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Addis Ababa: Shanghai of Africa?

Posted by addisethiopia on March 31, 2013

Addis Ababa, at 8,000 plus feet above sea level, is the third highest capital in the world, but because it sits in a bowl, at times of thermal inversion it will be a city increasingly hard to see from the hills, just as Mexico City and Los Angeles are on some days now. The pollution of progress will wash over the city, and what one will see will be the peaks of buildings that have yet to be built. Addis Ababa will be a very different city than even the hub of activity and perceived chaos it is today, a mix of old and new, just as Shanghai was thirty years ago.

There are several similarities to China of 1987 in the Ethiopia of 2013, though it seems difficult for Americans to comprehend. The standard of living for the people is rising and there is slowly, cautiously, a creeping openness in public discussions. By American standards, political control is too heavy-handed, but one must realize what the country’s recent past has meant. China had the Cultural Revolution and its aftermath into the early 80s, and Ethiopia had its own horrific oppression in the 70s and 80s. Both countries took a giant leap backwards before beginning to come out of the abyss.

It is difficult to have perspective if you haven’t ever been through these type of experiences. We can look at how our own Civil War affected our nation and see some of those wounds still affecting us more than 150 years later.

In ten years, Ethiopia may be the most changed nation on the continent. Its investment in building a national power grid is greater than any other nation in Africa. This alone presents major opportunities for American power companies large and small. China, and to a lesser extent Japan, are building its road and rail infrastructure. The Ethiopian Government is investing $5 billion in the light railroad project between Djibouti and Addis Ababa, as Djibouti serves as the major port for landlocked Ethiopia. Of its total annual budget, Ethiopia is allotting ten percent to infrastructure development, the highest such percentage in Africa. A $1.2 billion dollar power line to Kenya is also in planning.

Ethiopia is challenged by a population of 90 million people, and as a country with one of the highest population growth rates in the world, there will be a younger and growing population, a potential reservoir of discontent without jobs. This was not so different from Shanghai and the surrounding area in the 1980s.

Telecom and IT investors such as Samsung are also entering Ethiopia, and as noted in a previous blog, dialogue and debate will slowly open up in the country, just as it did in Shanghai and throughout China in the 1990s. Ethiopia, just as China, will see that they have no choice but to ease communication restrictions if they want even more investors and a supportive nation.

Not all changes will be improvements, of course. Pollution will likely increase significantly, and global warming may be accelerated because of all that we call progress. We can only hope that greater investment in clean energy and a careful examination of our transportation schemes worldwide will also be considered carefully. The great cities of the future, of which Addis Ababa could easily become one, depend on forward thinking. These are also great opportunities for investors and entrepreneurs.

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