Ethiopia taps Chinese firms to employ growing youth population

ADDIS ABABA - Selam Fantahun, an Ethiopian high school dropout, feels that her prospects have brightened since she landed a job at a Chinese shoe factory in Addis Ababa four months ago.

"I wouldn't say I've learned 100 percent of what I aspired to but I'm getting there, learning new skills everyday," she said.

Fantahun attaches soles to slipper shoes at the new partially finished plant of Huajian, a major Chinese shoe manufacturer. Encouraged by the salary increases and training, she plans to stay a bit longer before planning to start a business.

Fantahun is among the latest crop of Ethiopians learning skills in Huajian's second plant, which covers 138 hectares, and is expected to be totally completed by 2020.

The new park expects to earn $2 billion in annual export revenue and employ up to 50,000 Ethiopians.

That may seem ambitious, but is perfectly attainable in the eyes of Zemdeneh Negatu, former managing partner of the consulting firm Ernest and Young (Ethiopia).

"Ethiopia has 100 million people, adds 2.5 million people annually. It has a young, dynamic, educated and affordable labor force only matched in Africa by Nigeria," said Negatu.

He also cites Ethiopia's cheap electricity rates at 4 cents per kilowatt hour and the country's 4,200 megawatts of installed electricity capacity, second in Africa to South Africa.

Labor force of 45 million

Arkebe Oqubay, board chairman of Industrial Park Development Corp, sees the benefit of firms like Huajian not just in terms of export revenues and employment opportunities.

"With China rebalancing its economy, its firms are eyeing Ethiopia's young labor force of 45 million, while also being attracted by the relative affordability of wage in Ethiopia," he said.

According to him, with the annual manufacturing growth standing at 25 percent in the coming 10 years the government hopes the share of manufacturing in exports will increase to 50 percent.

"In 10 years time, Ethiopia will be among the top 10 populous nations in the world, with manufacturing creating two indirect jobs for every direct job," said Oqubay, highlighting another rationale for the country's strong focus on manufacturing.

The country has inaugurated three industrial parks and Oqubay says nine more are planned or currently under construction by the Ethiopian government with an ability to employ more than 200,000 people when finished.

With Ethiopian economy still dominated by agricultural commodities subjected to international price volatility and an ever-increasing urban population, the government counts on these projects to help create enough employment and improve people's livelihoods.