Economists, business leaders, investors, development partners, government leaders, local and international journalists and a host of others focused their attention on Addis Ababa last week with The Economists’ 2015 Ethiopia Summit, held at the Sheraton on October 28th and 29th.
His Honorable Excellency Prime Minister Hailemariam Desalegn of the Federal Democratic Republic of Ethiopia opened the event, sharing some high level thoughts on Ethiopia’s economic accomplishments and plans. Next, Dr. Arkebe Oqubay, a senior advisor to the Prime Minister and the former mayor of Addis Ababa, gave a very succinct overview of the government’s development plans as described in the Growth and Transformation Plan II, which in some ways was formally launched at the event. Dr. Oqubay detailed how the government is aiming for continued economic growth at around 11% per year and plans to focus on growing the manufacturing, agriculture and export industries. The government is also aiming to help create two million jobs in the next ten years. He described how the government looked closely at the economic development plans and accomplishments of countries such as China, South Korea, Vietnam and Brazil, and used several of their lessons learnt and best practices to map out the country’s future economic goals.
Both Dr. Oqubay and Prime Minister Desalegn mentioned the need for increasing local and foreign investment, encouraging groups like RENEW and the Impact Angel Network (IAN) to invest in textiles, leather, agro-processing, clean energy, steel, cement and chemicals. And, while some of these investments are larger than RENEW and the IAN’s focus (our sweet spot is $500K to $1.5M per deal), Dr. Oqubay stressed the need to invest in small and medium enterprises to fuel growth at all levels in the private sector.
The government appeared determined to continue building, and in some cases owning, critical infrastructure, including EthioTelecom (a government owned entity), industrial parks, and the railway system to Djibouti, which is estimated to cut transportation costs by one half. At the same time, government leaders at the summit were clear that they would not be opening up the banking sector to foreigners for at least another five years, as they feel they do not yet have the capacity to regulate international banks. Dr. Oqubay spoke about the current challenges of the country (infrastructure and human capital), which the government will continue to work on within the context of their ‘state led capitalism’ plan.
Later in the day, RENEW’s Matthew Davis, along with a powerhouse panel of international and local investment bankers, took the stage to discuss the “financing of Ethiopia’s ambitious plans.” Matthew’s fellow panelists included Davinder Sikand, Partner of The Abraaj Group; Helaway Tadesse, Senior Vice President and Chair of Management Credit Committee of Zemen Bank; and Sergei Stankovski, Managing Director of Goldman Sachs. Matthew’s main points were to be successful in Ethiopia investors need to “get small”, “play by the government’s rules” and “don’t complain about the challenges.”
Following the panel, Hailu Tessema, one of the owners of Mama Fresh Injera PLC (a RENEW portfolio company), held a one-on-one interview with the Xan Smiley, the Editor-at-Large of The Economist, about “doing business in Ethiopia.” Hailu challenged the assumption that obtaining debt financing was an issue for companies in Ethiopia, and stressed how the Ethiopian government has helped ensure small, local companies are having access to foreign markets through partnership with companies like RENEW, which are helping increase exports and modernize cottage industries like injera manufacturing.
Overall, the summit was a success and important for Ethiopia, as it brought the country’s economic progress and plans into the global spotlight, and gathered investors from around the world to hear about the prospects and challenges of investing in one of the next great investment frontiers.
Renew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. For the latest on investing in Africa, subscribe and follow us at our social links below.