Pillars of Ethiopia’s foreign policy, economic diplomacy
According to the Ministry of Foreign Affairs, the Ethiopia’s foreign policy is positioned on various strategic pillars that aims at ensuring national sovereignty, eradicating poverty and creating peaceful environments conducive for internal and external shared benefits.
In a recently held exclusive interview with Dr. Aklilu Hailemichael, State Minister of the Ministry of Foreign Affairs, The Ethiopian Herald discussed on how the Ethiopian foreign policies and diplomacies have yielded economic gains for the country, which is pursuing a “Win-Win” approach with its foreign counterparts.
Achievements of the Ethiopian Foreign Policy and Diplomacy
Dr. Aklilu: When we talk about foreign policy, we are talking about the priorities, goals and principles that largely guide our relations with states and also non-state actors. It has been more than fifty or sixty years since our foreign policy has been prepared as a document. After 2001/02, it had built-in other domestic policies.
Our foreign policy focused on achieving economic development, reducing poverty, ensuring sustainable peace, and facilitating the process of democratization in the country. As it is indicated in the policy, one of the threats for our national survival is poverty, which is the main concern to be addressed in the economic sector. Unless we lift up ourselves out of poverty speedily, our national existence will be questioned. Thus, our foreign relations have to create conducive international environment to make sure that we eradicate poverty, ensure sustainable, equitable and fast economic growth.
Secondly, the policy gives priority for national peace. We have to make sure that we have sustainable peace internally. We also have to have incredibly stable and exceedingly peaceful neighborhood. Hence, we have to contribute our best to make sure that countries around us are peaceful. If we do so, they don’t serve as a hatching ground for anti-peace forces that will potentially harm our country. As you know, Ethiopia is one of the largest contributors to peacekeeping task in the world. For instance, we have been contributing to peacemaking in Somalia, South Sudan, Rwanda, Burundi and other African countries.
The third pillar is our relations with countries and regions. Ethiopia also contributes for neighbors’ democratization process, in building democratic values, the core foundations on which our foreign policy is built.
With regard to promoting national interests and benefits, the top priority is development. Our foreign policy in the last 60 years, in this regard, has made a lot of progress, particularly, in the area of development. We have been able to attract Foreign Direct Investment(FDI), able to find large and diverse markets for our export products, and able to promote our tourism and strengthen technology transfer as well as development finance. These are the core pillars of our economic diplomacy.
Ethiopia, in recent reports, has been the top destinations of FDI. The reasons for many international companies' interest to visit and invest in various sectors in the country resides in Ethiopia's attractive investment climate. The first is the tranquility that has ensued since the advent of democracy decades back. The peace and stability that Ethiopia exhibited during the last two decades had been exemplary. To the surprise of many, located in chaotic and unstable neighborhood, Ethiopia has been the most stable country. Indeed, peace is the most important factor for FDI.
On the other hand, Ethiopia has made a wide-spectrum of progresses in infrastructural development. It has made an astounding leap in light of the situation we were in 20 years ago. The country is now well connected with asphalt roads, railways, airways and other facilities. Apart from expanding infrastructural facilities nationwide, the country is well known in the development of other social infrastructures such as education, labour and health facilities. Moreover, energy has been dramatically growing basically in producing renewable energy from hydropower, geothermal, solar, wind and biological resources. Here it is important to underline that energy is one of the allurements or factors for FDI.
Labour is the other important driving factor that attracts FDI. For instance, of all the hundred million people in Ethiopia, 54 millions are at the working age. For this reason, about 25 per cent of our budget irrigates education. In other ways, this implies that the country has massive skilled workforce, particularly, in health care services. Accordingly, the labour we have in Ethiopia renders industries competitive in the international market.
Other than abundant labour force, Ethiopia has better access and opportunities to international market for its export products. The credit for this goes for its excellent foreign policy and splendid diplomatic relations with several countries around the world. These market opportunities are available not only for Ethiopians but also for foreign direct investors as they are producing in Ethiopia.
