Doing Business at the Horn of Africa

Lucrative Businesses

Using two German-Ethiopian business conferences, Germany is currently trying to enhance its economic and political influence in Ethiopia. Yesterday, the German-African Business Association (AV) organized the third German-Ethiopian Business Day in Hanover. Today, Ethiopian and German politicians and businessmen are again meeting in Stuttgart on the occasion of the German Ethiopian Economic Conference, organized by the lobby association Baden-Württemberg International (BW-I), under the patronage of Baden-Württemberg's Ministry of the Economy. At both conferences, representatives of Ethiopia's Works and Urban Development, Agriculture, and Education Ministries are soliciting German business engagement in their country. Baden-Württemberg's Minister of the Economy is representing the German side. Among the sponsors of both conferences are the Commerzbank and the Robert Bosch Corp.

East Africa's Boom Country

Ethiopia is currently considered to have one of the fastest booming economies in Africa. According to the IMF, the country could soon bypass Kenya to become the strongest economy in East Africa.[1] In 2015, Ethiopia registered an economic growth of ten percent, investments rose by 28.2 percent in 2014 and by 18.9 percent in 2015. Following a slump in 2016, further growth is expected from 6.6 to 8.9 percent for 2018 to 2020.[2] This boom is being particularly stimulated by government investments in gigantic infrastructure projects. As the government-owned Germany Trade and Invest (GTAI) business information service writes, the industry is profiting from "massive government investments" with which Ethiopia would like to "be considered as an internationally respected low tech producer."[3] Government funds are being invested particularly in the energy sector and in the creation of new industrial parks. With its "Growth and Transformation Plan II," the government seeks to build up to twelve new power plants worth around 20 billion US dollars between 2015 and 2020. Ethiopia should "rise to become one of Africa's major energy exporters."[4] In recent years, many industrial parks have been built with Chinese funds, whose value has reached several billion US dollars.

Germany Lagging Behind

So far, Germany has been only moderately benefiting from Ethiopia's rapid boom. The German Ethiopian trade volume is still relatively small. As in many other African countries, the People's Republic of China is Ethiopia's major investor and trade partner. This week's two business conferences are supposed to help in catching up.

Warding Off Refugees

For years, the German government has been enhancing its cooperation with Ethiopia's repressive forces. For example, German Ethiopian cooperation in warding off refugees is quite developed. Addis Ababa is supporting the so-called Khartoum process that was decided at a meeting of the EU's foreign and interior ministers with their African counterparts in Rome in 2014. The accord on measures to already halt migration from Africa to the EU's centers of prosperity far from Europe's external borders ("migration management") was the main outcome of the meeting. Germany is also using the so-called development cooperation to ward off refugees. The Federal Association for International Cooperation (GIZ) is currently operating two cross-border projects in Africa for controlling and repressing migratory movements, which involves also Ethiopia. The project "Support to the African Union Border Program" is aiding AU countries to seal their borders against poverty migration. The project "Enhanced Migration Management," which is intended to help migrants "return voluntarily" to their home countries, basically serves the same purpose.[5]

A Powerful Army

Ethiopia would be a good partner for warding off refugees, not least of all because it has one of the continent's most highly armed repressive forces. The Ethiopian army - with its estimated 200,000 soldiers - is considered one of Africa's largest and most powerful. For years, its military strength has been to Germany's advantage. Of the nearly 20,000 soldiers engaged in the African Union's Mission in Somalia (AMISOM), to try to control Ethiopia's neighbor, Somalia, 4,000 are officially members of the Ethiopian Armed Forces. Experts of the situation on the ground estimate that an additional 4,000 Ethiopian soldiers are operating in Somalia without an AU mandate.[6] The AU intervention, operating in Somalia since 2007, has been unable to end the civil war. It has, however, succeeded in establishing a sort of fragile permanent state of emergency, which so far has been able to prevent serious impairment to maritime trade at the Horn of Africa. The Ethiopian army is also infamous for its brutality in Somalia. It is the only army experienced in both guerrilla and conventional warfare, according to an expert.[7] Critics of the AMISOM operation have repeatedly reported massacres of Somali civilians.

German Ethiopian Military Cooperation

Nevertheless, the German government seeks to enhance its military cooperation with Ethiopia. Already since 2010, a Bundeswehr advisory group has been carrying out "support services" in Ethiopia. In early 2016, a delegation of the German Armed Forces Staff College visited Addis Ababa for an exchange of views with representatives of the Ethiopian East African Standby Brigade. In addition, the Federal College for Security Studies (BAKS) is currently organizing a field trip to Africa, which will include a visit to Ethiopia. The excursion called "field study" is part of the BAKS "core seminar for security policy," devoted to Africa as a "regional focus of German and EU foreign policy." Questions concerning "security and crisis prevention" will be discussed and relevant strategies developed.[8]

Proportionality of Means

For years, Berlin's close partner, the Ethiopian government, has been brutally suppressing dissident movements. In late 2015, social resistance began to form in opposition to government infrastructure programs - particularly the government's decision to extend Addis Ababa's urban area, which was accompanied by the violent expulsion of the population of the Oromia region, bordering the capital. The government's brutal repression of this resistance resulted in more than 1000 people being killed, and - according to official counts - nearly 15,000 being arrested. A state of emergency has been in effect since October. Since 1991, the alliance of parties forming the Ethiopian People's Revolutionary Democratic Front (EPRDF) has been in power in Addis Ababa holding all seats in the national parliament. The EPRDF-Regime can rely on a well equipped repressive apparatus with one of the world's best trained networks of police spies. On the occasion of her last visit to Ethiopia in the fall of 2016, German Chancellor Angela Merkel announced the cooperation of the police apparatuses of both countries. This announcement was made in consideration of the country's violent protests "to maintain the proportionality of means and avoid too many deaths during such rebellions."[9]

[1] Germany Trade and Invest: Swot-Analyse Äthiopien. www.gtai.de 16.12.2016.
[2], [3], [4] Germany Trade and Invest: Wirtschaftsausblick Winter 2016/17 Äthiopien. www.gtai.de 15.12.2016.
[5] Verbessertes Migrationsmanagement. www.giz.de.
[6], [7] African Business Magazine: Ethiopian withdrawal poses question for future of Somalia. africanbusinessmagazine.com 20.04.2017.
[8] Das Kernseminar für Sicherheitspolitik 2017. www.baks.bund.de.
[9] Merkel ruft Afrika zurgegen Terror, Flucht und Vertreibung auf. www.welt.de 11.10.2016.