This episode features a podcast with Simba Makoni of Silk Invest’s Private equity investment team. Simba spends much of his time in Ethiopia to focus on our local investment investment activities.
During the podcast, we will discuss not only the investor’s perspective on Ethiopia, but we’ll also highlight some of the things you may not know about this amazing country.
Listen to the Podcast
At the bottom of this article we also feature a short BBC documentary that we helped make a couple years ago. It provides an interesting perspective of what will possibly become one of Africa’s main growth engines.
We have been investing in Ethiopian private equity for some time now. What we especially find compelling is the B2C opportunity that will result from a rising society of millions of consumers. Our main focus there is on household food staples and our first investment in this space was to help NAS Foods, a leading local biscuits manufacturer, scale up it business in order to meet the rapidly expanding local demand.
Upon first visiting Addis Ababa, you will be in for a number of positive surprises. Don’t rush to judge the place by its airport because just like many of its peers around Africa, it needs an upgrade. The discovery experience starts when you take your first breath of Ethiopian air, you will quickly gasp for more a bit more because Addis (what insiders like to call it) is at an altitude of no less than 2,300 meters (7,500 feet).
If you land during the daytime, you’ll be amazed by how grassy and green the Addis landscape is and as soon as you step out of the airport terminal the you will notice a peculiar countryside aroma. Close your eyes and you could almost imagine you are somewhere in rural Ireland during a chilly spring evening, not in a country that you were made to believe was a desert with cracks in the dried up soil.
Ethiopia is mostly fertile! Just over 1/3 of Ethiopia’s territory is arable. The same goes for demographics. Ethiopia is the second most populous country in Africa. Combine these features and add some investment and we may be looking at one of the world’s future leading food producers. We discuss this in the podcast.
A New Reality
As we mentioned before, this all stands in stark contrast with all the images we saw on TV during the 1980′s. The famine and human tragedy we witnessed back then was dreadful and happened under the watch of a political regime that now belongs to history, fortunately. The fact is that these visuals installed within us a perception that needs to be corrected. The thing is that you simply don’t often hear about this place so we never really got an update on all the progress that was made since those difficult days.
Getting to know Ethiopia is an unforgettable experience on many counts. Personally I think it must be a bit like going to China in the early 1980′s. It doesn’t take much thinking to figure out that it is a place of underestimated potential, with an ancient culture and enough patience to re-build a nation that can live up to re-claim its historical standing in the world’s economy.
Is This Like China in the 1980′s?
Interestingly enough, China must see it in the same way because Ethiopia has a close working relationship with the Asian giant. In many ways it seems like Ethiopia’s government took a few pages from China’s political playbook as it is faced with similar challenge to build an economy for a large population. But China is not alone. Other major investors in Ethiopia are India, Sudan, Germany, Italy, Turkey, Saudi Arabia, Yemen, the United Kingdom, Israel, Canada and the United States.
Since 1994 Ethiopia is governed as a federal democratic republic. The nation is made up of nine ethnically-based semi-autonomous administrative states. All have the power to raise their own revenues, can establish their own government and democracy according to the federal government’s constitution. Public service delivery, including health care, has to a large extent fallen under the jurisdiction of the regions. The approach has been to promote decentralisation and participation of the population in local development activities. Ethiopia is one of the most table political systems in Africa.
A Regional Power.
Ethiopians are very proud of the fact they were never colonised. This makes this nation rather assertive on the regional political scene. Ethiopia has one of Africa’s largest armed forces and has a history of using it to keep the peace in its region. Add to that Addis Ababa is a bit like the Brussels of Africa as it is the home of the African Union which it more of a worldly city than many would believe it to be.
Watch short BBC Documentary that we helped make a couple years ago. It offers visuals that could make you more familiar with Ethiopia. It also features NAS Foods, the business we invested in.
We hope this piece provided you with a better understanding of Ethiopia. If you would like to further discuss all this with us, please don’t hesitate to contact us.
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