Ethiopian PM Turns to Privatization to Further Economic Growth

In a move atypical of his political alignment with the Ethiopian People’s Revolutionary Democratic Front (EPRDF), Prime Minister Abiy Ahmed announced in June 2018 that the government will begin procedures to implement privatization in Ethiopia of various state-owned enterprises (SOEs) in telecommunications, energy and transportation.

Already one of the fastest growing economies in the world, Ethiopia hopes to continue this trend by selling shares in some of the country’s most profitable and promising industries. In this announcement, Ahmed proposed that privatization of these booming enterprises will aim to increase foreign direct investment (FDI), lessen the unemployment rate and reduce poverty.

Ethiopia’s Recent Improvements

The second largest country in Africa and home to more than 100 million people, Ethiopia has been experiencing tremendous economic growth in recent years. Unemployment has dropped from more than 26 percent in 1999 to less than 17 percent in 2015. The poverty rate has decreased from nearly 46 percent in 1995 to less than 30 percent in 2010.

While Ahmed has only been in office since April of 2018, his vows to reform Ethiopia economically and socially have surprised many. Since their coming to power in 1991, the EPRDF’s has had a history of complete state-ownership of the majority of the industry. The state, however, will remain in control of the majority of shares in the industries being opened up to foreign investment.

His promises of calming social tension and revamping the economy have been met with some skepticism, but Ahmed fervently retains that his intentions are to restore Ethiopia to a place of social stability, economic prosperity and peace. Ahmed has even gone as far as to reach out to Ethiopia’s long-term enemy, Eritrea, to find common ground.

The Prime Minister’s Plans

Although the government has yet to release detailed plans as to how they intend to implement privatization in Ethiopia, they have been working with consulting agencies abroad such as PwC and McKinsey to determine a practical and sustainable way to carry out an economic overhaul of such magnitude.

Among the SOEs the government plans to privatize, the introduction of Ethiopian Airlines to the private sector, in particular, represents a key component in Ahmed’s economic plan; Ethiopia will experience a shift from an agrarian society to a modern, competitive, industrial society. As the country’s national flag carrier and a symbol of state pride, Ethiopian Airlines has garnered an intake of hard currency (currency unlikely to be affected by inflation) three times that of coffee, a long-standing staple of Ethiopia’s economy.

Increasing Foreign Investment

The privatization of Ethiopian Airlines also indicates Ahmed’s desire to transform Ethiopia into a major air travel hub, similar to Emirates’ position in the United Arab Emirates. This will serve as a way to bring in foreign investors and to present Ethiopia as a modern contender in the world economy. By selling shares of Ethiopian Airlines and other rapidly-growing SOEs such as Ethio Telecom, Ethiopian Electric Power and Railway Corporation, Ahmed hopes to draw foreign investment since Ethiopia has experienced an alarming shortage of foreign exchange in recent years.

While privatization in Ethiopia is sure to be a slow transition, and the government will most likely remain majority shareholders in the enterprises they are selling, the country appears to be heading in a positive direction. Between 2004 and 2014, Ethiopia averaged annual economic growth of 10.9 percent and is projected to grow another 8.7 percent in the next two years.

With a goal of reaching lower-middle income national status by 2025 and a government promising major social and economic reform, Ethiopia has established itself as a nation in the midst of a true revival. Hopefully, Ahmed’s plan of privatization in Ethiopia will prove to be a positive step for the country’s future economic growth.

Rob Lee

Photo: Flickr

Ethiopian Airlines
At the 2018 Arabian Travel Awards, Ethiopian Airlines was voted as the “Best African Airline,” a recognition of the carrier’s impressive expansion into new markets over the past decade.

To fuel its growth and Ethiopia’s booming tourism industry, Ethiopian Airlines plans to build a new airport with an annual capacity of 80 million passengers. In addition to connecting Ethiopia to foreign investors and multinational companies, the airline has engaged with impoverished Ethiopians directly by funneling their profits into charitable causes.

In the article below six things to know about Ethiopian Airlines and its impact on economic development in Ethiopia are explained.

