A delegation of 70 companies from Shenzhen city, China’s innovation hub, is attending a show in Ethiopia’s capital Addis Ababa and locals are thrilled about the ample business opportunities on the horizon.
The delegation is in the east African country for the China (Shenzhen) Trade and Investment Promotion Meeting and Shenzhen Products show from Monday to Tuesday.
Lu Pengqi, Vice Chairman of China Council for the Promotion of International Trade (CCPTI) says there is good reason why business delegation from Shenzhen will attract attention.
“With Shenzhen’s Gross Domestic Product (GDP) reaching at $283 billion in 2016 and GDP per capita standing at $25,000, the city is one of China’s most developed and richest,” Lu said.
Shenzhen transformed from little more than a fishing village to “China’s Silicon Valley” in less than 40 years.
It is home to a population of nearly 12 million and more than 5,300 Chinese enterprises including tech giants Huawei, ZTE, and Tencent, which in total have made overseas investments estimated at $80 billion.
While trade relations between Ethiopia and its top trading partner China has reached $3.6 billion in 2016, investment from Shenzhen city and Guangdong province to Ethiopia still lags compared to other Chinese provinces, says Tadesse Haile, Ethiopia’s state Minister of Industry.
“Ethiopia offers Shenzhen a huge market as a next best destination in Africa, complemented by its desire to be a leading light manufacturing hub and middle income economy by 2025,” says Haile.
Ethiopia’s state minister of Industry was in particular referring to Shenzhen’s reputation for knowledge intensive industries in addition to labor intensive industries like Textile and leather.
With Shenzhen popularly called China’s “Silicon valley” for its reputation as innovation and entrepreneurship center, Ethiopia plans to tap its Information Communications Technology (ICT) ambitions on experiences from the likes of this entrepreneurial Chinese city.
The East African nation with a population of about 100 million, is focusing on labor intensive industries like textiles and leather to give its 45 million workforce mass employment while hoping ICT will give it a technological edge.
Already Chinese government is facilitating business capacity training and management skills to Ethiopian business community and experts.
It is hoped that this will help in fostering technological innovation and creative talent as a springboard for competitive export to the global economy.
Ethiopia hopes to transform its largely agrarian economy with manufacturing taking 50 percent share of GDP, creating annually 2 million job opportunity for youth.
“Ethiopia is at a crossroads between the Middle East, Africa and Asia giving access to wide market and huge human capacity as well as capable of creating large job opportunity,” says Afework Solomon, President of Ethiopia’s Chamber of Commerce and Sectoral Associations (ECSA).
Fitsum Arega, Commissioner of the state owned Ethiopian Investment Commission (EIC) points to another advantage the country has to attract Shenzhen investors.
“Ethiopia has constructed, is constructing or plans to construct 13 industrial zones across the country using Chinese expertise and companies for the most part,” he says.
Arega also points labor cost being 10 times cheaper than Shenzhen, companies can invest in sectors like textile and apparel and be assured of good return on their investments.
Already Ethiopia gives a 10-15 years tax holiday on companies investing in its industry parks while giving access to duty free European and US markets.
Arega further spoke about Ethiopia’s ambitions in energy sector, requesting Shenzhen’s experience in particular with solar and wind projects.
Ethiopia is currently undertaking large solar, wind, hydro and geothermal projects with a plan to increase its electricity generation capacity from current 4,200 MW to 17,300 MW by 2020.
While the first day of the trade and investment promotion meeting focused on hard statistics there was another reason, Ethiopian business people and officials welcome investment from Chinese cities like Shenzhen.
“Ethiopia feels at ease with Chinese businesses with China’s economic achievement of becoming the world’s second biggest economy in a short time being an inspiration,” says Solomon.
That ease has translated into Chinese exports accounting for about 87 percent of Ethiopia’s import in 2013.
It has also meant that between 1992-2014, 814 Chinese private companies’ invested and commissioned projects valued at $1.6 billion.