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Addis plays the long game

Addis plays the long game

Over the last five years, Ethiopia’s diplomatic engagement with its East African neighbours appears to have taken on a new urgency with wide-ranging agreements on transport corridors and energy sharing. But, as Wanjohi Kabukuru reports, this is just one plank of Ethiopia’s carefully worked-out master plan to sustain its double-digit growth.

In March 2012, the late Ethiopian Premier Meles Zenawi accompanied South Sudanese President Salva Kiir and the then Kenyan President, Mwai Kibaki, to Magogoni in Lamu County in Kenya.

Their mission was to lay the foundation stone of the $24.7bn Lamu Port South Sudan Ethiopia Transport (Lapsset) corridor, which will seamlessly connect the three nations by railway, road and oil pipelines.

The Ethiopian leader did not mince his words: “It is not hyperbolic to say we are making history today. We are making history because as countries wracked by poverty, this project reflects our commitment to chart our own economic development.”

A day earlier, then Kenyan Transport Minister Amos Kimunya and his Ethiopian counterpart Deriba Heiy had signed an agreement committing the two countries to the construction of a standard-gauge railway line from Lamu to Addis Ababa.

Also signed on that day was an agreement to construct the Garsen-Isiolo road to make an international trunk road similar to the Mombasa-Nairobi-Malaba road, to be fast tracked so it would connect Addis to Mombasa Port as the Lamu Port construction got under way.

Before they flew to Lamu, the two leaders had finalised a 25-year power-purchase agreement (PPA) for some 2,000 MW of electricity. Ethiopia, with its surplus energy ranked second only to DR Congo in hydropower potential, is planning to sell 40% of its annual power output to its neighbours Kenya, Djibouti, Sudan and South Sudan.

In April, the Ethiopia-Kenya electricity deal – a 1,070 km power line – became a reality when the World Bank released $684m on top of the African Development Bank’s (AfDB) $338m and the French aid agency, Agence Française de Développement’s (AFD) $118m for the project.

Kenya and Ethiopia are providing the remaining $88m and $32m respectively to cover the entire $1.26bn cost of the power line from Wolayta-Sodo in Ethiopia to Suswa in Kenya.

These bilateral moves are part of a new strategy, adopted some five years ago by Addis Ababa to engage more with its neighbours, particularly on matters relating to trade and commerce. Ethiopia’s resilience and ability to adapt to the realities of the day reveals sobriety and a sense of forward looking in its leadership. This can be deduced when one goes back 20 years into history. In 1993 Eritrea, through a referendum, seceded from Ethiopia, prompting a new agreement between Asmara and Addis over the usage of Eritrea’s two main port cities of Assab and Massawa.

This was because Eritrea’s independence had rendered Ethiopia a landlocked nation. Owing to hostilities between the two countries, which escalated in 1998 with bloody border skirmishes, Addis was forced to reconsider possible sea routes. Port Sudan was considered as an option even though it was 1,829 km from Addis Ababa. The port of Djibouti, on the other hand, was only 780 km away.

Since 1998, the bulk of Ethiopia’s goods, estimated to be 98% of Addis’s maritime traffic, have been handled by Djibouti Port. For the 15 years that Addis Ababa has heavily relied on it, Ethiopian importers have bitterly complained of the higher tariffs levied on all their imports and exports.

For some time, Addis has been using Port Sudan irrespective of distance and political differences as the levies charged were friendlier.

Early this year Ethiopia announced that the 100 km Ethiopia- Sudan Highway link from Asosa in Ethiopia to Kumruk in Sudan was complete and open to traffic. This highway, constructed by the Chinese, became the second road to connect to Sudan, complementing the Metemma-Port Sudan highway.

In March, Addis Ababa signed new construction deals for major highways to connect it to Sudan, South Sudan and Kenya, covering 260km in Gambella, South People’s and Oromia states.

Diplomacy at its best

How Ethiopia, the biggest economy in the Horn of Africa, has had to deal with its neighbours to access the sea ports is a tale of diplomacy at its best. A critical assessment of Ethiopia’s infrastructure development in the last decade shows a robust engagement with its neighbours regarding transport corridors.

In 2005 Ethiopia reached out to the Somaliland administration to explore possibilities of using Berbera Port, 933 km from Addis Ababa. Ethiopia’s trade interaction with Kenya and Somalia, both of which have sea ports, has remained constrained owing to poor road connections. No wonder Zenawi was enthusiastic about Kenya’s Lapsset.

When he died, many regional watchers expected a complete change in Addis Ababa’s regional intentions and economic policies. Ethiopia and Kenya pursue political and economic ideologies that are poles apart.

Why would the Ethiopian leadership seek more economic ties with Kenya? It is no secret that the Kenyan business community harbours expansionist ambitions.

Leading Kenyan finance sector players in the insurance and banking segments have already shown that hunger with footprints all over the region. It is the same with some of its leading manufacturers, notably cement and edible oils manufacturers, who have not hidden the fact that they are interested in the large Ethiopian market.

Zenawi’s successor, Prime Minister Hailemariam Desalegn simply pursued what Zenawi had envisaged. Of particular interest to Desalegn is Zenawi’s ideal to bring about the realisation of Lapsset.

One month after being inaugurated as Premier of Ethiopia, Desalegn visited Nairobi and met then President Kibaki in November 2012. The issue of Lapsset and trade between the two nations was discussed at length.

A fortnight after Kenya’s fourth President, Uhuru Kenyatta, had been sworn in, Desalegn became the first head of state to visit Kenya. His April 2013 visit echoed the 50-year friendship between Kenya and Ethiopia, which started when Emperor Haile Selassie became the first head of state to visit the new Kenyan leader Jomo Kenyatta (President Uhuru’s father).

At the meeting with President Kenyatta, Lapsset and Somalia security featured prominently in discussions. “Within the framework of cooperation for mutual benefit, we have also conferred on the modalities of actualising the Lapsset project as part of our common destiny, as neighbours and a region,” President Kenyatta stated.

Addis Ababa is now seeking Russian help to construct its 587km southern line, which will connect to Kenya’s 940km northeastern line that converges with the Moyale-Isiolo-Lamu line in the Lapsset corridor.

Vision for the region

Desalegn, mentored by Zenawi, is well versed in his vision. Even though the Ethiopian economy is strictly state controlled, with foreign investors barred from telecommunications, retailing, banking, insurance, media and energy, Desalegn granted Kenyan companies ‘most favoured status’ to enter the Ethiopian market.

Even though Ethiopia is the largest economy in the Horn of Africa, trade with Kenya is heavily lopsided in favour of Kenya with Nairobi’s exports totalling $60m, while Kenya imported goods worth a paltry $2m in 2011. This could change when the country’s massive transport upgrade programme is completed. Ethiopia is constructing 5,060km of electric railways and a light rail. China Rail Engineering Corporation has begun work on the light rail project, part of Ethiopia’s Climate Resilient Green Economy Strategy (CRGES). It is also engaged in the first phase of the Addis Ababa-Djibouti Railway line.

China Rail Engineering Corporation and China Civil Engineering Construction Corporation, with a Turkish firm Yapi Merkezi are undertaking the construction of the 752km Addis Ababa-Djibouti line. Perhaps it is time for Ethiopia’s neighbours to “Wake up and smell the coffee”.

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