SIGNATURE PROJECT: THE ETHIOPIAN DIASPORA BUSINESS CENTER (DBC)
The
Ethiopian Diaspora Business Center is a project that is currently in
its formative stages. When established in six months time, the Center will help to unleash the significant potential that exists within the
Ethiopian Diaspora for increased investment and trade by helping to remove
constraints, sharing valuable investment information, and providing direct
investment/export facilitation assistance.
If
you are a member of the Ethiopian Diaspora, please help us understand
your needs by filling out the following online servey. (http://www.surveymonkey.com/s.aspx?sm=Tb5XQZZeAogvOJeELH0zQA_3d_3d)
Also
read the following article we published on the Ethiopian American
Online Magazine about the greater concept of "The Potential of Greater
Ethiopia: A Nation Without Borders"
http://theethiopianamerican.com/read.php?article=0&module=business
The Potential of Greater Ethiopia:A Nation Beyond Borders.
The Rise of a Globally Interconnected Ethiopian Entity and the Promise it Holds for Development
By Joshua Yau and Henok Assefa,
Precise Consult International (www.PreciseConsultInternational.com)
Within the space of the past 35 years, Ethiopians have spread across
the globe and some 1-2 million of them now call North America, Western
Europe, The Middle East, and parts of East and Southern Africa home.
Over the same period, this Ethiopian Diaspora has grown in financial
and technical capacity and managed to largely integrate themselves into
their adopted countries. All the while, they have continuously harbored
a longing to either return home or at least help their families and
friends who have not been so fortunate to escape the quagmire of
poverty and civil war. As we approach the third Ethiopian Millennium,
the world in which Ethiopia and Ethiopians reside has changed in
fundamental way to make just this possible.
Advances in communications technology have made it possible for the
Ethiopian Diaspora to keep connected to each other across the globe and
indeed to friends and family back home. Voice over IP (VOIP)
technology, cheap phone cards, web aggregators, blogs, and sites such
as YouTube, Google, and Yahoo Groups! are helping to create a ‘virtual
Ethiopia’. In fact, what is beginning to emerge is a new Ethiopian
entity, a Greater Ethiopia, beyond the legally recognizable physical
borders spanning the entire globe. Combined with the end of civil war,
better investment environment, and a booming economy back home, there
exists today a potentially large win-win arrangement in which
Ethiopians the world over can all benefit economically.
Defining the “Other Half” Economically
The International Monetary Fund reckons that Ethiopians in the Diaspora
sent home USD 800 million in 2005 . This figure roughly doubles if
money transferred through unofficial channels, such as in person or
mail deliveries are included. These cash transfers alone may equal
around 10 – 20% of Ethiopia’s USD 13 billion GDP. The potential for
growth is even brighter. If Diaspora Ethiopians were to send no more
than a tenth of their total annual income home, it is conceivable that
the net value of their remittance may equal Ethiopia’s Gross National
Product (GNP) .
The Ethiopian Diaspora’s economic strength is just one of its potential
benefits to the country. Other major strengths of the Diaspora include
a vast pool of trained human capital. An International Organization for
Migration (IOM) report estimated that Ethiopia lost 75% of its human
capital – including a third of its doctors – from emigration between
1980 and 1991 . The loss in business management and other technical
skills are likely at least as severe.
People who move to developed societies also tend to acquire other
intangible skills. The bulk of the post-1974 émigrés now have had more
than 20 years to get acquainted with Western management styles,
business discipline, and technology. Someone who worked for a
multinational corporation understands the importance of attending
meetings on time and answering back to clients promptly. An IT manager
in an industrial country has seen how Internet can speed transactions
and enhance promotions – not to mention knows how to manage a
multi-team project. A simple visit to Starbucks reveals what customer
service can do to a business – and what it looks like. Moreover, the
Ethiopian-Americans, -British, -Dubaians know what the customers in
these markets desire and how they do business. Some perhaps even have
connections and influences. These are all skills and know-hows severely
needed and lacking in Ethiopia.
The “Other Half” as Agents of Change at Home
Members of the Diaspora are among the most powerful, capable and
focused development agents for Ethiopia. The macro view of the
Diaspora’s power only partly conveys the influence they can each exert
individually. In fact, the Ethiopian Diaspora returnees represent a
reverse side of the brain drain. The difference in living standards and
technology, a little money and know-how from the developed world goes a
long way back home.
