The first reason that Ethiopia’s Prime Minister, Abiy Ahmed, was awarded the Nobel Peace Prize in 2019 was that he had initiated successful peace talks with the East African country’s existential rival, Eritrea. The benefits of the peace process had been immediately obvious to the region and the international community.
Being one of the top three contributors of foreign direct investments (FDI) to one of Africa’s fastest growing economies – currently in the midst of a year-long war with its northern state that has contributed to its battered economy – Turkey has been one of the major players for the growth of the textile sector inside Ethiopia’s industrial parks.
This is in addition to its contribution to infrastructure projects, including Yapi Merkezi’s involvement in building a railway line worth $1.7bn, named Awash-Kombolcha-Hara Gebaya Railway project. The plan is to build a railway line that stretches from Ethiopia to Tanzania.
The project is now at a stand-still and effectively suspended because of the ongoing fighting that has spread from Tigray region to that of Amhara and Afar.
The relationship between Turkey and Ethiopia was in a downward spiral after the latter forged an alliance with the United Arab Emirates at the start of Prime Minister Abiy’s term. This came as the Gulf state became vital to Ethiopia’s economy – that was facing a Forex shortage – by providing an immediate $3bn injection and later providing strategic support to the Ethiopian government in its conflict against the Tigray People’s Liberation Front (TPLF)
With the relationship between the Gulf Nation and Ethiopia waning, Addis Ababa is in need of a new military alliance. Abiy has thus turned to Turkey for support.
Turkey’s role in the conflict
TPLF, declared a terrorist group by the Ethiopian government, was once the dominant political force in a coalition for 27 years before Abiy came to power. The group has proven to be a difficult foe to defeat, in what has become a prolonged conflict.
The TPLF has gained new ground outside of its own regions, deep in Amhara and Afar, causing the displacements of millions of people and a risk of famine. Ethiopia is under increased pressure from external developmental partners to end the current conflict.
In an effort to find a new military alliance, Prime Minister Abiy made a personal and rare visit to Turkey earlier this year and signed a ‘military financial agreement’ with President Tayyip Erdogan.
We see Ethiopia not just as a hugely important African country, but also as a part of a wider strategic region.
With the support of Turkey, Ethiopian federal military forces have started an offensive with Turkish drones in Tigray, aiming to emulate the success of Turkey’s divisive role in the recent conflict between Armenia and Azerbaijan.
In the last two weeks, the Ethiopian government used drones in Tigray, destroying what it describes as facilities that were providing support and training to the rebels. However, the TPLF says the attacks targeted and killed civilians.
The economic pact
“We see Ethiopia not just as a hugely important African country, but also as a part of a wider strategic region,” Yaprak Alp, the Turkish ambassador to Ethiopia tells The Africa Report. “We are the second biggest investors in Ethiopia and there are about 220 Turkish companies […] employing 30,000 Ethiopians.”
There has also been an increase in trade between both nations, with many local products originating from Turkey, as well as China and others making their way to Ethiopia.
“Ethiopia is a country in which Turkey invests the most [$2.5bn] in sub-Saharan Africa […],” says the ambassador.
Some Turkish investments have however not been successful.
While exports remain significant, there have been challenges. A growing number of Turkish companies have borrowed large amounts of money from local banks, but then declared bankruptcies, left their operations in tatters and fled the nation. This is due to inadequate mechanisms to ensure they pay back debt. Such situations impose increased financial pressure on Ethiopia.
- In its heyday, the Turkish Ayka Addis Textiles and Investment Group employed more than 7000 local staff and exported all of its products abroad. It started with Br813m ($17m) borrowed from the Development Bank of Ethiopia, collectively, as well as from the Commercial Bank of Ethiopia.
- In 2017, not having paid its taxes or its debt to the government-owned banks, much of its leadership fled Ethiopia. Earlier this year, the Development Bank of Ethiopia attempted, for a third time, to sell the company at an auction, but the offer failed to garner any interest from bidders.
- Else Addis Industrial Development Plc, owned by Seyfettin Kocak and İImam Altinbas, also abandoned their operations, despite owing money to the Ethiopian government. They were accused of undervaluing much of the company’s exports. They were also accused of importing old machinery, which banks valued as new, thereby pushing their productivity to a bare minimum. The company had been granted loans valued beyond their worth.
All in all, there continues to be generous scholarship programmes available to Ethiopian students to study in Turkey.
Amanu Argaw, a Turkish educated Ethiopian researcher, is one of many who benefitted from the bursary to study in Turkey. He believes there are many examples Ethiopia can learn from Turkey.
“Turkey can easily sympathise with Ethiopia as it has been in the same situation since the establishment of modern Turkey starting in 1923,” Argaw tells The Africa Report. “Ethiopia can learn something from its experience by utilising its own resources, building its economy and following in its footsteps to become self-sufficient.”
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options