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July 2, 2013

Economic Transformation in Ethiopia and the Role of JICA
–Kimiaki Jin, Chief Representative, JICA Ethiopia Office–

PhotoKimiaki Jin, Chief Representative, JICA Ethiopia Office

By Kimiaki Jin
Chief Representative, JICA Ethiopia Office

With green highlands, rift valleys and desert, Ethiopia encompasses a wide range of topography. The country also has the ancient history of a kingdom founded in the fifth century BC and has developed a unique Christian culture. With a land area three times as large as that of Japan, the country has a wide range of cultures with more than 80 ethnic groups. Tilling the soil, the people have long maintained their traditions, and the country has remained independent from the influence of the countries of Europe. Today, economic indexes indicate that the country is poor, and there are regions that are still at risk for famine. Traditional social systems and the natural environment have a complex relationship, and it seems that change had been rejected in the past.

However, Ethiopian society is clearly changing today. Over the nine years from 2004 to 2012, the economy grew an average of about 11 percent per year, and the construction boom is turning towns upside-down everywhere. The poverty rate has dropped from 38.7 percent in 2004 to 29.6 percent in 2011. Inflation is high, an average of 29.6 percent between 2005 and 2010. Furthermore, the lives of the people are undergoing changes. I would like to analyze how JICA should be involved in those changes.

Farm Management and Reducing Poverty

PhotoThe Quality Seed Promotion Project for Smallholder Farmers provides assistance so farmers can themselves increase their production of superior seeds.

Out of the population of 84 million people, 80 percent of Ethiopians make their living from farming. The population density is high, with each household living on an average of less than one hectare of farmland. Land productivity is low, and forest resources have been mostly lost over the country's long history. As agriculture depends on rainwater, farmers suffer when the periodic droughts come. In the middle of the 1980s, the country experienced a severe famine, and since then, food aid has been provided continuously from abroad. In recent years, a cash transfer system has been introduced on a large scale to provide cash to the poor in rural areas instead of food. Farmers suffering from drought then purchase grain from farmers with surplus production, creating a new safety net for the country that aims for food self-sufficiency.

Since the year 2000, Japan has provided cooperation with a focus on agriculture. To solve the vulnerability caused by rainfall dependence, Japan has provided assistance to spread the use of agricultural irrigation, and assistance for farmer research groups to locally develop and spread useful agricultural techniques. Farmers are increasing their production of improved seeds and spreading their use. Through the One Village One Product program[1], farmers are also diversifying their sources of income to include processed agricultural products, handicrafts and more. Japan's cooperation aims to enhance the technical level of farmers, increase land productivity and improve the living standard. The challenge is to scale up the activities to produce a more definitive impact, so that more remote farmers can also benefit.

With such activities alone, however, there is no prognosis for a wonderful future. Farmers cannot make a living on their small plots of land unless they engage in intensive, high-productivity farming. In areas with poor market access, conditions are even worse. To improve the production level so as to absorb the population increase of 2.1 percent and eliminate poverty is a herculean task. It is said that some must therefore give up farming for other occupations. But where will they go?

A Shift from Construction to Manufacturing

PhotoA shoe factory where productivity has been improved by introducing kaizen techniques.

One of the driving forces behind economic growth in recent years has been the construction industry. In the capital of Addis Ababa, road construction is moving forward, and old single-story buildings are giving way to multi-story buildings. The construction industry is creating employment for the time being, and also producing urban activity and chaos. In the past two years, the urban unemployment rate has dropped from 18.9 to 17.5 percent. The government is proactively building infrastructure, which is increasing the flow of funds. However, if industry is not fostered so that the new infrastructure is effectively put to use, a situation of overinvestment will result, and economic growth will not be sustainable. To create a constant flow of employment opportunities, industry and manufacturing, which have the capacity to absorb workers, must be expanded, along with the service sector, which already accounts for 45 percent of the GDP. So of the industry and manufacturing that accounts for 13 percent of Ethiopia's GDP, what sort of industries can be expected?

In general, textiles is an industry that is relatively predominant in less industrialized countries. Requiring a low-cost labor force, textiles is at the top of the list for expected development in the five-year "Growth and Transformation Plan" of the Government of Ethiopia that is running from 2010 to 2015. In Ethiopia, however, further expansion of the textile industry to account for a larger share of the GDP is unfortunately not likely at this point in time. In these circumstances, leather processing is being focused on as an industry of relative predominance that produces high-quality raw materials. The government, which had until now regulated the exports of raw materials, has adopted a strategy of enhancing the added value of products by exporting finished products such as shoes and bags. Expectations are also high for sugar and cement.

JICA's Kaizen Project has made contributions to these sorts of industrial developments. Applying the expertise in quality management and productivity improvement that Japanese business has developed, kaizen measures—and 5S[2] in particular—had been implemented in the factories of 30 companies through 2011, improving work productivity. Given this, the government established the Ethiopian Kaizen Institute, which is working to spread the kaizen philosophy to 265 small, medium-sized and large companies involved in manufacturing throughout the country by 2014. The issue is how to connect this to a change in behavior that takes root in the way Ethiopians live so the kaizen is not transitory.

Industrial Structural Reform and JICA's Role

The industrial structure of Africa is characterized by primary industry having a large labor population but low labor productivity, and tertiary industry with a large informal sector and low productivity. In comparison, the secondary industry is small, and there are many extractive industries that depend on oil and mineral deposition. Promoting manufacturing, which has the capacity to absorb workers, and expanding the proportion of secondary industry, are therefore issues currently shared by all countries in Africa. The Government of Ethiopia is working on industrial structural reforms appropriately named the Growth and Transformation Plan.

Poverty reduction through economic growth is a key policy of assistance to Africa that the Government of Japan has consistently held. Of course, this approach always carries the risk that economic growth will expand social disparity. That is why promoting a labor-intensive manufacturing industry and improving the productivity of agriculture will allow more people to participate in the process of economic growth and will lead to inclusive development. This focus on manufacturing is a Japanese development model that strives to correct the disparity between urban and rural areas, and is an approach that has yielded positive results in assistance to Asian countries. I want to build a development assistance model for Africa that will assist with the economic transformation of Ethiopia on both the agricultural development and economic promotion fronts.

About the Author

Kimiaki Jin

Born in 1961 and raised in Ebetsu, Hokkaido, Jin joined the Japan International Cooperation Agency (JICA) in 1986. He served in the Training Affairs Department, the Agriculture, Forestry & Fisheries Development Study Department, Africa Department and the JICA UK Office, and also was seconded to the then Environmental Agency. Following work in Ethiopia from 1990 to 1993 and 2003 to 2006, Jin has been in his third posting there since March.

In conjunction with TICAD V, this series is focusing on Africa, including development issues, new project trends and analyzing existing aid.


  • [1] The One Village One Product (OVOP) Programme is a community-centered and demand-driven regional economic development approach initiated by Oita prefecture in Japan in the 1970s.The uniqueness of the approach is that at that time people in Oita intended to achieve their regional economic development through adding value to locally available resources, through processing, quality control, packaging design and marketing promotion.
  • [2] 5S is a bottom-up technique employed by Japanese businesses to engage everyone in continuously improving the workplace. The five S-words may be translated into English as: sort, set, shine, standardize and sustain.


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