17 ms·

Ethiopia is now Africa's fastest growing economy

219 points by thomas 8y ago

mirajshah 8y ago
Ethiopia seemingly has an incredibly good relationship with China. The lion's share of FDI in Ethiopia is from China, and much of it goes towards large infrastructure projects. Flying through the airport in Addis recently I was surprised to see multiple Chinese restaurants, a special lounge for Chinese travelers, and signs everywhere in Chinese. It's great to see economic cooperation working out so well on so many levels!
- component 8y ago
  Ethiopian here Yes, Chinese contractors are having a big boom (banks, stadiums, airports & roads) There's a shortage of foreign currency due to the mega projects underway - medicine, electronics, car prices have nearly doubled
  - dvfjsdhgfv 8y ago
    > medicine, electronics, car prices have nearly doubled What about salaries? Is the net result positive for you?
    - bytematic 8y ago
      I imagine most or almost all of those jobs are going to chinese firms and citizens
    - component 8y ago
      Salaries went up a bit also tax was reduced - needless to say the price spikes aren't proportional but it's a start
  - gandreani 8y ago
    > There's a shortage of foreign currency due to the mega projects underway Could you elaborate? How is there a shortage if there's a ton of foreign investment coming in?
    - nwah1 8y ago
      This sounds more like a case of rental values of locations increasing, as the price of prime urban land is bid up, requiring laborers be paid more to achieve the same standard of living, and inflating costs across the board. Same issue that all booming cities face, whether it is New York, San Francisco, London, Hong Kong, Tokyo, or anywhere else. Some manage it better than others.
    - Habesha 8y ago
      Not all mega infrastructure projects are foreign aid/loan financed. For example the 6000 MW Nile Grand Renaissance Dam is self financed by Ethiopia. Beside there is a deficit between export and import leading to currency shortage. https://www.reuters.com/article/ethiopia-energy-idUSL6N0N91QM20140423 https://www.reuters.com/article/ethiopia-energy-idUSL6N0N91Q...
  - andrewksl 8y ago
    Genuinely curious: As far as you know, are the projects synergistic, or do the Chinese offer lopsided/predatory deals?
- andrewksl 8y ago
  As hopeful and excited as I am for Ethiopia, the cynical part of me can't help but see the relationship as less cooperation and more exploitation.
  - deleted 8y ago
    [deleted]
  - freehunter 8y ago
    Many countries grew rich off of US exploitation. Japan and then China wouldn't be the power houses they are today if it wasn't for the US needing a place to offload cheap and dirty manufacturing. True, many more countries were just exploited without any gain, but there are factors that can tilt the balance in your favor. The fact that they're a strong economy with a strong military and have a government wary of imperialism bodes well, as long as the can keep the number of revolutions and civil conflicts low. Stability is the key.
  - temp-dude-87844 8y ago
    Let's have a nuanced conversation about this. The article suggests that Ethiopia may be trying to position itself as a destination for manufacturing. In today's global economy, regardless of value judgments about its merits, less developed countries have an opportunity because they can offer much lower labor costs than highly-developed states. However, structural changes that result from large-scale gainful employment cause costs to rise over time, as a middle class emerges, people place themselves into global context, and begin to ponder whether they can realistically achieve something better. This is happening in China today. The continent of Africa remains the last frontier in outsourcing manufacturing, but right now it's not competitive: transport costs are high, there are issues with utilities, capricious governments, and no established concentration of expertise. The Chinese involvement is working hard on improving these for other reasons, but ironically it may enable Ethiopia to begin to take on roles that China has now in the global supply chain. It may also be deliberate: during a gold rush, most money was made by those who enabled the prospectors, not the prospectors themselves.
- ende 8y ago
  It’s really not polite to celebrate colonialism.
  - jeffreyrogers 8y ago
    This isn't colonialism.
  - _emacsomancer_ 8y ago
    Ethiopia is one African country that was never really colonised - though it was occupied by Mussolinian Italy for a few years.
- dalore 8y ago
  This might not be as good as you think: https://news.ycombinator.com/item?id=15272413 https://news.ycombinator.com/item?id=15272413 China will cause the country to become indebted to it and when they can't make the repayments offer to helpfully take full control of it.
  - beat 8y ago
    coughcoughIMFcough More broadly, taking on debt to build the infrastructure needed to level up industrial capabilities isn't exploitation. Building better energy grids, transportation, and communication infrastructure is expensive. It's fundamentally no different than software startups taking on fundraising rounds to enable growth. As long as the leadership isn't irresponsible about it, there's nothing wrong with it and it should easily pay for itself. The important thing for debt-for-infrastructure planning is to keep corruption manageable, so you don't wind up borrowing to build boondoggles that are for the personal enrichment of the the well-connected rather than the good of the country. At any rate, China is no more predatory in this regard than the IMF, the World Bank, or other western financial institutions. They have a surplus of capital and need to invest it somewhere. The goal is not imperialist, but rather capitalist.
    - eloff 8y ago
      I think what you say is true, but that you very much underestimate China's imperialist ambitions.
    - dalore 8y ago
      China is more imperial. They have a really long 100 year view. They don't mind losing money to gain a long term advantage. Yes it's exactly/similar behaviour to the IMF. Doesn't make a difference though to the people.
