High enthusiasm for learning by considering Korea as a digital economy benchmarking case
Expected participation of Korean companies in various related IT projects
background
Prime Minister Abi of Ethiopia announced 'Digital Ethiopia 19', a detailed strategy to build a digital economy in line with the autonomous economic reform agenda announced in '21 and the 10-year development plan (2021-2030) announced in '2025 and continue to develop it. The digital economy pursued by the Ethiopian government, which is considered to be still in the analog economy, is economic activity using internet networks and digital platforms. Digital Ethiopia 2025 aims to establish the basic foundation of digital basic infrastructure and digital ID & payment system, and ultimately achieve job creation, foreign currency acquisition, and overall economic growth by applying it to agriculture and manufacturing, which are the country's main economic engines. aim In particular, the following four key sectors are presented as the direction to proceed, and each strategy is presented.
Agriculture
Ethiopia's agricultural sector plays an important role in Ethiopia's economy, accounting for 32.8% of total GDP, 85% of domestic jobs, and 90% of exports. However, low illiteracy and Internet supply rates are major obstacles to the application of digital technology in agriculture, given the overwhelming majority of rural farmers.
The Ethiopian Agricultural Transformation Agency (ATA), in cooperation with the Ministry of Agriculture of Ethiopia, has established soil and groundwater data, National Market Information system, Location-based Producer-Buyer Matching Platform (Agricultural commercialization Clusters), Agricultural Technology Advisory Hotline (8028-farmer hotline) and various infrastructure projects such as financial support have been promoted. In the future, it is expected that digital technology will be used to improve access to agricultural information, increase production, simplify the supply chain, and reduce operating costs. In particular, the newly established Artificial Intelligence Research and Development Center will support future technologies including artificial intelligence. In this regard, it is expected that innovation in the agricultural sector will be prioritized. In addition, the Ministry of Innovation and Technology (MInT) will support various agricultural technology companies and start-ups through an incubation program. In addition, by applying the latest IoT and block chain technologies, we plan to promote the establishment of a digital agriculture platform.
manufacturing
Ethiopia is being reborn as an international clothing producer based on low wages and electricity rates, preferential trade and industrial complex creation. Through this, the benefits of job creation and urbanization are being created. However, compared to a major apparel exporting power such as Bangladesh, which has more than 4500 apparel export companies, Ethiopia has fewer than 100 apparel export companies and the manufacturing industry is still in the development stage. The Ethiopian government is aiming to expand exports by disseminating the Internet and improving the digitalized logistics management system. Currently, the Internet is expanding mainly in industrial complexes, and this is having a positive impact not only on the clothing industry but also on improving the quality of life of residents. Ethiopia is also in the process of building a railway connecting Addis Ababa and Djibouti ports and modernizing the inland port of Modjo for the logistics sector. In addition, the Ethiopian government is trying to introduce modern customs systems such as an e-commerce system and ASYCUDA (Automated System for Customs data).
Even considering the 4th industrial revolution progressing globally in the manufacturing sector, Ethiopia still sees the sewing industry as a key manufacturing sector as promising. In order to introduce technology that can contribute, we plan to secure a fast and stable internet connection and build a logistics management system with IT to increase exports.
IT utilization service industry
The IT utilization service industry encompasses all service industries using information and communication technology such as application development, programming, and IT infrastructure service and management (cyber security, etc.). Due to the nature of the IT industry that requires real-time communication, Ethiopia's poor Internet communication network is a major obstacle to the development of the IT industry, which is the second largest population in Africa, but it has a low IT manpower pool and a small number of BPO (Business Process Outsourcing) companies. .
Global demand for digital service tasks such as writing, editing, translation, web design, image processing, and social media management continues to increase. Ethiopian labor force is inexpensive and well-educated compared to major OECD countries, providing excellent internet environment. It is expected to be able to act as a virtual office partner.