Interviews conducted with recently returned expatriates shows the
promise of the Diaspora community. A returned Canadian Ethiopian who
worked in hotel management for the Hilton for more than a decade and
wanted to come back to contribute to the country’s development put it
this way:
“If we don’t come back and face the hardship [of development] here, who
is going to come?” he told himself. He added “if I can create just one
job, that is contribution.”
After many years of, sometimes admittedly difficult, trials and errors,
he now employs 55. These 55 employees probably support several hundred
people in turn.
In another example, an Ethiopian American who works for a garment
distributor, with the help of USAID’s AGOA project, successfully placed
a USD 1 million garment export order. This large garment order possibly
will increase the country’s total non-agricultural export by up to 5% ,
single-handedly. With several more millions orders likely to come in
the future from this Diaspora buyer, the potential for expanding export
in this sector is bright. It is tough to imagine where else this type
of impact can be achieved.
Then there is the progress in business savvy brought by the Diaspora.
Arguably already the best known international business to come out of
Ethiopia, Ethiopian Airlines has been flying even higher since the
arrival of CEO Ato Girma Wake, once a member of the Diaspora. Since his
takeover, Ato Girma has emphasized the state owned airliner’s
modernization efforts on customer service and global competitiveness.
Ethiopian Airlines is currently projected to earn USD 1 billion and
reach about 50 international destinations by 2010, a phenomenal feat
for a country currently marginalized in every measure of world trade.
But the business savvy is also starting to reach smaller investments as
well. Recently, when a cup of coffee took too long to come at a
recently opened trendy Café establishment in Addis started by an
ex-Diaspora, the on-duty manager walked out, apologized, and offered
the customer to have it for free. This unfamiliar level of customer
service has deeply surprised many Ethiopians. There are more examples
than this page can hold.
The Home as an Opportunity for the “Other Half”
An expatriate’s involvement in Ethiopia’s economy is beneficial to both
the expatriate and the country. Many argue that Ethiopia is now a great
place to do business. GDP has been growing by double-digits for three
consecutive years. Various business environment indicators score well
above Africa’s average. A national Industrial Development Plan has been
passed, outlining export-oriented strategies for sectors such as
coffee, leather and flower, whose exports grows at more than 200% per
annum. The government has put many incentives in place, including a
loan guarantee for 70% of the capital requirement for an investment on
‘priority sectors’. International organizations and IT professionals
continue to sprawl into Addis Ababa, creating demands for high-scale
services as well as capacity for niche high-value technical businesses.
A day’s tour around Addis Ababa will reveal as many buildings in
construction as established buildings.
The returned entrepreneur mentioned above heard news that the
government was trying to induce investment, and came back to test the
environment as a tourist for two weeks. To his surprise, he found that
the government agencies were inviting. He was able to get direct access
to the needed people at the Investment Agency and other secretaries
with no prior connection. The incentives were hard to refuse. Land was
offered at 70 cents per square meters, “which is like free”, he said.
“You might not get things done in the way you do in the US, but have to
understand Ethiopia and America are not the same,” he conceded. “Yet,
the business opportunities are here. As long as you learn how to
navigate the bureaucracy, the private environment is very
advantageous.” After an attempt at building a hotel consultancy failed
since the local hotels were not ready to embrace professional practices
yet, he quickly moved on to other entrepreneurial opportunities.
Today, he owns a fiber glass manufacturing shop and a fish processing
plant in joint venture with Italian partners. When asked about the
difference in his living standards between now and the day when he was
Operating Manager of The Hilton Hotel in Toronto, he replied, “Oh,
there is no comparison. Much higher. It is much higher now. It’s got to
be when I am employing 55 people.”
Moreover, the superior management and technological know-how that the
Diaspora possesses, as discussed above, give them an unique competitive
advantage in this environment to make profits out of opportunities.
Spend a few months in country and it is not hard to see that many of
the most successful businesses are started and run by people who had
first-hand foreign exposure. As the economy steers itself for
export-driven growth, the new business leaders will need to understand
what foreign customers demand; the ones with established contacts with
foreign buyers will excel even more.
Where Do I Put My Money?