  - jrs95 8y ago
    If the local government is already highly corrupt this might not even ultimately be a bad thing for most Ethiopians.
  - thablackbull 8y ago
- ak39 8y ago
  A short summary of China's Belt and Road Initiative: https://www.youtube.com/watch?v=EvXROXiIpvQ https://www.youtube.com/watch?v=EvXROXiIpvQ (6 min)
- joelhaasnoot 8y ago
  Note that this is probably also because of foreign travelers in transit through the airport. Ethiopian Airlines is growing fast and is a major player in travel to a lot of African countries. See for instance https://www.reuters.com/article/us-ethiopia-airlines/ethiopian-airlines-to-step-up-expansion-with-more-deals-and-jets-idUSKBN1I81N5 https://www.reuters.com/article/us-ethiopia-airlines/ethiopi... A family member on a recent flight between Chad and Addis Abeba told me that 85% of passengers on the flight were Chinese.
- jjcc 8y ago
  It's more than just good relation, its a --quite-- assistant to Ethiopia from Chinese government to export nation build expertise with a goal of creating a prosperous area that ultimately as an investor also can benefit from the development and growth by itself. Contractors and private companies are just tip of iceberg. A lot of hi level government cooperations , government sponsored think tank activities[1] which might play a more important role than private business activities. Chinese are coaching Ethiopia to build a nation. It's the same journey that China itself experienced for last 30 years. The nation building expertise partially comes from tons of competing local government policy makers fighting for the prosperity of their home cities on the vast experiment field of 1.3 billion people, but in early years of struggle also from Hongkong,Taiwan entrepreneurs and even a foreign government with their management expertise when China was as poor as many Africa countries and with no expertise. During the time (in 1996) I created the first web site for CS-SIP[2], I witnessed local Chinese government officials learned from Singapore coaches like pupils. Why Ethiopia? Because although it's a democracy but the Ethiopian political ecosystem is closer to an "Orwellian regime" that makes building nation possible. It's totally not because Chinese particularly like a regime. Actually Chinese are ideology agnostic and pragmatic. Chinese have a better understanding that this kind of "oppressive" governance creates less chaos. For example Chinese construction contractors almost always hire Chinese worker from China. The real reason is those are the only qualified teams[3] be able to get the job done. However in a democratic countries some sponsored NGO and activists will speak out the "true" that Chinese companies have job discrimination against local people. Then there are massive protests by local people Th Projects can not continue. These incidents happened many times in non-regime countries. Why quite? Isn't nation building expertise is more valuable and worth to promote than business building expertise so larger population can benefit from? There are a couple of reasons: 1.Western journalists are almost all belief driven people with a little different mindset of HN readers with proof driven thinking. Most of them are activists in the guise Journalist who want to promote their own ideology. They mentally deny the real cause of fast growth in Ethiopia because both governments are regimes so they unintentional hide the truth. 2.Chinese government don't want to be to visible so the nation building is less likely to be interrupted. The international community won't see Chinese effort as an mutual beneficial economic activity but as an expansion to gain regional influence like Soviet Union or Iran because international community is largely brain washed by Orwell's works like 1984 which used to be valid many years ago and still valuable but not applicable everywhere any more. [1]I have a old friend did consulting job helping policy making for Ethiopia [2] https://en.wikipedia.org/wiki/Suzhou_Industrial_Park https://en.wikipedia.org/wiki/Suzhou_Industrial_Park [3] https://twitter.com/elonmusk/status/968608879914270721?lang=en https://twitter.com/elonmusk/status/968608879914270721?lang=...
gandreani 8y ago
So after reading Factfulness by Hans Rosling and family I'm really interested in investing in African companies. Ideally it would be through index funds. I got as far as finding ABSA as my go to online broker, but couldn't find any indexes to research (just a bunch of broken links) Would anybody have any resources or direction to point me to?
- overcast 8y ago
  Vanguard Emerging Markets? Or these? https://www.investopedia.com/articles/investing/011316/afk-eza-gaf-3-best-africa-etfs-2016.asp https://www.investopedia.com/articles/investing/011316/afk-e...
- jeffreyrogers 8y ago
  What is their financial system like? My guess is not very good. I think most of the gains are going to go to private investors, businesses, and other countries that can afford to invest in large projects.
  - anubisresources 8y ago
    Financial system varies broadly country to country, but there are virtually no publicly traded African companies. If you wish to invest you need to find private companies willing to take on an investor
    - jeffreyrogers 8y ago
      Not sure why you're being downvoted. I think what you're saying is correct.
      - icebraining 8y ago
        The Johannesburg stock exchange alone has about 400 companies listed, so "virtually none" seems a bit hyperbolic.
jeffreyrogers 8y ago
This is good, but there are some potential problems. 1. Ethiopia's GDP per capita is ~$700 USD, so this growth is from a very low base. 2. Total fertility rate is 4.28. Compare this to China at 1.57 and USA at 1.84. This means that some of the growth just goes to supporting a larger population. 3. I have read elsewhere that you need government connections and a lot of money to do business in Ethiopia. So the benefits of this growth might not be as broad as they otherwise could be.
- joelhaasnoot 8y ago
  Land ownership is also an issue - I believe (no expert, don't quite me) you can get a 99 year lease.
- AlanSE 8y ago