Top 6 Things About Ethiopian Airlines

  1. Ethiopia’s location in the Horn of Africa makes it a prime spot for aviation. As a proof for this statement, the number of passengers flown by Ethiopian Airlines tripled from 2008 to 2017. A 2015 United Nations article found that Ethiopian Airlines is Africa’s fastest growing and most profitable passenger and cargo airline. On the cutting edge of innovation, Ethiopian Airlines was the second carrier in the world to operate the Boeing 787 Dreamliner back in 2012. As of now, the carrier serves 101 international and 22 domestic destinations.
  2. Ethiopian Airlines is key for the country’s Vision 2025 framework, under which the government plans to make Addis Ababa the leading manufacturing hub of Africa. The national airline will help Ethiopia achieve Vision 2025 by connecting Ethiopia to China and South America. Last year, the carrier launched flight to Chengdu, China, and in 2018 the Airlines has expanded into Buenos Aires, Chicago and Geneva.
  3. The Airline’s expansive network has helped to transform Ethiopia into a major tourist destination. In 2015, the European Council on Tourism and Trade named Ethiopia the world’s best tourism destination. That same year, 681,000 tourists visited Ethiopia, supporting a tourism industry that makes up 4.5 percent of the country’s GDP and provides more than one million jobs.
  4. Ethiopian Airlines has made environmental protection a pillar of its corporate social responsibility. Under its “Plant one tree for every passenger flown” project, the company will plant nine million trees across different regions of Ethiopia. Moreover, the airline has trained its employees on integrated waste management, hazardous chemical treatment, air quality monitoring and sustainable production. At the Ethiopian Aviation Academy, pilots-in-training can now take a course on the U.N. Environment Sustainable Consumption and Green Economy Program. Erik Solheim, the Head of U.N. Environment, applauded Ethiopian Airlines for raising the bar on environmental responsibility and green business.
  5. Beyond its commitment to a green economy, Ethiopian Airlines uses its planes to deliver educational supplies to impoverished Ethiopians. For example, Ethiopian Airlines partnered with the African Legal Library Project, a nonprofit organization, to transport 40 boxes with 720 law books, as well as 101 e-Readers with over 1,000 books each to Debre Markos University.
  6. The company has also used its resources to deliver medical aid to impoverished Ethiopians. In 2010, Ethiopian Airlines collaborated with Seattle Anesthesia Outreach (SAO) to deliver 12,000 pounds worth of medical supplies, mainly anesthesia equipment to the Black Lion Hospital, the largest hospital in the country. To supplement the delivery of medical supplies, 20 SAO doctors traveled to Ethiopia as part of a humanitarian trip. To this day, Ethiopian Airlines fills empty cargo space in its passenger planes with humanitarian supplies.

Rapid, sustained growth is in the Ethiopian Airlines’s horizon. In May 2018, Ethiopian Airlines accelerated its expansion plans, confirming that it will order 13 additional Boeing 787s and six Airbus A350s. According to the Brookings Institution, the company plans to invest in start-up airlines across Africa.

It bought a minority stake in Malawi Airlines in 2013 and helped relaunch Zambia Airways in January 2018. Looking forward, Ethiopian Airlines plans to jumpstart national carriers in Chad, Djibouti, Equatorial Guinea and Guinea, signaling its desire to connect not only Ethiopia but the whole African continent to the global economy.

– Mark Blekherman

Photo: Flickr

Ethiopian Airlines Promotes Women’s Empowerment in Africa

During the month of March, as the world observed Women’s History Month, advocates for women’s empowerment in Ethiopia held a celebration of their own. On March 8, Ethiopian Airlines sent an all-female flight crew from the country’s capital, Addis Ababa, to Buenos Aires, Argentina, in observation of International Women’s Day.

This was a historical feat, as the group became the first all-female flight crew to fly from Ethiopia to the South American city. However, this event was not the first time Ethiopian Airlines made history by dispatching an all-female crew to another city.

As the premier airline of Africa, Ethiopian Airlines has the largest share of revenue in Africa’s airline industry and operates flights to 50 cities in Africa and 95 countries worldwide. The airline is also home to the continent’s largest aviation academy, which trains students from all over Africa to fulfill careers as pilots, cabin crew members, ground staff and maintenance technicians, among other positions. As of 2016, the airline’s academy enrolled 1,300 students in training and the number of enrolled students is expected to grow to 4,000 in the near future.

History in the Making

Ethiopian Airlines first made headlines in 2015 after it dispatched its first all-female flight crew from Addis Ababa to Bangkok, Thailand. Not only were the pilots and cabin crew members women, but so were the baggage handlers, ramp operators, ticket officers and air traffic controllers.

Furthermore, in 2017, the airline dispatched another all-female flight crew in a flight from Addis Ababa to Lagos, Nigeria, the first flight of its kind in Africa. President and CEO of Ethiopian Airlines Tewolde GebreMariam stated that the historical flights made to different cities are part of its efforts to promote women’s empowerment in Africa and that the historic flight on International Women’s Day reflects the airline’s values to mainstream gender into its business.

Educational Challenges for Women in Ethiopia

Due to cultural traditions in Ethiopia, women are not encouraged as much as men to pursue a secondary education of their choice and many have struggled to pursue professional careers. UNESCO reported that as of 2009, only 30 percent of Ethiopian women were enrolled in a secondary education program, compared to 39 percent of Ethiopian men. Furthermore, the literacy rate among Ethiopian adults was only 18 percent for women, compared to 42 percent for men.

A Time for Change in the Aviation Industry

This gesture by GebreMariam to promote women’s empowerment in Africa comes at a significant time, while the number of males to females in the aviation industry is still largely disproportionate. According to the Royal Aeronautical Society, “only 3 percent, or 4,000, of the world’s 130,000 pilots are women, and only 450 are captains.” GebreMariam is hoping to change this statistic by inspiring young girls in school to be optimistic about their futures with the opportunity to pursue a career in the aviation industry.

Besides establishing a platform to promote women’s empowerment in Africa, the historical flights are also helping bring attention to Africa’s aviation industry. GebreMariam stated that airlines in Africa only receive about a 20 percent share of the global airline market. He hopes that more efforts made to promote Africa’s airlines in distinct ways will help educate youth throughout Africa and, over time, create a greater market share for Africa in the airline industry.

