking about developing a strong manufacturing base. I had to focus my research on this critical topic and industrial policymaking within a broader African framework, and the outcome of that research is essentially what this book explains.

Ethiopia is still a largely agrarian society, how sustainable will it be to have this shift on focus to manufacturing and services. Do you not risk creating economic silos within the major cities?

AO: That’s not the case. Our policies and strategies are not to neglect agriculture in the rural areas just to focus on urban industrialisation. We are saying that in order to sustain the growth of agriculture, only strong manufacturing development can boost the agro-productivity. Manufacturing and agriculture are complementary. For example, if we take an agricultural product, wheat, and sell it locally to the 90 million Ethiopian population, we neglect the broader international market and opportunities for value addition that double or triple earnings and expand the market. This boosts the productivity of agriculture and is also an incentive for the agriculture sector to increase production volumes and improve quality.

How have you been investing in other areas of the economy to promote future growth?

AO: While we have focused on agriculture, we are also have long-term investments plans. For instance, from our capital budget at the federal level, close to 55% is spent on long-term infrastructure projects. There are three long term programmes we have been investing in: Energy, Railways and Skills.

1) Energy: In terms of energy, we have been expending billions of dollars, including locally mobilised resources, to build the Grand Renaissance Dam on the River Nile. By 2017, we will generate about 12,000MW of power. You cannot attract manufacturing without having a reliable and affordable energy supply. This is a massive investment to support manufacturing in our country.

2) Railways: We had to move forward and invest in a modern railway system. So now we are developing a 5,000km rail network with one of the main corridors from Djibouti to Addis Ababa scheduled to be operational in October. The railway is electric, so we will be using our own hydro-electric power stations. At a top speed of 120km/hr, the Addis Abba to Djibouti journey will be cut to only nine hours. This dramatically changes the dynamics. Ethiopia’s land-locked position had been a challenge to its economic performance, but this new development completely changes everything with the access and efficiency of a modern train and railway network.

3) Skills development: The third long-term investment we are making is in the skills development and it’s a unique model for Ethiopia. We have now expanded technical schools. We only had three technical schools in 1991, now we have more than 600 technical colleges, technical schools, technical centres that can train up to one million students each year, and we basically reformed our education system, modelling it on the German system.

We have been executing this reform for the past 10 years. The number of people that can go to university will always be limited in number, but we can provide vocational opportunities so that others attain skills to work in agriculture, services or the manufacturing sector. In addition to this, we have been heavily investing in universities. Twenty years ago, we only had two or three universities, now we have more than 35 public universities with more than 400,000 student. We also completely overhauled the courses and over 70% are now in engineering, technology and natural sciences. Previously 90 percent was in social sciences. This positions us well as we now attract manufacturing investment from Asia, Europe, and the US, and they will have abundant skilled labour. In the process, we are targeting to create two million manufacturing jobs in medium and large size firms in the coming 10 years, and we want to expand manufacturing to grow four-fold from the existing share of the total GDP.

This makes it sustainable because we will be having a young workforce that is very well trained and productive. So these examples in energy, transportation and skills development are the basics required for manufacturing and the expansion of the agriculture sector.

Made in Africa: Industrial Policy in Ethiopia

By Arkebe Oqubay

£55 Oxford University Press

ISBN: 978-0-19-873989