Ethiopia was the first stop of a four-nation President’s Advisory Council on Doing Business in Africa (PAC-DBIA) fact-finding trip to Africa led by U.S. Under Secretary of Commerce for International Trade Gilbert Kaplan.
The visit yielded new business deals for U.S. companies currently doing business in Ethiopia and laid the groundwork for new investment and trade opportunities for other firms in this critical market.
Under Secretary of Commerce for International Trade Gil Kaplan and the delegation met with senior government officials and industry leaders to discuss solutions to challenges and develop strategies to improve U.S.-Ethiopia commercial relations.
The visit was capped off with a new agreement between the U.S. and Ethiopian governments to support economic reforms to diversify Ethiopia’s economy and enhance its competitiveness to attract private investment and U.S. participation in key industry sectors.
Under Secretary Kaplan met with Minister Abraham Tekeste, Ethiopian Minister of Finance and Economic Cooperation and signed a Memorandum of Understanding aimed at promoting trade and reducing trade barriers.
The MOU provides a roadmap whereby the Government of Ethiopia will identify priority projects in key sectors that help Ethiopia achieve its priorities for growth and the United States will share that information with U.S. companies that could compete to supply solutions, materials, and expertise to fulfill those projects, as well as identify potential U.S. Government resources.
The MOU also establishes a forum for the two governments to address and look for ways of solving business climate issues to encourage greater participation by U.S. companies seeking to invest or do business in Ethiopia.
There are promising signs of economic change in Ethiopia. On June 5, Ethiopia announced plans to allow private investment in leading state-owned enterprises, including Ethiopian Airlines (EAL).
EAL is the fastest growing and most profitable airline in Africa, registering an average growth of 25 percent in the past seven years. Following a meeting with Under Secretary Kaplan and the delegation, Ethiopian Airlines Group – parent company of EAL – Chief Executive Officer Tewolde Gebre Marian announced a deal with General Electric to procure 12 General Electric engines valued at $444 million. In addition a separate $473.5 million 10-year maintenance contract was also signed.
Aviation is the top market in Ethiopia for U.S. companies, and the airline’s growth, with a new route to Chicago launched June 10, is creating new paths for the transfer of goods and travelers between the U.S. and Ethiopia.
A pair of procurement manuals announced during the visit will help Ethiopia improve its public procurement process, using life-cycle value analysis to ensure that Ethiopia can identify best-value opportunities and that all companies can compete on the basis of transparent rules and processes.
The Commercial Law Development Program created its new procurement handbook in light of Ethiopia’s new Public Private Partnership law, which recognizes the essential role of the private sector to support economic growth and improve the quality of public services in the market.
In addition, the U.S. Trade Development Agency capped its collaboration with the Ethiopian Electric Power (EEP) with the introduction of an EEP procurement manual for competitive tendering for power generation and transmission projects.
Several U.S companies announced new deals and agreements during the visit. In addition to General Electric:
- Honeywell International, Inc., of Morris Plains, New Jersey, announced a $10.2 million deal for the security system of the Bole Airport expansion, and a $7.2 million Auxiliary Power Unit service contract.
- TROY Group, Inc., from Wheeling, West Virginia, announced a preliminary agreement to provide the Vital Events Registration Agency of Ethiopia with 130 Secure UV printers, TROY’s SecureDocs Software and related licenses. The deal is valued at $750,000.
- BAK USA, from Buffalo, New York, recently won a tender, funded by the African Development Bank, for 4,000 tablet computers for Ethiopia’s Ministry of Water, Irrigation and Energy. The deal is valued at $2.1 million.
Other U.S. Government supported initiatives were also announced. During the visit, Ethiopian Airlines announced a training grant from the U.S. Trade Development Agency (USTDA). USTDA is partnering with the Sabre Corporation to provide an Airline Solutions Training Program Technical Assistance grant for Ethiopian Airlines Enterprise, which could leverage up to $21.2 million in financing to support the procurement of airline information technology solutions, consulting services, and industry best practices.
Under Secretary Kaplan also joined a signing of an MOU between Ethiopia’s Ministry of Water, Irrigation, and Electricity, which extends the Power Africa initiative in Ethiopia through the end of 2023 and commits to support efforts to increase power generation, expand distribution systems, and help Ethiopia open the doors for independent power producers to invest in growing the sector.
Under Secretary Kaplan, U.S. Ambassador to Ethiopia Michael Raynor, and members of the PAC-DBIA delegation all spoke to Ethiopian media, stressing the tremendous economic opportunities that exist in Ethiopia. They shared their optimism for Prime Minister Abiy’s economic reform efforts and stressed that the United States is a committed partner for Ethiopia’s economic development.
Ethiopia has the fifth-largest and fastest-growing economy in the Sub-Saharan Africa region, and has averaged more than 10 percent annual growth during the last decade.
Both the government of Ethiopia and the United States have a desire for foreign direct investment and a more diversified economic relationship between the two nations. This fact-finding visit is a solid step forward to ensuring a bright future.