  Interesting points you raise, I thought about calculating this by-hand, but then I realized that actual numbers are published by actual economists. Here are some old figures: https://tradingeconomics.com/ethiopia/gdp-per-capita-growth-annual-percent-wb-data.html https://tradingeconomics.com/ethiopia/gdp-per-capita-growth-... In that year, GDP growth was 7.5%, but per-capita GDP growth was 4.9%. I could have some gaps in my knowledge of the meanings in these figures, but I think the difference roughly equates to what you speculate - that population growth eats some of the economic growth when viewed from the perspective of the individual. Also important to note, I think that these are nominal, not real figures. So right now, I think we would reasonably expect sub-5% real per-capita growth. Even correcting for that I'm sure it's an astounding pace of improvement. It's hard to wrap your head around multi-year improvements in quality of life of that scale. But there's a depressing side, that maybe some nations are actually contracting in per-capita real GDP.
  - rgbrenner 8y ago
    That's a real growth rate (not nominal). They have 15% annual inflation.
  - ido 8y ago
    But there's a depressing side, that maybe some nations are actually contracting in per-capita real GDP. I'm sure some countries are contracting, but not due to Ethiopia growing - the world economy is not zero-sum.
Maarten88 8y ago
There was an interesting Danish documentary on foreign investments in Ethiopia titled "Dead donkeys fear no hyena's" [1]. It came down that economic investments (including from the World Bank) are used to drive indigenous people from their lands, that land is sold (outside of the public eye) to anonymous foreign agricultural corporations to start industrialized agriculture. However, those corporations will just export everything abroad, leaving the local people with little return, and, most importantly, without food. Promises of compensation, relocation and education are, of course, neglected, and people who dare to protest are met with arms. 1. http://www.deaddonkeysfearnohyenas.com/ http://www.deaddonkeysfearnohyenas.com/
- pjc50 8y ago
  > "Dead Donkeys Fear No Hyenas was triggered by a seemingly trivial scene at the airport in Addis Ababa, six years back. Waiting for my flight late at night, I happened to see some tired workers at the tarmac who were loading food products on an airplane destined for Europe. At the same time, another team was busy unloading sacks with food aid from a second plane. It took some time to realize the real meaning of it – that this famine struck country, where millions are dependent on food aid, is actually exporting food to us." This is straight out of the Potato Famine. :(
  - sitkack 8y ago
    There is value in learning history, makes an excellent crib sheet.
  - chocolatebunny 8y ago
    Or the famines of British India.
  - Barrin92 8y ago
    >food products on an airplane destined for Europe. At the same time, another team was busy unloading sacks with food aid from a second plane. while everyone should acknowledge the degree of poverty that is still rampant in countries like Ethiopia, that image is not particularly well suited to make a point. It can be true that at the same time that Ethiopian farmers sell produce to Europe, while people from somewhere else try to alleviate poverty in the country. It would not make sense for farmers in Ethiopia to stop trading food with the world at large just because people in the country are hungry. In fact, depending on whatever economic transaction is going on, the food coming in might be significantly cheaper than the food going out. Trade and reducing poverty or hunger are not at odds. The goal should be to generate better incomes and social services for poor Ethiopians, not stopping businesses from trading with Ethiopia globally.
csours 8y ago
Sing it along with me: If you are told the percentage increase, check the absolute increase; Aaaaand if you are told the absolute increase, check the percentage increase!
- everdev 8y ago
  Yes, our newborn was our fastest growing child for a long time! In fact, his growth outpaced all other children we knew going all the way back until the previous child was born. Adjusted for "inflation" though, I'm told it was only average growth.
  - TremendousJudge 8y ago
    relevant, as always: https://xkcd.com/1102/ https://xkcd.com/1102/
- davidsawyer 8y ago
  And if you're told something "increased by 150%", for example, make sure it really is 150% and not just 50%.
- WhompingWindows 8y ago
  Generally speaking, you'll want to present both. "From 6th to 7th grade, I went from 200 cm to 205 cm in height, a 2.5% increase." Otherwise, as you say, people will ask for N= or for %, or even starting asking for median IQR and statistical tests of difference. I do tire of oversimplistic analyses in popular media which present whichever one of the above measures is most in line with their narrative.
  - ido 8y ago
    That's a very tall 12 year old!
    - danieltillett 8y ago
      It could be the GP is just very slow and was still in 6th grade as a 16 year old :)
deleted 8y ago
[deleted]
typpo 8y ago
I spend a lot of time in Ethiopia for my company. In many parts of Addis Ababa, the entire skyline is under construction - you can't look up anywhere without seeing a new building in progress. The sound of hammers is ubiquitous. You can tell the place is booming. Most of the large construction projects are run by Chinese companies, especially the Chinese State Construction Corp. New airport terminal, ministries, hotels, convention center, light rail, and so on. This has caused some discussion around Chinese taking construction jobs etc. You'll see these state-funded Chinese construction projects in pretty much every African country. Although Addis is booming, the population still primarily lives in the countryside, and their quality of life is a lot lower. It's misleading to look at average income across the entire population because the city's economy is so far ahead of the rest of the country. This has probably contributed to some of the unrest.
- AdamM12 8y ago
