When I still lived in New York, I came home one day to the pleasant company of my Ethiopian friend’s family who were visiting. Amidst the heart-warming conversations about their relatives, Ethiopia and its politics, an old Amharic proverb came up, that translated to, ‘do not hesitate or you will be left in between doing something, having something and being nothing.’ Not completely understanding its meaning at the time, having visited Addis Ababa now, it seems to appropriately capture the essence of the city – uninhibited and growing without hesitation.
Addis feels very much under construction. There’s dust everywhere and the horizon is replete with half-constructed high-rises. Amidst the abundant sunshine and jacaranda trees, lies the blooming promise of a city on the rise. Here are some of my key observations:
Unlike other East African markets, Ethiopia’s investment code precludes foreign investment in the banking, telecoms and financial services sectors. Therefore, despite ongoing construction of offices, most of the uptake is by NGO’s, government and the energy sector. While most of these new developments are in Bole and Kazanchis, they are largely being delivered with limited or no parking space. Not only does this reflect short-sighted building planning but also makes it challenging for international occupiers to find suitable office space as many of the upcoming buildings will not meet their requisite health and safety standards.
Ethiopia is re-positioning its economy away from agriculture to a low-cost, labour-intensive, light manufacturing economy. As labour costs rise in Asia, leading manufacturers are seeking alternatives. Recognizing a local history with textiles, apparel, leather and food processing, Chinese investors have been quick to position themselves in Ethiopia with some industrial parks already operational. Ethiopia is collaborating with investors from China, India and Turkey on the construction of new industrial parks. Global consumer manufacturers like Unilever, Walmart Stores Inc. and Diageo are already present.
Chinese investment in Addis Ababa seems more dominant than anywhere else on the continent. You cannot cross a corner without seeing a sign in Mandarin and English celebrating the friendship between the two nations.
Addis Ababa’s formal retail centres are still nascent with no international retailers present yet. Most of the retail offering comprises the lower 2-3 floors of office buildings with some retail centres on Bole road. Similar to office buildings, retail centres also have limited parking relying on visitors to use street parking. With the government expanding roads, street parking has been further curtailed which in some instances has reduced business by 70% for some shopping centres! Taking a long-term view, with a population of 96 million people, one would expect the retail sector to burgeon; however, with amongst the lowest minimum wages on the continent, the spending potential seems constrained.
For years, one of Africa’s biggest nations has remained under the radar. But now, the buzz is real and Ethiopia is growing with confidence.