Eight Business benefits of resuming economic relations between Ethiopia and
Eritrea - By Tony Carroll
Posted on January 30,
2014<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/>
by
AfricanArgumentsEditor<http://africanarguments.org/author/africanargumentseditor/>
Ethiopia and Eritrea ceased business relations upon the commencement of the
border war in 1998. While a small amount of barter trade still exists, it
is fair to say that trade relations between the two countries are
non-existent - this is very much to the detriment of the private sectors in
both countries (and across the region).
Since the closure of the border, the economic fortunes of Ethiopia and
Eritrea could hardly have been more divergent. While both remain poor
countries in terms of per capita wealth, Ethiopia has been among the
fastest and growing countries in the world averaging a steady 10% per annum
growth for the past nine years. Conversely, as per the chart below, Eritrea
has suffered vast fluctuations in its economic growth from a low of - 9% in
2008 to the 2012 level of + 7.5%.
*GDP Growth over the years ("Eritrea Country Report."
<http://www.gfmag.com/gdp-data-country-reports/277-eritrea-gdp-country-report.html>
Global
Finance).*
*Year**Real GDP Growth in Percentage*20018.8200232003-2.720041.520052.62006
-120071.42008-9.820093.920102.220118.720127.5
Ethiopia has also been a leader in Africa in terms of infrastructure
development, especially in the construction of roads, power infrastructure
and water supply. Eritrea has endeavoured to rebuild its transportation
infrastructure after the border war but progress has been slowed by
inaccessibility of finance. In terms of education, Ethiopia has built
dozens of institutions of higher education in the past 10 years and has
begun to develop a work force that is increasingly in demand by
manufacturers from Turkey, China and India. Despite promising signs of self
reliance immediately after Independence, Eritrea continues to find its work
force diminished due to emigration and military service.
Last, Ethiopia is rapidly modernizing its domestic and export agriculture
whereas as Eritrea still relies on subsistence methods of production -
albeit while eschewing food aid.
As a business consultant who has worked on investment in both countries, I
am confident that a comprehensive settlement of disputes that underlie the
1998-2000 border war and normalization of economic relations will create
myriad benefits, including:
1. Increase in road, rail and port infrastructure in Eritrea. With
assistance from the Chinese, Ethiopia has expended billions on building its
transportation corridor to Djibouti. However, for many regions in Ethiopia,
Eritrean ports are closer.
1. Increase in power infrastructure and opening of export markets. By
combining their respective sources of power, hydroelectric, wind and
geothermal, Eritrean and Ethiopian consumers would benefit from lower costs
and greater reliability of supply.
1. Reduced power and transport costs would increase manufacturing
investment in both Ethiopia and Eritrea. Although Ethiopia remains one of
the world's most expensive countries in terms of road transportation costs,
there have been a swath of new manufacturing ventures in textiles, apparel
and leather goods, driven by low labour costs and increased skill training.
1. With its port access, Eritrea could also become a manufacturing hub,
perhaps even adding strategic value to raw or semi-processed materials
coming from Ethiopia.
1. Renewed access to the US market under the Africa Growth and
Opportunity Act (AGOA). In 2004, Eritrea was deemed ineligible for market
access benefits offered and while the impact was minimal at the time,
Ethiopia has been able to substantially grow its exports to the US in the
past five years. The normalization of political and economic relations with
its neighbour would not in itself restore AGOA eligibility, but it would
demonstrate progress toward that end.
1. Increased convertibility of currencies. Normalization of economic
relations would allow the establishment of banking relations, now
non-existent between the two countries. The Nakfa is among the world's
least convertible currencies and an open and transparent exchange with the
Ethiopian birr could lower transaction costs for all businesses and
consumers.
1. Return of the commercial sector. As a result of the border war,
Ethiopian businesses were expelled from Eritrea and vice versa. This bar
has constrained companies from both countries to achieve scale. Moreover,
among the most dynamic business communities in Ethiopia for generations
were those of Eritrean origin.
1. Fostering regional integration. Africa is striving to integrate its
markets and Ethiopia has been leading in this process by establishing
agreements with its neighbours for power and transportation corridors.
There has been speculation that Ethiopia seeks membership of the East
Africa Community. EAC membership would also provide benefits to Eritrea.