  This reminds me of the DW documentary I watched on their (Chinese) "aid" work in Africa. The Chinese gov lends money to they country and makes them use Chinese companies to do all the work and thus effectively brings much of the money back while dropping the legal obligation on the citizens of that nation.
  - duxup 8y ago
    There was an interesting article about other such deals with the Chinese. The Chinese would make a deal with an African nation and dump products on the market that they couldn't sell in nations who had an actual choice or quality standards that were enforced. The market would be flooded by cheap garbage tools, electronics, and etc. Quality products would disappear quickly as they were many times more expensive.... and then everyone realizes everything is garbage. Interesting enough the construction sites contain none of these tools (the Chinese workers don't use them), and the locals now can't afford to bring them on a special order because they're either locked out of the market or many more times expensive than before due to the trade deal. Crappy state run industries just keep on trucking at the expense of the locals in Africa.
    - 8y ago
StanislavPetrov 8y ago
Just a few years ago, Libya was the jewel of Africa and led in almost every social and economic metric. I wonder what happened there to throw them so horribly off course?
- dotancohen 8y ago
  Kadafi gave up his nukes. We saw the same thing happen in Ukraine after they gave up their nukes. Do you know what is happening in Iran these past few weeks? And I say this as an Israeli, whom Iran has already threatened to destroy. I understand their position. Moreso if you consider which two countries border Iran to the east and to the west, and what has happened in those two countries not long after the turn of the millennium. Don't get me wrong, I realize that Europe, Israel, and the US are better off with a non-nuclear Iran. But having seen Libya and Ukraine, I completely understand the Iranian position.
  - IkmoIkmo 8y ago
    Yeah I recall Mehdi Hasan's article about this some 7 years ago: "Wouldn't it be rational for Iran – geographically encircled, politically isolated, feeling threatened – to want its own arsenal of nukes, for defensive and deterrent purposes?" Pointing out the difference between America, and its allies, going to "war with non-nuclear Iraq" and their "diplomacy with nuclear-armed North Korea", Hasan concluded: "The simple fact is there is no alternative to diplomacy, no matter how truculent or paranoid the leaders of Iran might seem to western eyes." [0] As for the OP's question... it was a dictatorship for 40 years driven not by good governance but by oil money. You either have a dictatorship that builds very strong institutions for a post-dictator rule, or you don't. And particularly the oil-dependent states forgo building the right institutions, because an oil-rich country doesn't need them. Without institutions and civil society a dictatorship erupts into chaos after the dictator dies, particularly if it happens abruptly. In terms of institutions and governance Libya was far from the jewel of Africa. It was never designed to last. It's more akin to someone living on creditcard debt for a few years before it all comes crashing down. [0] https://www.theguardian.com/commentisfree/2011/nov/17/iran-want-nuclear-bomb https://www.theguardian.com/commentisfree/2011/nov/17/iran-w...
esaym 8y ago
Get you an air popcorn popper and some green Ethiopian coffee beans [0] and enjoy some of their great economy right in your own home! [0] https://www.sweetmarias.com/green-coffee/africa-arabia/ethiopia.html https://www.sweetmarias.com/green-coffee/africa-arabia/ethio...
- slfnflctd 8y ago
  I have tried a lot of different coffees, and I personally think Ethiopian is just about the most pleasantly flavorful in the world, at least for my taste. The fresher the better.
jk2323 8y ago
Ethiopia is an interesting place. You can smell the money in the air. "Ethiopia hailed as 'African lion' with fastest creation of millionaires" https://www.theguardian.com/world/2013/dec/04/ethiopia-faster-rate-millionaires-michael-buerk https://www.theguardian.com/world/2013/dec/04/ethiopia-faste... Ethiopia is not an easy place to travel. People are friendly but reserved. English it not very common there. They are not the African "buddy" type of people (ey man, lets have a beer!). If you are into adventure, go to the Bale mountains and take a three day horse ride expedition and try to see the Ethiopian fox. https://en.wikipedia.org/wiki/Ethiopian_wolf https://en.wikipedia.org/wiki/Ethiopian_wolf Or take a two week expedition on horsed to see the Ethiopian lions (unfortunately longer that my ass can sustain on a horse). AFAIK the only lions that live in the jungle. It is a rough place. I like it. Possibly love it, but Ethiopia is not for everyone. Addis has two major museums. If you want to see Lucy https://en.wikipedia.org/wiki/Lucy_(Australopithecus) https://en.wikipedia.org/wiki/Lucy_(Australopithecus) make sure you go to the right one. If anyone is interested in importing ore, please ask me. My Ethiopian friends are always nagging me for business contacts.
- ikeyany 8y ago
  > They are not the African "buddy" type of people (ey man, lets have a beer!). I think you're confusing Africans with Jamaicans or some other black stereotype.
  - jk2323 8y ago
    I don't care about what you think about "black stereotypes". But try to see the difference between welcoming Uganda (based on a statistic they are the most welcoming nation to foreigners) and Ethiopians. Yet, they are nearly neighbors. I don't dislike that the Ethiopians are reserved. What did one of the rangers tell me? We are dirty. We don't have showers. We don't have washing machines. We are dirty. But we know that we are dirty. We are dirty but not stupid!
    - jk2323 8y ago
      A 20 year expat (speak, before the Ethiopia hype( told me this joke: How to shoot an Ethiopian? Aim 1 meter above his hear. You have to hit his ego! Yes, they are a special kind of people and they take proud in it. If they ever throw me out of my current home, Ethiopia may be, besides Colombia, my second destination. It is happening there!

