Boosting Ethiopia’s economic growth with building boom

12 March 2014

Above Addis Ababa’s concrete skyline, cranes tower high amid blasts from nearby drills and diggers. At the feet of buildings shrouded in bamboo scaffolding, excavators dig up dirt tracks, to be replaced by paved roads and a modern railway.

It is a scene common to most neighbourhoods in the Ethiopian capital, which has turned into a giant building zone and a city in transformation.
Addis Ababa’s construction boom — funded both from private and public coffers — is being driven by the country’s recent rapid economic growth.
The public works projects, worth billions of dollars, include new roads, railways and massive power generation schemes across the country.

Development promises to boost Ethiopia’s economic growth, officially 9.7% last year, though the IMF pegs it at closer to 7%.

“The basic engine blocks of economic transformation are the infrastructure,” said Zemedeneh Negatu, managing partner and Ernst & Young in Ethiopia.
“The Achilles heel of Africa is power, lack of power, lack of road networks, lack of the basic needs that you need to transform your economy.”

The majority of the new buildings are hotels, apartments and offices. Most are being built by Ethiopian-owned construction firms, though foreign-owned contractors from China or Turkey are cashing in too.

The big push in the sector is driven by the need to create jobs for Ethiopia’s 91 million people, about one in four of whom is unemployed.

Zemedeneh is confident Ethiopia will continue to attract investors from abroad who witness the country’s growth for themselves and said he only expects the city’s transformation to continue.

“The bottom line is you will not recognise Addis if you come 10 years from now, it will be a completely, completely different city,” he said.

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