Dula's Blog

There should be a silver lining to the AGOA situation. Ethiopia can move from manufacturing to a high-tech country for more sustainable development. When France refused to sell planes and parts to Israel during the Six-Day War, Israel immediately opted to build its airplanes and technology not to be hostage again. Consequently, with a population of 9 million, Israel is a powerhouse of technology and one of the strongest economies in the Middle East.

Industrial Parks are not sustainable solutions
Industrial parks, as they are set up now, are transients. They are temporary solutions to unemployment. Ethiopia uses cheap labor to attract companies to establish cloth and textile-driven manufacturing plants. Manufacturing plants based on labor alone are transient and do not provide good or living wages or sustainable solutions; like rivers; they flow in one direction with cheap labor. Most of the manufacturing plants moved from China, Bangladesh, and other regions to take advantage of cheap labor in Ethiopia. I am sure they will move whenever such an opportunity arises anywhere else. The life expectancy of industrial parks can be cut short and leave people without Jobs and the area with environmental damages. Of course, the suggestion is not to dismantle such plants immediately but to transition to a long and lasting solution to Ethiopia’s economic woes.

 Ethiopia can be like Israel, China, and other Asian tigers in 10-15 years by planting the seeds for sustainable development bolstered by technology. Turning Industrial Parks into technology parks or hubs by fostering and promoting innovation for technology, where a high density of startup companies, engineers, and other innovators cluster together to produce goods and services driven by markets can be the solution. Besides technology parks, universities and cities can provide co-working spaces for technology hubs and incubators with funds supplied by diaspora, private companies, and the government for equity interest or loans. Alternatively, the Ethiopian government can issue bonds to sell to the diaspora or the diaspora can set up their own venture capital to fund these projects.

Moving to the Fourth Industrial Revolution is the Solution

 To catch up with the rest of the world, Ethiopia needs to leap to the fourth Industrial Revolution that focuses on robotics, AI, nanotechnology, blockchain, biotechnology, the Internet of Things, autonomous vehicles, 3D printing, and others without totally discounting manufacturing. The government should prioritize the introduction of the Fourth Industrial Revolution by opening up Internet access, broadband, and Research and Development in these areas.

To grow the economy, the current government is promoting manufacturing by inviting companies from China, Turkey, India, and others by enticing them with low wages and tax breaks. Dr. Abiy should prioritize direct foreign investment in high technology transfer jobs rather than low-wage manufacturing to provide a platform for sustainable economic development.

The typical trajectory of moving from agriculture to manufacturing is no more an option for Ethiopia. Because of TPLF’s fear of social media and denial of access to technology, Ethiopia failed to enjoy the full benefit of the digital revolution. Given this failure, Ethiopia has no time to go through these stages and catch up with the rest of the world technologically and economically. Jumping to the Fourth Industrial Revolution will accelerate its economic and technological development, save it from future famine, ecological damage emanating from manufacturing, and massive economic disruption that arises in manufacturing phase-out.

Manufacturing undertaken by Chinese and other companies will not save Ethiopia from its permanent third-rated status or fill empty stomachs. Huajian is one of the most celebrated Chinese Companies with over 5000 employees. According to AP “Amazing China” (May 2, 2018), Ebissa Gari, a 22-year-old employee of Huajian, earns 966 Birr ($35) a month. The average worker at Huajian factory earns $50 a month. According to Kuwait Institute for Scientific Research, a basic living wage was about 3000 Birr or ($109) a month in Ethiopia. On the other hand, Artificial Intelligence (AI) specialists with little or no industry experience can make between $300,000 and $500,000 a year in salary and stock. “Top names can receive compensation packages that extend into the millions” (NYT, April 19, 2018).

The increased productivity, efficiency, lower operating costs, and high wages are a product of access to technology. The Heritage Foundation recently reported that not all Ethiopians had enjoyed economic growth evenly. It argued that more economic freedom is needed to grow the economy and reduce civil strife.

Ethiopia will need 177 years to catch up with the U.S

Given the economy and the state of technology, Ethiopia is pre-industrial, where Britain was in the 1840s. Unless Ethiopia skips some steps, it will need hundreds (100) of years to catch up. Of course, this assumes the rest of the world will stand still and wait for Ethiopia. For example, at a reasonable growth rate of 5%, Ethiopia will need 177 years to catch up with the U.S. growing at an average of 2.5% holding everything constant. At a 10% rate, it will take 60.5 years. The calculation is derived using a per capita of $50,000 for the U.S and $700 for Ethiopia.

Technology has the potential to be a tremendous tool in advancing the well-being of humankind by improving the quality of life and lifting the standard of living. Leveraging technology allows us to work from anywhere and enhances productivity. The progress of the industrial revolution from the steam engine, electric power, and digital and information technology is the foundation for the fourth industrial revolution.

 Over 80% of the jobs will be AI and IT-driven in the next two decades.

Artificial intelligence will be pervasive based on autonomous products, from cars to robots. Over 80% of the jobs will be AI and IT-driven in the next two decades. AI will increasingly take over mundane tasks to the most sophisticated, including fabrication, surgery, and ground and space warfare.

 Ethiopia is 120th out of 139 countries in the Network Readiness Index (NRI)

According to Global Information Technology 2016, Ethiopia is 120th out of 139 countries in the Network Readiness Index (NRI), which measures access to the latest technologies to individuals, businesses, and government, ease of starting a business, the efficiency of the legal system, infrastructure, capacity for innovation and more. Ethiopia’s ranking could have been much better had it not been for TPLF’s fear of technology and lack of interest in advancing Ethiopia’s technological and digital capability.

Leveraging technology underpinning the Fourth Industrial Revolution will create a solid and sustainable economic foundation. The people who generate the wealth (the next Apple, Google, etc.), the carpenters, the risk-takers, and inventors should be appreciated much more than talking heads or politicians. After all, the hard-working and creative Ethiopians with strong work ethics will be the catalyst to propel Ethiopia to be an economic and technical juggernaut.

The technology revolution is taking place at a breakneck speed led by Artificial intelligence, the Internet of things, the cloud, and 3D printing. Ethiopians need to demand unfettered access to technology and the internet as a right for their survival and to avoid future famines.

Dr. Abiy needs to leapfrog Ethiopia to the fourth Industrial Revolution and unleash innovation to create a better future for Ethiopia. If he does not leverage the technology revolution, grow the economy with open competition, transparency, property rights, and unfettered access to technology and the internet, he will leave Ethiopia with a distressed economy and more hungry and angry people.

Dula Abdu, a retired banker, economist and is the founder of a non-profit that promotes access to technology to underserved communities. Currently supports underserved schools in the US and in Ethiopia by providing a STEM-based educational database that works without the internet. The article was adapted from a previous article entitled “Ethiopia needs to leapfrog to the Fourth Industrial Revolution.”