Ethiopia provides infrastructure for talent centers with high potential (such as universities) so that 70% of university graduates can utilize the strengths of STEM majors and abundant human capital of the city, and business process outsourcing for IT parks , in particular, we plan to attract service providers with impact sourcing (providing services by hiring vulnerable groups).
tourism
Although Ethiopia has abundant tourism resources enough to have nine UNESCO World Heritage Sites, Ethiopia is a country in sub-Saharan Africa due to expensive and low-quality lodging facilities, inexperienced tourist manpower, and outdated basic facilities (water, sanitation, hospitals, etc.). The competitiveness of the tourism industry is low enough to have the 9th tourism industry competitiveness (Kenya 18th, Tanzania 5th, Rwanda 8th). In addition, digital barriers such as low Internet penetration cause various problems such as Internet access for tourists, promotion of tourism resources, digital payment, travel agencies and staff lacking digital capabilities, and the influence of digital technology on tourism industry competitiveness is growing. For example, by providing appropriate travel information and online reservation service to tourists before travel, increasing convenient digital transaction and real-time travel information access during travel, and sharing tourists' experiences after travel, attract more tourists and travel destinations. It can be used as basic information to develop
In the future, Ethiopia plans to develop related policies and secure budgets under the leadership of the Ministry of Culture and Tourism (MoCT) for the digital transformation of the tourism industry. In addition, the government aims to improve the digital capabilities of tourism companies, such as increasing the influx of tourists, inducing the development of new tourist destinations, and providing incentives to tourism companies that have applied digital technology through digital promotion strategies using SNS and online search pop-ups. level will be supported. In addition, in order to realize the potential of the tourism industry in the future, we will refer to other countries' digital tourism initiatives and establish a tourism digitalization TF to implement them and promote a customized digital marketing strategy.
Ethiopia is urging immediate changes in the following areas for digital transformation in the key industries mentioned above.
Infrastructure construction (Internet & mobile, electric power)
The Internet penetration rate in Ethiopia is 18.6%, and the average speed (bandwidth) is very slow with an average of 2kb/s. In addition, while the number of mobile subscribers is announced at 60%, the actual number is estimated at 41%. The electricity penetration rate is 44%, and there is a great imbalance between urban (96%) and rural (31%). Accordingly, the government is promoting the privatization of the Ethiopian mobile market, and Safari com, which has obtained a business license, is scheduled to start business operation, and announced that it will invest $10 billion over 85 years to build a mobile infrastructure in Ethiopia. One additional mobile business license is in the process of auction bidding. In addition, the Ethiopian government announced the National Elecrification Plan 1 plan to expand the power grid in the entire region by 2025, and the World Bank has promised to invest $2.0 million for this.
Digital systems (digital IDs, digital payments, cybersecurity)
In Ethiopia, more than half of the population do not have identification cards such as Kebele ID (resident registration card), driver's license, and birth registration card, and ID cards are often made false. Accordingly, under the leadership of the Prime Minister's Office and the Ministry of Technology and Innovation, the 'National Digital ID' project, which allows all citizens to have a unique digital ID, will be expanded nationwide, starting with Addis Ababa, the capital city.
In Ethiopia, less than 1% of the population of over 1 million use banks, and they do not have a credit card, and rather than using an ATM through a deposit/withdrawal card, they mainly visit the bank to conduct deposits and withdrawals. Accordingly, the government announced the National Digital Payment Strategy (NDPS) and enacted the E-Transaction proclamation including electronic signatures and electronic receipts led by the Ministry of Innovation and Technology, and enacted the Banking Service proclamation amendment to provide digital payment, remittance, and insurance services for NBE. Policy work to establish a digital payment system is in progress. In addition, more citizens will use the bank, and it will be connected to the mobile money system to establish the foundation of a digital payment system.
According to Ethiopia's Information Network Security Agency (INSA), Ethiopia was subjected to 2017 cyberattacks in the six months of 6 and 256 cyberattacks during the 20/21 period. As Ethiopia's Internet connection develops, the importance of cybersecurity is rising. In addition, efforts to protect digital data from cyber attacks and disasters are required while building cloud and data centers.