219 points by thomas 8y ago

Ethiopia seemingly has an incredibly good relationship with China. The lion's share of FDI in Ethiopia is from China, and much of it goes towards large infrastructure projects. Flying through the airport in Addis recently I was surprised to see multiple Chinese restaurants, a special lounge for Chinese travelers, and signs everywhere in Chinese. It's great to see economic cooperation working out so well on so many levels!

component 8y ago
Ethiopian here Yes, Chinese contractors are having a big boom (banks, stadiums, airports & roads) There's a shortage of foreign currency due to the mega projects underway - medicine, electronics, car prices have nearly doubled
- dvfjsdhgfv 8y ago
  > medicine, electronics, car prices have nearly doubled What about salaries? Is the net result positive for you?
  - bytematic 8y ago
    I imagine most or almost all of those jobs are going to chinese firms and citizens
  - component 8y ago
    Salaries went up a bit also tax was reduced - needless to say the price spikes aren't proportional but it's a start
- gandreani 8y ago
  > There's a shortage of foreign currency due to the mega projects underway Could you elaborate? How is there a shortage if there's a ton of foreign investment coming in?
  - nwah1 8y ago
    This sounds more like a case of rental values of locations increasing, as the price of prime urban land is bid up, requiring laborers be paid more to achieve the same standard of living, and inflating costs across the board. Same issue that all booming cities face, whether it is New York, San Francisco, London, Hong Kong, Tokyo, or anywhere else. Some manage it better than others.
  - Habesha 8y ago
    Not all mega infrastructure projects are foreign aid/loan financed. For example the 6000 MW Nile Grand Renaissance Dam is self financed by Ethiopia. Beside there is a deficit between export and import leading to currency shortage. https://www.reuters.com/article/ethiopia-energy-idUSL6N0N91QM20140423 https://www.reuters.com/article/ethiopia-energy-idUSL6N0N91Q...
- andrewksl 8y ago
  Genuinely curious: As far as you know, are the projects synergistic, or do the Chinese offer lopsided/predatory deals?
andrewksl 8y ago
As hopeful and excited as I am for Ethiopia, the cynical part of me can't help but see the relationship as less cooperation and more exploitation.
- deleted 8y ago
  [deleted]
- freehunter 8y ago
  Many countries grew rich off of US exploitation. Japan and then China wouldn't be the power houses they are today if it wasn't for the US needing a place to offload cheap and dirty manufacturing. True, many more countries were just exploited without any gain, but there are factors that can tilt the balance in your favor. The fact that they're a strong economy with a strong military and have a government wary of imperialism bodes well, as long as the can keep the number of revolutions and civil conflicts low. Stability is the key.
- temp-dude-87844 8y ago
  Let's have a nuanced conversation about this. The article suggests that Ethiopia may be trying to position itself as a destination for manufacturing. In today's global economy, regardless of value judgments about its merits, less developed countries have an opportunity because they can offer much lower labor costs than highly-developed states. However, structural changes that result from large-scale gainful employment cause costs to rise over time, as a middle class emerges, people place themselves into global context, and begin to ponder whether they can realistically achieve something better. This is happening in China today. The continent of Africa remains the last frontier in outsourcing manufacturing, but right now it's not competitive: transport costs are high, there are issues with utilities, capricious governments, and no established concentration of expertise. The Chinese involvement is working hard on improving these for other reasons, but ironically it may enable Ethiopia to begin to take on roles that China has now in the global supply chain. It may also be deliberate: during a gold rush, most money was made by those who enabled the prospectors, not the prospectors themselves.
ende 8y ago
It’s really not polite to celebrate colonialism.
- jeffreyrogers 8y ago
  This isn't colonialism.
- _emacsomancer_ 8y ago
  Ethiopia is one African country that was never really colonised - though it was occupied by Mussolinian Italy for a few years.
dalore 8y ago
This might not be as good as you think: https://news.ycombinator.com/item?id=15272413 https://news.ycombinator.com/item?id=15272413 China will cause the country to become indebted to it and when they can't make the repayments offer to helpfully take full control of it.
- beat 8y ago
  coughcoughIMFcough More broadly, taking on debt to build the infrastructure needed to level up industrial capabilities isn't exploitation. Building better energy grids, transportation, and communication infrastructure is expensive. It's fundamentally no different than software startups taking on fundraising rounds to enable growth. As long as the leadership isn't irresponsible about it, there's nothing wrong with it and it should easily pay for itself. The important thing for debt-for-infrastructure planning is to keep corruption manageable, so you don't wind up borrowing to build boondoggles that are for the personal enrichment of the the well-connected rather than the good of the country. At any rate, China is no more predatory in this regard than the IMF, the World Bank, or other western financial institutions. They have a surplus of capital and need to invest it somewhere. The goal is not imperialist, but rather capitalist.
  - eloff 8y ago
    I think what you say is true, but that you very much underestimate China's imperialist ambitions.
  - dalore 8y ago
    China is more imperial. They have a really long 100 year view. They don't mind losing money to gain a long term advantage. Yes it's exactly/similar behaviour to the IMF. Doesn't make a difference though to the people.
- jrs95 8y ago
  If the local government is already highly corrupt this might not even ultimately be a bad thing for most Ethiopians.
- thablackbull 8y ago
ak39 8y ago
A short summary of China's Belt and Road Initiative: https://www.youtube.com/watch?v=EvXROXiIpvQ https://www.youtube.com/watch?v=EvXROXiIpvQ (6 min)
joelhaasnoot 8y ago
Note that this is probably also because of foreign travelers in transit through the airport. Ethiopian Airlines is growing fast and is a major player in travel to a lot of African countries. See for instance https://www.reuters.com/article/us-ethiopia-airlines/ethiopian-airlines-to-step-up-expansion-with-more-deals-and-jets-idUSKBN1I81N5 https://www.reuters.com/article/us-ethiopia-airlines/ethiopi... A family member on a recent flight between Chad and Addis Abeba told me that 85% of passengers on the flight were Chinese.
jjcc 8y ago
It's more than just good relation, its a --quite-- assistant to Ethiopia from Chinese government to export nation build expertise with a goal of creating a prosperous area that ultimately as an investor also can benefit from the development and growth by itself. Contractors and private companies are just tip of iceberg. A lot of hi level government cooperations , government sponsored think tank activities[1] which might play a more important role than private business activities. Chinese are coaching Ethiopia to build a nation. It's the same journey that China itself experienced for last 30 years. The nation building expertise partially comes from tons of competing local government policy makers fighting for the prosperity of their home cities on the vast experiment field of 1.3 billion people, but in early years of struggle also from Hongkong,Taiwan entrepreneurs and even a foreign government with their management expertise when China was as poor as many Africa countries and with no expertise. During the time (in 1996) I created the first web site for CS-SIP[2], I witnessed local Chinese government officials learned from Singapore coaches like pupils. Why Ethiopia? Because although it's a democracy but the Ethiopian political ecosystem is closer to an "Orwellian regime" that makes building nation possible. It's totally not because Chinese particularly like a regime. Actually Chinese are ideology agnostic and pragmatic. Chinese have a better understanding that this kind of "oppressive" governance creates less chaos. For example Chinese construction contractors almost always hire Chinese worker from China. The real reason is those are the only qualified teams[3] be able to get the job done. However in a democratic countries some sponsored NGO and activists will speak out the "true" that Chinese companies have job discrimination against local people. Then there are massive protests by local people Th Projects can not continue. These incidents happened many times in non-regime countries. Why quite? Isn't nation building expertise is more valuable and worth to promote than business building expertise so larger population can benefit from? There are a couple of reasons: 1.Western journalists are almost all belief driven people with a little different mindset of HN readers with proof driven thinking. Most of them are activists in the guise Journalist who want to promote their own ideology. They mentally deny the real cause of fast growth in Ethiopia because both governments are regimes so they unintentional hide the truth. 2.Chinese government don't want to be to visible so the nation building is less likely to be interrupted. The international community won't see Chinese effort as an mutual beneficial economic activity but as an expansion to gain regional influence like Soviet Union or Iran because international community is largely brain washed by Orwell's works like 1984 which used to be valid many years ago and still valuable but not applicable everywhere any more. [1]I have a old friend did consulting job helping policy making for Ethiopia [2] https://en.wikipedia.org/wiki/Suzhou_Industrial_Park https://en.wikipedia.org/wiki/Suzhou_Industrial_Park [3] https://twitter.com/elonmusk/status/968608879914270721?lang=en https://twitter.com/elonmusk/status/968608879914270721?lang=...

