Ethiopia needs fourth industrial revolution

Ethiopia has an extremely long and extensive recorded history going back some thousands of years, however, economically remains one of the poorest. What is disturbing is even in 2018, there are millions of Ethiopians suffering from famine and there is no concrete plan to extricate the country from this nightmare.

Ethiopia in its current form has existed since 1991 when Meles Zenawi through his TPLF (Tigrean Peoples Liberation Front) guerrillas overran the country and ruled until his death in 2005. He is most remembered for facilitating the separation of Eritrea, the introduction of toxic ethnic-based federalism that gave an advantage to his own tribe, and blocking access to the Internet.

On April 2nd, 2018 Dr. Abiy Ahmed Ali became prime minister, after the resignation of Haile Mariam Desalegn. His election is widely seen as positive and an opportunity to unite Ethiopia and address the wrongs of the past and improve the economic conditions for the extremely poor population of about 100 million.

The election of Abiy Ahmed may have saved Ethiopia from further bloodshed and disintegration; however, his chance of transforming the economic backwardness of Ethiopia, a legacy of poor governance from yesteryears, remains immensely difficult.

In 1996, in memory of the late Congressman Mikey Leland, who died on a hunger mission in Ethiopia, the U.S. Congress allocated $12 million dollars to put a broadband Internet in all universities and high schools in Ethiopia in order jump start Ethiopia’s famine-stricken society to a technology-driven economy. In the dawn of the Internet in 1990′s, Ethiopia had the chance to leapfrog many nations and become a leading technology juggernaut in the likes of S. Korea, China, Singapore, and others.

However, Prime Minister Meles Zenawi blocked the grant because it stipulated open access and competitive bidding for the installation of the network. He was primarily afraid of social media to mobilize the masses against his authoritarian rule. This shortsighted greed resulted in the loss of the possibility of incredible advancement and incalculable damage was done to the economy.

Current Position

In Ethiopia, many children are stunted physically and intellectually because of malnutrition. While TPLF was able to improve infrastructure, its toxic ethnic policy restricted the free flow of trade and exacerbated the economic divide and created mass misery.

To grow the economy, the current government is promoting manufacturing by inviting companies from China, Turkey, India, and others by enticing them with low wages and tax breaks. Dr. Abiy should prioritize direct foreign investment in high technology transfer jobs rather than low-wage manufacturing.

The normal trajectory of moving from agriculture to manufacturing is no more an option for Ethiopia. Because of TPLF’s fear of social media and denial of access to technology, Ethiopia failed to enjoy the full benefit of the digital revolution. Given this failure, Ethiopia has no time to go through these stages and catch up with the rest of the world technologically and economically. Jumping to the Fourth Industrial Revolution will accelerate its economic and technological development, save it from future famine, ecological damage emanating from manufacturing, and massive economic disruption that arises in the phase-out of manufacturing.

Manufacturing undertaken by Chinese and other companies will not save Ethiopia from its permanent third-rated status or fill empty stomachs. Huajian is one of the most celebrated Chinese Company with over 5000 employees. According to AP “Amazing China” (May 2, 2018), Ebissa Gari, a 22-year-old employee of Huajian, earns 966 Birr ($35) a month. The average worker at Huajian factory earns $50 a month. According to Kuwait Institute for Scientific Research, a basic living wage is about 3000 Birr or ($109) a month in Ethiopia.

Opportunities

In order to catch up with the rest of the world, Ethiopia needs to take a leap to the fourth Industrial Revolution that focuses on robotics, artificial intelligence (AI), nanotechnology, the blockchain, biotechnology, the Internet of Things, autonomous vehicles, and 3D-printing, while not totally discounting manufacturing. The government should prioritize the introduction of Fourth Industrial Revolution by opening up Internet access, broadband, and Research and Development in these areas.

The increased productivity, efficiency, lower operating costs and high wages are a product of access to technology. The Heritage Foundation, recently reported that economic growth had not been enjoyed evenly by all Ethiopians and it argued that more economic freedom is needed to grow the economy and to reduce civil strife.

Ethiopia is a very poor country by any standard and sits at the bottom of the ladder in all barometers. Many articles have been written with glowing statistics about Ethiopia’s fast-growing economy around 10%. In 1994, Ethiopia’s GDP was only $6.93 Billion; however, as of 2015, Ethiopia GDP stood at $72.4 Billion, a ten-fold increase according to TPLF data. This means GDP doubled every two years in the last two decades. Still, GDP of $72.4 Billion for a country of 100 million is not very impressive compared to $72.6 billion Apple Inc. earned before taxes in 2015.

The Future

Given the state of economy and technology, Ethiopia is at the pre-industrial stage where Britain was in 1840’s. Unless Ethiopia skips some steps, it will need hundreds (100) of years to catch up. Of course, this assumes the rest of the world will stand still and wait for Ethiopia. For example, at a reasonable growth rate of 5%, Ethiopia will need 177 years to catch up with the U.S. growing at an average of 2.5% holding everything constant. At a 10% rate 60.5 years. The calculation is derived using a per capita of $50,000 for the U.S and $700 for Ethiopia.

The technology revolution is taking place at a breakneck speed lead by Artificial intelligence, Internet of things, the cloud, and 3D-printing. Ethiopians need to demand unfettered access to technology and the Internet as a right for their survival and to avoid future famines.

Dr. Abiy needs to leapfrog Ethiopia to the fourth Industrial Revolution, stop Internet censorship, and unleash innovation to create a better future for Ethiopia. If he does not leverage the technology revolution, grow the economy with open competition, transparency, with respect to property rights, unfettered access to technology and the Internet, he will leave Ethiopia with a distressed economy and with more hungry and angry people.

Leveraging technology underpinning the Fourth Industrial Revolution will create a strong and sustainable economic foundation. The people who generate the wealth (the next Apple, Google, etc.), the carpenters, the risk takers and inventors should be marveled as much or more than idle politicians and theologians and others as in the past. After all, it will be the efforts of all hard working and creative Ethiopians with a strong work ethics that will propel Ethiopia to be an economic and technological juggernaut.

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