Among the initiatives for international markets, the first one is the African Growth Opportunity Act (AGOA), through which Ethiopian exporters can export their product to the United States without tariff and tax. The other one is ‘everything but Arms (EBA) initiative’, an initiative of the European Union under which all imports to the EU from the Least Developed Countries are duty-free and quota-free, with the exception of armaments. Ethiopia has also access to the Common Market for Eastern and Southern Africa (COMESA) region, where around 470 million people live.
And we have many bilateral agreements through which we can export our products without tax and quota as well in Our geographical proximity to the very large consuming countries in the Middle East is also an advantage. Thus, the special market opportunity that we have in various countries in the world is an incentive for foreign direct investors to come and invest their resources here. There are also several sorts of incentives that motivate these international companies to come and invest in Ethiopia. Hence, they can also bring capital goods without being taxed. This shows that Ethiopia respects international investment laws as well as multilateral investments and agreements. Many other international laws that ensure the involvement of international companies will be safe while they decide to invest here.
Ethiopia was one of the best destinations of FDI in Africa in 2017. More investors are coming this time not only from China, but also from India, Saudi, Turkey, European countries and American companies.
By the way, infrastructural development in Ethiopia, for instance the construction of industrial parks which have all the services at one point – single window services such as road infrastructure, custom services, foreign currency services, water, electricity are in place, - and attracts numerous FDIs from China or Asia, USA, and Europe.
Correspondingly, the policy gives priority to industries that are labour consuming. In other words, we focus on manufacturing industries which take raw materials from agricultural products, and will also have positive impact on agricultural productivity. For example, the raw material for textile is cotton, and the raw materials for livestock are leather, hide and skins.
The other pillar for our economic diplomacy has to do with facilitating export or expanding market horizon for our agricultural and industrial products. Ethiopia is trying to increase its export revenue through exporting coffee, flower, pulses and oil seeds, vegetables, meat, leather, spices and all kinds of products, which are largely agricultural. As our policies focused on farmers’ linkage to international market, our ambassadors and diplomats abroad are engaged, as part of their daily routines, in looking for markets for our products, which is a successful move in this regard.
Although there have been challenges, diplomats with the support of the National Chamber of Commerce make sure that our producers get connected with potential buyers in different parts of the world through business and trade forums. The Ministry of Foreign Affairs(MOFA) links these local suppliers to potential buyers. We have created our best joint venture; facilitate agreements between suppliers and buyers. In this regard, I would say we have been expanding our diversified products which are targeted for export.
Tourism is also the other economic pillar in our foreign policy. Recently, we have made the country’s tourism brand ‘a land of origins’, to promote our products and to better increase the influx of tourists from different countries. Last year, the inflow of tourists had reached 880 thousand, and in the running year, we want to soar up the number of tourists to 1.2 million, in collaboration with the Ministry of Tourism. As a result, our missions abroad are heavily engaged in trying to promote the heritages - the natural, social and historical, anthropological heritages the country has. The country is also trying to attract potential investors that are interested in the area of building star-rated hotels, resorts, and so on. We are trying our best to build up the capacity of the local tourist operators to facilitate their linkage with internationally renowned tour operators. Hence, by creating these linkages, they can sign agreements and contribute to the increasing inflow of tourists.
The other priority area enjoying focal attention is technology transfer. Of course, technology can come in tandem with FDI; it could come in terms of skilled man power, through modern organizational system and information communication. In this regard, MOFAs is facilitating mobility of experts from Ethiopia to different countries in different sectors through training, bench marking, and so on. Thousands of international investors have so far visited industrial developments in Ethiopia. Foreign experts are helping local human powers to install and operate machines. In doing so, we facilitate technology transfer at a large scale. In our economic diplomacy, we are involved jointly with the Ministry of Finance and Economic Cooperation (MoFEC), in facilitating development finance in terms of aid, loan, and technical support.
