If you look down from an airplane in the air, you can see innumerable apartment complexes in the capital Addis Ababa and its vicinity. They are lined up in the same shape and the same color. They are residences for low-income people constructed by the national government in order to avoid turning those people inflowing to the capital into slum dwellers. As those residences were built by a Chinese company, the layout looks like a city somewhere in China. A lot of parabolic antennas are installed at windows of those residences in a messy manner.
Addis Ababa has become a totally different city during the recent five years. It is obvious that foreign investments are flown into the country as the economy grows. While Russian shabby taxies are hanging around, we see also Toyota Vitzs and Land Cruisers. Along the road where we see people carrying goats and sheep, there are locally capitalized fancy coffee chain stores and hamburger shops just like Starbucks Coffee.
Smart phones are getting popular, the government has announced to introduce 4G, and we see apple logos posted at many places while the Apple computers are not yet sold. Construction works are all over, but we also find many buildings constructions are suspended in the middle due to financial shortage.Bypass roads are opened and short-distance trains run for commuting. Business persons from different countries have business meetings at the gorgeous Sheraton hotel.
Coffee chain store in Addis Ababa
The reason why I intensively visit Ethiopian factories these days is because Ethiopia has a potential to be a place to realize ‘overseas development through a shift of the production base’, which Japanese companies are good at. The number of Japanese firms in Ethiopia is still limited. Ethiopia is not yet well prepared as Asian countries to receive the production base shift. The productivity is low and the defect rate is high; it would take several years to improve them to an acceptable level. Ethiopia is not the destination that we can choose just by following the trend. However, unless we decide to invest now, Japanese firms will be lagging behind as we experienced in other Asian countries.
This year, an American private equity fund, KKR, invested US$ 200 million to a floriculture company in Ethiopia. The apparel company PVH, which produces and sells Calvin Klein and Tommy Hilfiger, is also expected to launch the production in Ethiopia. A couple of Japanese manufacturing firms are also under preparation of setting up the production base in Ethiopia. Direct flights of the Ethiopian Airlines to Japan will also enter into the service from this December. Now is the best timing to consider the investment.