gandreani 8y ago

So after reading Factfulness by Hans Rosling and family I'm really interested in investing in African companies. Ideally it would be through index funds. I got as far as finding ABSA as my go to online broker, but couldn't find any indexes to research (just a bunch of broken links) Would anybody have any resources or direction to point me to?

overcast 8y ago
Vanguard Emerging Markets? Or these? https://www.investopedia.com/articles/investing/011316/afk-eza-gaf-3-best-africa-etfs-2016.asp https://www.investopedia.com/articles/investing/011316/afk-e...
jeffreyrogers 8y ago
What is their financial system like? My guess is not very good. I think most of the gains are going to go to private investors, businesses, and other countries that can afford to invest in large projects.
- anubisresources 8y ago
  Financial system varies broadly country to country, but there are virtually no publicly traded African companies. If you wish to invest you need to find private companies willing to take on an investor
  - jeffreyrogers 8y ago
    Not sure why you're being downvoted. I think what you're saying is correct.
    - icebraining 8y ago
      The Johannesburg stock exchange alone has about 400 companies listed, so "virtually none" seems a bit hyperbolic.

jeffreyrogers 8y ago

This is good, but there are some potential problems. 1. Ethiopia's GDP per capita is ~$700 USD, so this growth is from a very low base. 2. Total fertility rate is 4.28. Compare this to China at 1.57 and USA at 1.84. This means that some of the growth just goes to supporting a larger population. 3. I have read elsewhere that you need government connections and a lot of money to do business in Ethiopia. So the benefits of this growth might not be as broad as they otherwise could be.