Taking these five areas of FDI such as promotion of export trade, tourism, peace and stability, technology transfer, and development finance; we have made significant progress in the last couple of years. With these features of economic diplomacy, our foreign policy is increasingly becoming successful. But it doesn’t mean that there were no challenges. Having such enabling environment for investment, we have to make sure that we have enduring peace, and our economic growth has to be sustained.
In the area of export, we have to be competitive in the international market. Although there have been challenges in the supply side, we have to continue enhancing the productivity of agriculture. Since we have to think of the volume of export, we have to increase the quality of the product that we will export, through meeting the demands and standards of the international market. Therefore, we can make progress amid these challenges.
Significant Economic Relations with Neighboring Countries
Dr. Aklilu: Like our political relations, we have also very significant economic relations with our neighbors such as Djibouti, Somalia, Kenya, South Sudan, and Sudan. We have outstanding economic relationships with Djibouti, particularly in port services – which most of our goods are imported through port of Djibouti. Ethiopia earns more foreign currency annually by selling over 80 MW of energy to Djibouti.
The other economic sector that promotes superior relationship between Ethiopia and Djibouti is infrastructure development including road, railway and airways. We are also exporting energy and electricity to Djibouti. Also, the fiber optics comes to Ethiopia from Djibouti. The relationship between Ethiopia and Djibouti is comprehensive and strong. And I believe that, in the course of time, Ethiopia will have stronger economic integration with Djibouti. Accordingly, there are so much interdependence between Ethiopia and Djibouti as they have same culture, same people, same language, and share some values in common.
Similarly, Ethiopia has strong relationship with Somalia. Ethiopia has contributed a lot in the restoration of peace and stability, which are basis for the development of a given country. After a decade, a government is established in Somalia. Things there are making a turn for the better. Ethiopia has made sacrifices to reversing the appalling situation in Somalia to where it is now.
Thus, creating very friendly relationship, Somalia and Ethiopia are seeing the light at the end of the tunnel - the coming to power of an elected government as well as strengthened democratic institutions in the country. Consequently, together with our friends – the African Union and international community in general - Somalia has become stable. The two countries have also made economic relations especially in exchange of commodities, which will be further strengthened.
Ethiopia has also first-rate economic relations with Kenya. The construction of the road stretching from Addis to Nairobi is nearing completion. Over 95 percent of the construction has been completed from Nairobi side, and 70 or 80 per cent from our side. There is also a plan to connect with this country through railway in the long term. Efforts to export energy to Kenya are underway. Along their common border, the two have communities who share same culture and language. According to recent reports, when the Ethio-Kenya electricity transmission and distributions line sees completion Ethiopia plans to earn 290 million USD annually from energy export by 2019.
Ethiopia has also good economic relations with Sudan. Like the relationship we have with Djibouti, the relationship we have with Sudan is fantastic. It is a perfect relationship. We export a wide-spectrum of products to Sudan and we import gas from there. Ethiopia and Sudan are also connected through road infrastructure; which could later be growing to Railway linkage. All the diplomatic relations regarding the Grand Ethiopian Renaissance Dam - in the use of Nile - is perfect. They lean on understanding and fairness. Ethiopia earns about 80 million USD of revenue annually by selling about 100 MW of energy to Sudan.
Likewise, Ethiopia has political and economic relations with South Sudan. Ethiopia has been significantly contributing in bringing reconciliation and ensuring sustainable peace in South Sudan. Like Sudan, South Sudan is a reliable friend for Ethiopia, which is a major negotiator in the framework of IGAD. Ethiopia is trying to make sure that peace and stability prevails there. The economic relationship between Ethiopia and South Sudan will be strengthened in the course of time.
On the contrary, trading raw agricultural products, contraband trade and instability among other things, were mentioned as the major hurdles that tested the growth of economic relations between countries in the region.
To conclude, the practices of Ethiopia’s foreign policy and economic diplomacy have been bringing significant contributions for the realization of sustainable and fast economic growth in the region. Apart from economic relations in the neighborhood, Ethiopia has been targeting many Asian and some European countries to promote its cross-border trade relations.
BY ZELALEM GIRMA