As reported by my friends Ambassadors Cohen, Shinn and
Lyman<http://africanarguments.org/country/eritrea/>,
this appears to be a moment of inflection in the relationship between
Eritrea and Ethiopia. Certainly the implementation of the border agreement
and the resumption of commercial relations will not be an easy process.
However, the economic benefits that would accrue to both countries could be
substantial and should motivate leadership in both to expedite the process.
*Tony Carroll is Vice President of Manchester Trade and Director of Acorus
Capital.*
If you enjoyed this post, please consider leaving a
comment<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/#comments>
or subscribing to the RSS feed <http://africanarguments.org/feed/> to have
future articles delivered to your feed reader.
This entry was posted in African Politics
Now<http://africanarguments.org/category/politics-now/>.
Bookmark the
permalink<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/>
.
9 thoughts on "Eight Business benefits of resuming economic relations
between Ethiopia and Eritrea - By Tony Carroll"
1. Haki Fitewu says:
January 30, 2014 at 12:46
pm<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/#comment-33484>
Simply Hilarious, the title of the article should of been, 'look at
ethiopia, the fastest growing economy & Eritrea the slowest growing
economy', looks like your talking on behalf of the ethiopian government.
No matter how many lobbyist the ethiopian government hires, to paint a
bleak image of Eritrea, it will never change the Truth & Reality on the
ground. In this day an age, where information is readily available, you can
not just simply lie, and expect to getaway with it, as you lose crediblity
once the Truth has been told.
Of course, your intention is to hide and down play the success of
Eritrea, who is infact the one of the fastest growing economy of the world,
despite the fact that Eritrea has been illegally sanctioned and it's
territories occupied, where as aid addicted ethiopia, with the billions of
dollars in aid it receives, is still one of the most poorest in the world.
So it's quite hilarious to see someone comparing the Self-reliant
Eritrea, with the aid addict ethiopia, and tries to make it look like
ethiopia is doing better, simply hilarious:-)
2. Erey says:
January 30, 2014 at 1:59
pm<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/#comment-33487>
This is simply a cheer leading for Ethiopia
The way you presented it, it looks like Ethiopia is all set as it is and
any relationship with Eritrea would not add any value.
So, why bother?
Your attempt to present the grimmest picture of Eritrea, is so apparent,
so much so that any one can read the pain you are feeling because some
previous a ambassadors are talking about positive things about that part of
out world
Simply pathetic
3. Erey says:
January 30, 2014 at 2:07
pm<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/#comment-33489>
The question any one could not help but ask is: if Ethiopia is doing all
the progress you and your likes love to preach, and is doing fine with out
the whole Eritrea, then why in Gods name is Ethiopia holding a small
Eritrean sovereign land, going to the extent of violating international
law? What is the benefit in doing that?
And why in Gods name are you people cheering for injustice?
4. observer says:
January 30, 2014 at 4:45
pm<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/#comment-33498>
@ Ayte Haki.
Now we know who is really barking like "Beverly Hills Chihuahua".
http://en.wikipedia.org/wiki/Beverly_Hills_Chihuahua
ha ha ha ha . . . .
5. Haki Fitewu says:
January 30, 2014 at 5:34
pm<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/#comment-33500>
@observer
Did they let you out of the psychiatric ward or something, this is not
'dogsarguments', it's 'africanarguments', so please go to the dog's forums
& go bark there.
6. Addis Alem says:
January 30, 2014 at 7:41
pm<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/#comment-33505>
Our esteemed editor seem to have noticed that the majority of the
comments appearing in this forum are mostly that of cadres defending the
lunatic in Asmara and his greedy generals, so he sets out to lure more of
them to make his site appear more vibrant than it actually is; the result
is nothing more than a feast of nonsensical garbage for his targeted
audience!
He claims to have worked as a business consultant both in Addis and
Asmara? Yeah yeah, we are supposed to believe that there are such moronic
"investors" who would pay him for shamelessly lobbying for these Asmara
greedy generals. The only "investors" who would pay for your service are
the greedy Asmara generals you are lobbying for WITHOUT WIT OR SHAME!
I can't say whether this rubbish is more annoying than it is disgusting.
This guy dare tell us that "Asmara could become manufacturing hub, perhaps
even adding strategic values to raw to semi-processed materials coming from
Ethiopia."