joelhaasnoot 8y ago
Land ownership is also an issue - I believe (no expert, don't quite me) you can get a 99 year lease.
AlanSE 8y ago
Interesting points you raise, I thought about calculating this by-hand, but then I realized that actual numbers are published by actual economists. Here are some old figures: https://tradingeconomics.com/ethiopia/gdp-per-capita-growth-annual-percent-wb-data.html https://tradingeconomics.com/ethiopia/gdp-per-capita-growth-... In that year, GDP growth was 7.5%, but per-capita GDP growth was 4.9%. I could have some gaps in my knowledge of the meanings in these figures, but I think the difference roughly equates to what you speculate - that population growth eats some of the economic growth when viewed from the perspective of the individual. Also important to note, I think that these are nominal, not real figures. So right now, I think we would reasonably expect sub-5% real per-capita growth. Even correcting for that I'm sure it's an astounding pace of improvement. It's hard to wrap your head around multi-year improvements in quality of life of that scale. But there's a depressing side, that maybe some nations are actually contracting in per-capita real GDP.
- rgbrenner 8y ago
  That's a real growth rate (not nominal). They have 15% annual inflation.
- ido 8y ago
  But there's a depressing side, that maybe some nations are actually contracting in per-capita real GDP. I'm sure some countries are contracting, but not due to Ethiopia growing - the world economy is not zero-sum.

Maarten88 8y ago

There was an interesting Danish documentary on foreign investments in Ethiopia titled "Dead donkeys fear no hyena's" [1]. It came down that economic investments (including from the World Bank) are used to drive indigenous people from their lands, that land is sold (outside of the public eye) to anonymous foreign agricultural corporations to start industrialized agriculture. However, those corporations will just export everything abroad, leaving the local people with little return, and, most importantly, without food. Promises of compensation, relocation and education are, of course, neglected, and people who dare to protest are met with arms. 1. http://www.deaddonkeysfearnohyenas.com/ http://www.deaddonkeysfearnohyenas.com/

pjc50 8y ago
> "Dead Donkeys Fear No Hyenas was triggered by a seemingly trivial scene at the airport in Addis Ababa, six years back. Waiting for my flight late at night, I happened to see some tired workers at the tarmac who were loading food products on an airplane destined for Europe. At the same time, another team was busy unloading sacks with food aid from a second plane. It took some time to realize the real meaning of it – that this famine struck country, where millions are dependent on food aid, is actually exporting food to us." This is straight out of the Potato Famine. :(
- sitkack 8y ago
  There is value in learning history, makes an excellent crib sheet.
- chocolatebunny 8y ago
  Or the famines of British India.
- Barrin92 8y ago
  >food products on an airplane destined for Europe. At the same time, another team was busy unloading sacks with food aid from a second plane. while everyone should acknowledge the degree of poverty that is still rampant in countries like Ethiopia, that image is not particularly well suited to make a point. It can be true that at the same time that Ethiopian farmers sell produce to Europe, while people from somewhere else try to alleviate poverty in the country. It would not make sense for farmers in Ethiopia to stop trading food with the world at large just because people in the country are hungry. In fact, depending on whatever economic transaction is going on, the food coming in might be significantly cheaper than the food going out. Trade and reducing poverty or hunger are not at odds. The goal should be to generate better incomes and social services for poor Ethiopians, not stopping businesses from trading with Ethiopia globally.

csours 8y ago

Sing it along with me: If you are told the percentage increase, check the absolute increase; Aaaaand if you are told the absolute increase, check the percentage increase!

everdev 8y ago
Yes, our newborn was our fastest growing child for a long time! In fact, his growth outpaced all other children we knew going all the way back until the previous child was born. Adjusted for "inflation" though, I'm told it was only average growth.
- TremendousJudge 8y ago
  relevant, as always: https://xkcd.com/1102/ https://xkcd.com/1102/
davidsawyer 8y ago
And if you're told something "increased by 150%", for example, make sure it really is 150% and not just 50%.
WhompingWindows 8y ago
Generally speaking, you'll want to present both. "From 6th to 7th grade, I went from 200 cm to 205 cm in height, a 2.5% increase." Otherwise, as you say, people will ask for N= or for %, or even starting asking for median IQR and statistical tests of difference. I do tire of oversimplistic analyses in popular media which present whichever one of the above measures is most in line with their narrative.
- ido 8y ago
  That's a very tall 12 year old!
  - danieltillett 8y ago
    It could be the GP is just very slow and was still in 6th grade as a 16 year old :)

deleted 8y ago

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typpo 8y ago

I spend a lot of time in Ethiopia for my company. In many parts of Addis Ababa, the entire skyline is under construction - you can't look up anywhere without seeing a new building in progress. The sound of hammers is ubiquitous. You can tell the place is booming. Most of the large construction projects are run by Chinese companies, especially the Chinese State Construction Corp. New airport terminal, ministries, hotels, convention center, light rail, and so on. This has caused some discussion around Chinese taking construction jobs etc. You'll see these state-funded Chinese construction projects in pretty much every African country. Although Addis is booming, the population still primarily lives in the countryside, and their quality of life is a lot lower. It's misleading to look at average income across the entire population because the city's economy is so far ahead of the rest of the country. This has probably contributed to some of the unrest.

