Ethiopia’s infrastructure spending, as a percentage of GDP, is the highest in Africa. The Ethiopian government rightfully makes the delivery of infrastructural services, such as transport and energy, a focus of its development plan. Absent the government’s current and continued focus on infrastructure, the development story of Ethiopia would hit a wall.
Heavy construction sectors, including cement and steel, are the ancillary beneficiaries of this infrastructure build. The national building lottery is undergoing expansion in Piassa. As you drive out of Addis, you pass newly built affordable government housing or private housing developments; both promptly filling up after the final touches are added. Pass through Bole and expect to encounter changing roadways, as one road finishes construction and another undergoes it. “I don’t know which road is open today,” says my taxi driver.
It is not just the government. All the buildings under construction in Addis are also a clear indication that those with money are investing in property.
Says Tsege, a local resident, “Walking around Addis is like walking through a major construction site.”
The prices of cement and steel remain high in Ethiopia and in Kenya and Tanzania, both of whom are potential export partners. Transportation and logistics still frustrate some companies, but such frustrations are eased by the government’s focus on transport, especially the rail corridor between Addis Ababa and the Port of Djibouti. Importing certain materials has confounded the industry, but the Ethiopian government expedites access to foreign currency for those exporting in these industries.
Energy costs are also one of the lowest on the continent. With the new hydro dams coming online over the next few years, the Ethiopian government will ensure cheap energy for its people and make Ethiopia a potential energy exporter for the region.
Interested in more opportunities for investment in Ethiopia? Next week’s piece will cover the top two sectors for investment.