Now, can you please tell us why in the world Addis would send its raw
materials to Asmara so that value can be added to it??? Why would we do
that when our precious brothers and sisters are leaving the country in
droves in search of a job?? Is that because Asmara has a larger population
than Addis? My God, STUPID doesn't even begin to describe the rubbish this
guy wants to spit on us!
" The most dynamic business communities in Ethiopia for generations were
those of Asmara origin." I hail from the Gurage ethnic group okay, so shut
up! Don't freaking tell us to let them exploit the business community they
no longer wanted to be a part of if they cannot exploit it! We don't care
how much they paid you, be it in money or in kind, don't you ever dare tell
us that they can have it both way!
We lost precious brothers in the border war those greedy Asmara generals
imposed on us, but we didn't let the sacrifice of the war to go to waste,
and put an end to the exploitation of our resources in the name of FALSE
BROTHERHOOD! Forget little barren Bademe, this is our greatest victory of
the war, and nobody can take it away from us!!!!!!
Thanks but no thanks, we are more than qualified, and blessed with
abundant population, to add value to our own raw materials, while creating
jobs at home and protecting our precious brothers and sisters from those
sadist Arabs.
So our response to your rubbish that is devoid of any wit or shame is:
GET LOST!!!!
7. observer says:
January 30, 2014 at 8:52
pm<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/#comment-33509>
@Addis Alem.
Spot on! If Gujarati's are for India, then Gurage's are to Ethiopia. I
do not know when and where those folks (Eritreans) became the 'most dynamic
business communities' in Ethiopia - they probably owned some left-over
Italian Pastries. But the author's overall impression is indeed laughable!!!
Ethiopia providing raw materials so Eritrea can process and add value is
a dangerous economics! I do not know what the author is smoking - but that
thinking from Eritrean side is indeed one reason for the brutal conflict!
It will never happen!!! Eritrea can process its own raw materials, if it
has any! Ethiopia has its own industries, sufficient enough to add values
to its own raw materials. Eritrea can only serve as a port - that's all
there is to it! Tigray region of Ethiopia alone has a lot more industries
than Eritrea at this point! Eritrea is still mesmerizing about the old beer
and shoe factories Mussolini built half a century ago! Let them live in
their nostalgia!!!
8. Addis Alem says:
January 30, 2014 at 10:23
pm<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/#comment-33510>
Observer,
I am speaking from first hand experience here.
I remember staying in a hotel in the tourist town of Lalibella, watching
in aguish all these brand new Toyota Land Cruisers, every single one of
them brandishing the greedy Asmara License Plate Number! Imagine the cold
hard currency they were here to amass selling Ethiopian tourist
attractions, while we stood on the sidelines selling entry tickets for a
goddamn miserable 30 Ethiopian birr!
Remember how Asmara at one point exported more Ethiopian coffee than
Ethiopia itself? How about Ethiopian leather? How about the electronic
shops that had to close in Addis because they just couldn't compete with
the greedy Asmara dudes who flooded the market with "smart products with
smart price"?
Of course what the Asmara greedy generals and their lobby mean by
economic cooperation is the same old blatant economic exploitation! This is
exactly why they want to be independent; what they mean be independence is
the right to exploit Ethiopia.
As one bright Oromo brother told Meles to his face, this is not going to
work for Ethiopia! He told Meles this talk of colonization ... and
independence ... was a big lie! We never told them they can only go until the
six grade like true colonizers do!
It's all about greed, and more greed, and we are tired of it!
9. Addis Alem says:
January 30, 2014 at 10:51
pm<http://africanarguments.org/2014/01/30/eight-business-benefits-of-resuming-economic-relations-between-ethiopia-and-eritrea-by-tony-carroll/#comment-33513>
... anguish ...
--
You received this message because you are subscribed to the Google Groups
"South Sudan Info - The Kob" group.
To unsubscribe from this group and stop receiving emails from it, send an email
to [email protected].
To post to this group, send email to [email protected].
Visit this group at http://groups.google.com/group/SouthSudanKob.
To view this discussion on the web visit
https://groups.google.com/d/msgid/SouthSudanKob/CAJb14opsu6GA8DLBUOm_6vJ5XyJ4TSgik6pFkcw6PprQjHmexw%40mail.gmail.com.
For more options, visit https://groups.google.com/groups/opt_out.