– Lois Charm

Photo: Flickr

How to Help People in BahrainBahrain was predicted to have a significant amount of fiscal debts in coming years in July 2016. The debt of Bahrain’s government was expected to rise from 44 percent in GDP (gross domestic product) in 2014, to 83.7 percent in 2016. The answer to how to help people in Bahrain is to prevent such predictions from coming true, and solutions can be seen through the country’s recent opportunities.

The Economic Development Board characterizes Bahrain as a “legislative sector” and “strong financial system,” — a standing which attracts investors. Bahrain is also able to transfer profits, funds and capital without restrictions. Bahrain’s free and open economic policy has given its country the reputation of a fast-growing financial center in the Middle East.

As for Bahrain’s labor productivity rate, the country has seen only a 17 percent increase in this sector over the past 25 years. Compared to countries with labor productivity rate increases of 21 percent, Bahrain’s rate is relatively small. Bahrain also increased its employment rates by offering jobs to citizens in the country’s public sector. However, the jobs were low-wage, causing Bahrain to face a shortage of quality employment.

Hamad bin Isa Al Khalifa (Bahrain’s king in 2008) launched a development program called Vision 2030 to improve Bahrain’s economy. The program aimed for more Bahraini families to have twice as much disposable income by 2030. Less than a decade after Vision 2030’s launch, Bahrain’s economy has grown by 28 percent, and from 2009 to 2014 international investments into Bahrain have risen threefold.

Infrastructure investments in Bahrain have helped the country boost its non-oil sector by 3.7 percent. The sectors that helped this growth were particularly strong in financial performance, social services and construction. Additionally, Bahrain’s volume of active projects doubled from $1.6 billion in the first quarter of 2016 to $3.2 billion in February 2017.

After a six-year absence from Bahrain, Ethiopian Airlines announced in July 2017 that it would resume its services to the country. Ethiopian Airlines will offer three flights per week between its base in Addis Ababa-Bole and Manama (Bahrain’s capital). The airline calls Bahrain a “centre of the main trade routes” with a decade’s worth of growing economy; this too shows how to help people in Bahrain.

Bahrain’s manufacturing sector accounts for 14.4 percent of the country’s GDP. Bahrain also has investment and international growth opportunities in the sub-sectors of food, industrials, and beverage (F&B) and fast-moving consumer goods (FMCG).

The country plans to invest $32 billion in infrastructure projects in the coming years as well. One-third of the expenses will go toward Bahrain’s manufacturing sector.

Bahrain also works to enhance infrastructure and create more attractions to increase tourism. Earlier this year, Bahrain held an event called “Shop Bahrain” that managed to attract 130,000 shoppers from Saudi Arabia, Kuwait and other neighboring Gulf states. More business coming to Bahrain could mean more job opportunities for Bahrain’s citizens.

With trade, tourism and Vision 2030, Bahrainis may have many economic opportunities to come. This could prove especially helpful for the four percent of unemployed Bahrainis. These opportunities and the efforts in place to help the country’s economy demonstrate feasible methods of how to help people in Bahrain.

Rhondjé Singh Tanwar

Photo: Flickr

Boeing's Dreamliner Does Africa
Ethiopian Airlines has become the first airline outside of Japan to own a Boeing 787 Dreamliner. Ethiopian Airlines has managed to maintain an impressive business record in the face of a harsh economic crisis. The airline has seen substantial economic growth over the last seven years.

Airline CEO Tewolde GebreMariam is helping his company use its impressive economic growth and its strategic location to its advantage. Ethiopia is located in the middle of the developing world. However, if the airline is to be successful with their Boeing endeavor, they will need to deal with the economic stress of being an airliner in Africa.

The airline needs to combat a poor African airline infrastructure. Additionally, Ethiopian airlines will need to invest in the education and training of their pilots and technicians. GebreMariam has answers for these problems. He says Ethiopian Airlines is working with African governments to improve airport infrastructure. Ethiopia, he says, is building a huge aviation academy that has grown to 1000 graduates a year. He is confident that the airline can give an opportunity for the country.

GebreMariam believes the new airliner has a great deal to offer passengers as well. He boasts the more humid air on the aircraft, wider windows allowing passengers to take in more scenery, and better fuel efficiency, all of which he hopes will increase business to the airline.

GebreMariam believes the airline can generate over ten billion dollars annually in revenue citing Ethiopia’s growing GDP as one of the world’s fastest-growing economies. He expects its growth to continue because of its strategic location. Economies such as China, African economies, India and Brazil are all growing economies, and GebreMariam believes he can use the Boeing Dreamliner to help boost Ethiopian Airlines’ profits with customers from those countries.

The Boeing Dreamliner will fly in Africa for the time being. When they are able to purchase a second Dreamliner, GebreMariam says Ethiopian Airlines will utilize it on the Washington route.  They have already ordered ten Boeing Dreamliners and are expecting to have four of them delivered by year-end.

– Caitlin Zusy
Source: CNN
Photo: Ethios Sport