AdamM12 8y ago
This reminds me of the DW documentary I watched on their (Chinese) "aid" work in Africa. The Chinese gov lends money to they country and makes them use Chinese companies to do all the work and thus effectively brings much of the money back while dropping the legal obligation on the citizens of that nation.
- duxup 8y ago
  There was an interesting article about other such deals with the Chinese. The Chinese would make a deal with an African nation and dump products on the market that they couldn't sell in nations who had an actual choice or quality standards that were enforced. The market would be flooded by cheap garbage tools, electronics, and etc. Quality products would disappear quickly as they were many times more expensive.... and then everyone realizes everything is garbage. Interesting enough the construction sites contain none of these tools (the Chinese workers don't use them), and the locals now can't afford to bring them on a special order because they're either locked out of the market or many more times expensive than before due to the trade deal. Crappy state run industries just keep on trucking at the expense of the locals in Africa.
  - 8y ago

StanislavPetrov 8y ago

Just a few years ago, Libya was the jewel of Africa and led in almost every social and economic metric. I wonder what happened there to throw them so horribly off course?

dotancohen 8y ago
Kadafi gave up his nukes. We saw the same thing happen in Ukraine after they gave up their nukes. Do you know what is happening in Iran these past few weeks? And I say this as an Israeli, whom Iran has already threatened to destroy. I understand their position. Moreso if you consider which two countries border Iran to the east and to the west, and what has happened in those two countries not long after the turn of the millennium. Don't get me wrong, I realize that Europe, Israel, and the US are better off with a non-nuclear Iran. But having seen Libya and Ukraine, I completely understand the Iranian position.
- IkmoIkmo 8y ago
  Yeah I recall Mehdi Hasan's article about this some 7 years ago: "Wouldn't it be rational for Iran – geographically encircled, politically isolated, feeling threatened – to want its own arsenal of nukes, for defensive and deterrent purposes?" Pointing out the difference between America, and its allies, going to "war with non-nuclear Iraq" and their "diplomacy with nuclear-armed North Korea", Hasan concluded: "The simple fact is there is no alternative to diplomacy, no matter how truculent or paranoid the leaders of Iran might seem to western eyes." [0] As for the OP's question... it was a dictatorship for 40 years driven not by good governance but by oil money. You either have a dictatorship that builds very strong institutions for a post-dictator rule, or you don't. And particularly the oil-dependent states forgo building the right institutions, because an oil-rich country doesn't need them. Without institutions and civil society a dictatorship erupts into chaos after the dictator dies, particularly if it happens abruptly. In terms of institutions and governance Libya was far from the jewel of Africa. It was never designed to last. It's more akin to someone living on creditcard debt for a few years before it all comes crashing down. [0] https://www.theguardian.com/commentisfree/2011/nov/17/iran-want-nuclear-bomb https://www.theguardian.com/commentisfree/2011/nov/17/iran-w...

esaym 8y ago

Get you an air popcorn popper and some green Ethiopian coffee beans [0] and enjoy some of their great economy right in your own home! [0] https://www.sweetmarias.com/green-coffee/africa-arabia/ethiopia.html https://www.sweetmarias.com/green-coffee/africa-arabia/ethio...

slfnflctd 8y ago
I have tried a lot of different coffees, and I personally think Ethiopian is just about the most pleasantly flavorful in the world, at least for my taste. The fresher the better.

jk2323 8y ago

Ethiopia is an interesting place. You can smell the money in the air. "Ethiopia hailed as 'African lion' with fastest creation of millionaires" https://www.theguardian.com/world/2013/dec/04/ethiopia-faster-rate-millionaires-michael-buerk https://www.theguardian.com/world/2013/dec/04/ethiopia-faste... Ethiopia is not an easy place to travel. People are friendly but reserved. English it not very common there. They are not the African "buddy" type of people (ey man, lets have a beer!). If you are into adventure, go to the Bale mountains and take a three day horse ride expedition and try to see the Ethiopian fox. https://en.wikipedia.org/wiki/Ethiopian_wolf https://en.wikipedia.org/wiki/Ethiopian_wolf Or take a two week expedition on horsed to see the Ethiopian lions (unfortunately longer that my ass can sustain on a horse). AFAIK the only lions that live in the jungle. It is a rough place. I like it. Possibly love it, but Ethiopia is not for everyone. Addis has two major museums. If you want to see Lucy https://en.wikipedia.org/wiki/Lucy_(Australopithecus) https://en.wikipedia.org/wiki/Lucy_(Australopithecus) make sure you go to the right one. If anyone is interested in importing ore, please ask me. My Ethiopian friends are always nagging me for business contacts.

ikeyany 8y ago
> They are not the African "buddy" type of people (ey man, lets have a beer!). I think you're confusing Africans with Jamaicans or some other black stereotype.
- jk2323 8y ago
  I don't care about what you think about "black stereotypes". But try to see the difference between welcoming Uganda (based on a statistic they are the most welcoming nation to foreigners) and Ethiopians. Yet, they are nearly neighbors. I don't dislike that the Ethiopians are reserved. What did one of the rangers tell me? We are dirty. We don't have showers. We don't have washing machines. We are dirty. But we know that we are dirty. We are dirty but not stupid!
  - jk2323 8y ago
    A 20 year expat (speak, before the Ethiopia hype( told me this joke: How to shoot an Ethiopian? Aim 1 meter above his hear. You have to hit his ego! Yes, they are a special kind of people and they take proud in it. If they ever throw me out of my current home, Ethiopia may be, besides Colombia, my second destination. It is happening there!