Análisis de los datos

The presence of China in Ethiopia is very visible, for example in the construction sector, but also in the leather and textiles sector, where competing Chinese prod- ucts have changed the market for local producers.1 _{In Ethiopia a lot of industrial}

products are imported or smuggled into the country. Buses are often imported from India or bought second-hand in China, but also shoes, textiles and food products from abroad are available. In the construction sector, the Chinese have carried out lots of projects in Ethiopia. Among those undertaken by them are the ring road around the capital, Addis Ababa , a low-cost housing project, a stadium and a ministry. It must be noted that the quality of the work is often limited, be- cause no money is available in the city for complementary investments. Improving the quality is also not considered a priority in Ethiopia.

China is also exploring oil in the south of Ethiopia . However, the Ogaden Lib- eration Front attacked the Chinese oil explorations in Ethiopia and, in April 2007, killed 65 Ethiopian and nine Chinese citizens. A number of Chinese workers in the oil exploration were abducted, but eventually liberated (Financial Times and NRC Handelsblad, 2007). It was speculated for some time that the Chinese gov- ernment would start to protect the workers with armed guards.2 _{However, such a}

military presence in Africa has not yet been noticed, except under the fl ag of the United Nations in a few cases (Puska, 2008). Also this was not the fi rst time China had a problem protecting its citizens in Africa. In the Niger Delta in Nigeria, Chi- nese employees of Chinese oil companies have also been attacked, just like their Western colleagues (Van Hoeymissen, 2008). She concludes rightly that such events make it more diffi cult for China to maintain its non-interventionist stance. China considers it should protect its people, but fi nds it diffi cult to do so. Hence it may eventually also consider a military presence in certain African countries.

The Ethiopian Prime Minister, Meles Zenawi, returned from the summit in Beijing at the end of 2006 with praise for his hosts. More agricultural products would be allowed into China duty-free and the Chinese had pledged some 500

 The impact of the Chinese in other African countries

million US$ in concessionary loans for various development projects in Ethiopia . The country will also receive unconditional support from China consisting of 1.5 billion US$ investments in telecommunication and infrastructure and 1.5 million US$ will be available for short-term export credits (Financial Times, 6 February, 2007).

These are soft loans, coming without conditions. This may conflict with the principles of the Washington consensus and may be contrary to the agreements concerning the reduction of Ethiopia ’s debt with the Bretton Woods institutions. The current Prime Minister, Meles Zewari, refers to the Chinese economic suc- cesses when he argues in favor of government-led economic development. He confronts this approach with the World Bank - and IMF -imposed Western de- velopment model, the Washington consensus. However, the population, and in particular the Ethiopians living abroad, do not really trust his policies and do not invest as much in their mother country as would have been possible.

The Chinese are also helping Ethiopia to build up an industrial zone (see Box 8.2). It will be named the Ethiopian Eastern Industrial Zone (EEIZ). The Chinese investment group has already signed an agreement with the Ethiopian Investment Authority, and the construction of five projects will begin shortly as part of a total of 80 industrial projects.

Box 8.2 Chinese are helping to build industrial zones in Ethiopia

A Chinese investment group has fi nalized preparations to construct a private industrial zone some 387km south of Addis Ababa of at least fi ve square km. According to the president of the investment group, 80 industrial projects will be constructed at a cost of fi ve billion Yuan (0.5 billion US$). Over twenty Chinese companies have already shown interest in investing in the industrial zone. Projects will include textile and garments, leather and leather products, food, electrical materials and manufacturing. It is expected that in the next fi ve years jobs will be created for over 20,000 Ethiopians. It is estimated that Ethiopia will benefi t from over a billon Birr each year from tax collections, after the tax exemption period ends.

Source: www.klmclubafrica.com, accessed 28 April, 2008

Competing with Chinese manufactured products is a problem for many African countries. However, a competitive advantage can sometimes be found in unex- pected sectors. For example, Ethiopia has a lot of potential in tourism and leath- er. However, private operators take the political system into consideration and study the macro-economic context before deciding whether they will invest in these sectors in Ethiopia. Making such an evaluation is what horticulture farmers

 Meine Pieter van Dijk

choosing between Kenya , Tanzania and Ethiopia have done and also what Ethio- pians living abroad are constantly doing (Van Dijk and Pfisterer, 2009). Many prefer Kenya or Tanzania. For the development of the local economy in Ethiopia it is also important that the national government is willing to really decentralize decision power and to stimulate private entrepreneurship, preferably in an inno- vative and export-oriented environment.

Politically, it is interesting that Prime Minister Meles Zenawi works with the Americans and the Chinese and manages in this way to stay in power. The Americans were not difficult about the cheating during the 2006 elections and then convinced him to go to war in Somalia at the end of 2006.3 _{Ethiopian troops}

were occupying large parts of Somalia and the capital Mogadishu, until they left at the end of January 2009 (NRC, 26 January, 2009). The Financial Times (6 February, 2007) summarized Meles’s dealings with China as: “Ethiopia looks east to slip reins of western orthodoxy”. In the article it is noted that Ethiopia draws inspiration and a growing portion of funding from the east. Meles consid- ers neo-liberal market reforms the hallmark of the West and the World Bank , but they did not generate the kind of growth Africa was looking for, while it weakened the role of the state. He believes in a strong developmental state and considers China to be the example.

Western countries and in particular the European Union (EU) were more critical about the political developments in Ethiopia . The EU stopped its aid for some time and a small country like the Netherlands went from budget support (showing confidence in the African partner country) to financing projects, which are selected using the criteria applied by Dutch development cooperation.

Meles denies that China ’s willingness to lend without conditionality is un- dermining Western aid conditionality and reinforces some of the continent’s re- pressive regimes. According to Meles, “the West assumes that they can buy good governance in Africa. Good governance can only come from inside; it cannot be imposed from outside. That was always an illusion”. The reality is of course that Meles’ regime is repressive, denying the results of a democratic process in Ethio- pia , and that he has managed to pacify the Americans and now uses the Chinese for his purpose. His political model, with no space for real opposition, resembles the Chinese political system. Hence the same question can be asked for both countries, how long will the people still accept this kind of repression (Van Dijk, 2008)? Ethiopia ends up as one of the countries that receives very limited FDI (it is not even coming from China), because investors lack sufficient trust in the long-term policies of the government and because the government is unwilling to sell land, which is all government-owned in Ethiopia (Serbeh-Yiadom et al., 2008).

 The impact of the Chinese in other African countries