According to Bloomberg, over the next 10 years, China will pump $10.7 billion into Ethiopia in an attempt to transform the nation’s existing agrarian economy into a manufacturing one.
Casting the recently-completed, $250 million Hawassa Industrial Park — a complex with “56 identical hangar-size, red-and-gray metal sheds devoted to textile production” — as both the prototype and harbinger of things to come, the story breaks down the pros and cons of the proposed transformation.
As for the pros, “industrialists who set up shop here are exempt from income tax for their first five years of business and absolved from duties or taxes on the import of capital goods and construction supplies,” the story found, noting that the Ethiopian government can afford to shrug off the tax revenue because of how much money China is investing.
“This [capital injection], the Ethiopian government says, will allow the country to join the global middle class,” and, if goals are met, create 2 million manufacturing jobs by the end of 2025. “We are an agrarian nation now, but that will change,” Ethiopian Investment Commission’s Belachew Mekuria said.
And then there are the (many, many) cons to the plan. Firstly, local farmers have had their land seized so that factories can be built on it, which has led to “mass protests to decry… what they say are land grabs from farmers for an autocratic government.”
Making matters worse is that the government doesn’t appear to be delivering on the recompense promised to the farmers. According to the story, one farmer was offered $37,000 and employment opportunities for his family, only to receive $6,000 in cash, and jobs that his relatives found unsuitable and constricting.
And while Hawassa park expects to “employ 20,000 Ethiopians by 2019,” it also has set the entry level salary at $25/month, which isn’t good by any metric. And, in an eerily 1984-like turn, “the help center gives [each worker] a dexterity test and divides them into three categories: gifted ‘ones,’ fated to work the sewing machines, and less talented ‘twos’ and ‘threes,’ who will pack boxes and sweep floors.”
On top of all that, a 2009 Ethiopian law essentially bans nongovernmental advocacy groups from auditing local factories, so the only people who will be responsible for factory oversight are the very people profiting most from them.
While not all Ethiopians are against the proposed transformation, the opposition to it, and government’s want for it, are both strong enough, that, according to Bloomberg, there could be a full-on civil war.
You can read more about it at Bloomberg.
