China, the world’s largest developing country, has set 2020 as its target year for the elimination of extreme poverty within its borders. This is a whole decade ahead of the UN’s 2030 goal for member states achieving the Sustainable Development Goals. As the world marked the International Day for the Eradication of Poverty last week, it was especially notable that between 1978 and 2018, the impoverished population in China's rural areas dropped by over 75o million.
China is great example for Africa’s development agenda. In starting off its own development policy four decades ago, China facilitated an increase in labour productivity in its rural areas, largely in the agricultural sector, and harnessed the rising household incomes to increase savings and route those to other productive economic sectors. Further, China focussed on optimising human capital to deliver its economic success. Indeed, The World Bank in its 1983 study on the Chinese economy noted that China had most remarkably achieved making its low-income groups far better off in terms of basic needs than their counterparts in most other poor countries.Further, a key part of the Chinese fight against poverty has been becoming food secure. China increased its yearly total grain output from 545 million tonnes in 1949 to 658 million tonnes in 2018.When China began its development reforms in 1978, 75% of its labour force was located in rural areas and was largely agrarian. To achieve the desired economic growth, China set about reallocating its labour from agriculture to industry. In order to compete on the global market, China had to rapidly upgrade its industries and, in this regard, leveraged technological innovation.The large Chinese population provided a ready local market for commodities, even as China began to export. The industrialisation also created jobs for the said population.
Much like China, Africa has vast territory, abundant resources and a large population. In particular, Ethiopia has been making strides towards industrialisation, with support from China. Ethiopia, whose economy is largely agrarian based, intends to become a light manufacturing hub in Africa and a middle-income economy by 2025.Infrastructure improvement, food and water security, reliable energy sources and skilled labour are critical to the industrialisation agenda.
In September 2019 a US$270 million water supply project funded by China, commenced in Ethiopia’s Tigray state. The 3-year project is to be carried out by China Gezhouba Group Co. Ltd and once completed, it is anticipated to supply 124,300 cubic meters of clean water daily to meet the needs of approximately 400,000 residents of Tigray’s capital city - Mekelle. This project is catalytic to Ethiopia’s development programme as the water will facilitate agriculture and animal husbandry as well as industry. The water is expected to be used in the Mekelle Industrial Park, Mesfin Industrial Engineering, Messebo Cement Factory, and Velocity Apparels Company.
Reliable energy is critical to Ethiopia’s industrialisation strategy. To meet the energy needs of its approximately 105 million people, Ethiopia intends to step up its electricity generation capacity from 4,200 MW to about 17,300 MW by 2020 using hydro, wind, geothermal, biomass and solar energy. The China Electric Power Equipment and TechnologyCorporation has completed the construction of the Ethiopian side of the Ethiopia-Kenya electricity transmission line, comprising 433-km electrical transmission line. Meanwhile, the US$450 million Chinese funded 254 megawatts GenaleDawa III hydro dam is set to be commissioned by the end of 2019.
Ethiopia’s campaign to plant 4 billion trees as part of its green economy resonates with China’s green development strategy. So much so that China through its China Communications Construction Companyhas offered a grant to undertake the Addis Ababa riverside development project along two major rivers in Addis Ababato create a beautiful and healthy environment.
Ethiopia has further mirrored China’s industrialisation example by adopting industrial parks by which to process and export agricultural produce and progressively move rural economies from agriculture based to industry based. China, which in 2016 funded and built Ethiopia’s flagship Hawassa Industrial Park through the China Civil Engineering Construction Company, has also recently funded the Dire Dawa Industrial Park’s construction by the same company to host potential export-oriented investors in heavy industries, textile and apparel, vehicles assembly and food processing, electronic, paper and allied products, chemicals. The Dire Dawa industrial park is strategically close to the Djibouti port through which about 90 percent of Ethiopia’s overall export-import trade happens. Ethiopia has been able to build with China’s help, 756 km of electrified rail connecting to ports in neighbouring Djibouti. The Ethiopia Investment Commission estimates that Ethiopia’s export value from Chinese built industrial parks during the Ethiopian fiscal year 2018/19 is upwards of US$ 14o million.
In much the same way that China leveraged its populationboth as labour and as a market, Ethiopia’s development progress would benefit from a skilled labour force and ready local market. The 15 industrial parks certainly provide a job creation avenue to absorb the 70% Ethiopian population that are youth of working age, availing disposable income in local economies. For example, the Hawassa industrial park created over 20000 jobs for local youth.Training with the various Chinese companies and interfacing with Chinese technologies is also key to capacity building and knowledge transfer to local communities.
China has through its ambassador to Ethiopia continually reaffirmed its commitment to common development, and promoting global partnerships and shared benefits, by building on its achievements.
By George Nyongesa
The writer is Senior Associate, Africa Policy Institute (Nairobi, Kenya)