The Ethiopian Diaspora wants to invest back in their homeland. Unlike
other Diaspora groups, such as the Armenians, who are typically
second-or-more generations removed, the Ethiopian Diaspora is made up
of almost entirely first generation and still maintains fresh and
emotional links to their country. Most expatriates we interviewed so
far expressed strong desire to come back and do business in Ethiopia at
some point soon. Of those who returned, none of them regretted their
decision to return home.
But many of the people we interviewed said they do not know where to
put their money. What sectors are growing, which geographical areas are
best to put in a factory, whom to trust, and how does one determine
these things? We have talked to several people who have accumulated
more than USD 100,000 in investable assets, would like to invest in
Ethiopia, but do not know where to start. Worse, there are some that
are turned off by Ethiopia’s regulatory obstacles. A prospective
Diaspora returnee we talked to expressed his desire to invest and be a
part of the country’s development. But, due to the burdensome
regulatory structure and weak telecommunication infrastructure, he was
forced to divert his invest to Kenya and South Africa instead.
Putting it all Together: A One Stop Shop for the Diaspora
In the absence of a well developed integrated scheme to lure the global
Diaspora into the Ethiopian economy in a productive way, the current
level of involvement is only indicative of the immense potential the
Diaspora holds for development. Taken together, through remittances,
direct investments, and increased export opportunities, it is not hard
to see the significant role the Ethiopian Diaspora is already playing
in earning foreign currency and job creation into the Ethiopian
economy. In fact, the Diaspora can be much more important for Ethiopia,
even more so than foreign direct investment and development assistance.
But how to translate this potential into results is a key challenge.
While economic performance and third-party assessments suggest that the
overall business environment is changing for the better (World Bank’s
most recent Investment Climate Survey found that most areas of
regulations have significantly improved), bureaucracy and regulatory
transparency often take a long time to fix. More immediate stop-gap
solution will reap a large benefit.
The authors of this paper argue that what’s needed is a one-stop shop
for the Diaspora focusing exclusively on business related services. We
are working on a project and work plan to establish a Center that will
facilitate all investment and trade needs of the Diaspora. The Center
(and its website) will provide comprehensive and easy-to-understand
information on all aspects of business regulations. It will also have
database on which investment opportunities and suppliers are reliable
and high-performing (tested by various due diligence processes), and
trained agents to handle specific inquiries from interested investors.
Finally, it aims to form special relationships with government agencies
to allow it to facilitate and ‘fastrack’ permitting and land access
processes. It can also arrange meetings and help ‘follow up’ with
potential local partners. (Please see the end of this article for more
information about how you can get involved and contribute*).
The Greater Ethiopia Concept and Its Policy Implications
As argued earlier, the GDP of Ethiopians living abroad is now at least
as large as the one within Ethiopia’s geographic borders. These facts
and trends are inevitably changing the way we think about and define
the Ethiopian economy. Discussions around a development policy
therefore must now start to include the “other half of the Ethiopian
economy” and how to integrate it for better value addition system-wide.
Such an approach can help to increase incomes for Ethiopians the world
over.
In the areas of direct investment and trade development, national and
donor policy makers should pay a lot more attention to the potential
and promises of the Diaspora as a development force. Today the Diaspora
is treated more or less on equal ground as other foreign investors and
importers. But we believe they are a lot more important. No export
strategy, sector planning, or linkage building should be done without
considering the Diaspora at the forefront. Just as the government put
in economic, preferential incentives for priority sectors, it can
equally view Diaspora as a sector with strong natural endowment, and
put in preferential incentives to facilitate their impacts to the
economy. This would imply, for examples, preferential economic
incentives, dedicated government agencies and access process, and
tailored supporting services, such as access to finances and legal
money-pooling mechanism for shared companies. And this could be even
more productive if an offer of dual citizenship is considered along the
lines of what the Indian government is doing to integrate its sizable
global Diaspora into its economy ‘within borders’. These seemingly
drastic steps are not superfluous considering the developmental impacts
that the Diaspora has demonstrated for the country.
Members of the Diaspora want to invest back because they care about the
country’s development, and because they want to make profits. So they
should. We are at a point in the country’s development that the two
objectives coincide. Ethiopia will only be better off if they continue
to do so. The government should consider the potential of the Diaspora
in economic terms separately from their stands on political terms. The
Diaspora should, at least, as our succeeded hotelier-turned-plant-owner
advocated, “come, and see the country for yourself. Come and see
whether it is like what you heard. You will never regret it.”