Digital Government, E-Commerce (E-Governance, E-Commerce)
According to the E-Government Development Index (evaluation criteria: online service, telecommunication infrastructure, human capital), which evaluates the excellence of e-government services in UN member states, Ethiopia in 2020 was 0.2740 (lowest 0 to maximum 1), out of 193 UN member states. It ranks 178th, very poorly, and although the tax revenue inflow is increasing every year, the gap from the GTP II tax revenue target is gradually widening. Through the introduction of E-Governacne, Ethiopia is expected to effectively and efficiently provide social services such as education and health care to all citizens, and to strengthen the national finances through tax revenue reform.
Currently, projects to digitize government administration, such as the 'National Backbone Project' for the development of 'WoredaNet', an intranet for the Ethiopian government, are in progress. working hard
In addition, we intend to develop the E-Commerce field to improve Ethiopian companies' access to the international market. According to UNCTAD's B2C E-Commerce index (evaluation criteria: bank account retention rate, Internet usage rate, postal delivery reliability, number of secure servers, etc.), which evaluates the potential of e-commerce between businesses and consumers, Ethiopia scored 31.1 points, ranking 152th out of 120 countries. level.
Currently, the Internet network is being expanded through the communication infrastructure construction project, and the Ministry of Innovation and Technology (MInT) and the Ethiopian Central Bank (NBE) are preparing related policies to make digital payment a reality. In addition, to improve the logistics sector, Ethiopian Airlines is investing in modern logistics services with DHL.
Creating a digital ecosystem (finance, digital technology manpower, policy & regulation)
According to Ethiopia's Autonomous Economic Reform Agenda, financial access was cited as the cause of business difficulties in Ethiopia along with foreign currency regulation and corruption.
In particular, securing funds is essential for the creation of Ethiopia's digital ecosystem. Current Ethiopian policy lacks incentives to invest in technology startups, and access to loans through banks is very poor. In addition, foreign currency regulations have made foreign investors hesitant to invest in Ethiopia, and some Ethiopian companies are relocating to neighboring countries. In response, Ethiopia is using the government innovation fund and domestic private investors and incubators to revitalize domestic investment in the ICT industry, and is preparing to revise policies for foreign investment, such as introducing stock trading and compensation for losses. In addition, public-private cooperation is promoted and financial accessibility is enhanced by operating an incubation program that meets the needs of startups.
The Ethiopian government aims to create 2020 digital jobs by 30, and believes that digital technology will play an important role in digital transformation and job creation. In order to nurture digital technicians capable of engaging in digital jobs, it is necessary to lower the illiteracy rate through basic education. Currently, only 52% of Ethiopia's population can read, and the literacy rate is 80% of urban residents vs. Rural residents 10%, men 49% vs. There is also a significant difference between groups, with 29% female. In addition, there are various obstacles to nurturing digital technical manpower, such as poor internet network, low electricity penetration, lack of standardized digital education and evaluation standards, and poor digital education equipment.
In response, Ethiopia developed digital skills-related teacher competency and educational contents, and set literacy and digital skills education as top priorities in the elementary and secondary education curriculum. Universities are preparing for a new job market by activating internships and introducing entrepreneurship and digital technology education, and the government plans to provide digital skills education optimized for jobs for all citizens. Additionally, it is encouraging the cultivation of ICT technical manpower by supporting job matching companies and encouraging the employment of ICT experts in government agencies. The Ethiopian government sees that policy makers have low understanding of global digital trends and policies, and judges that policy-making without communication with stakeholders, especially the private sector, is a hindrance to building a digital ecosystem.
In addition, for the development of the ICT industry, it is necessary to protect intellectual property rights and a suitable business registration system for new fields such as ICT. Uncertain tax regulations and high taxation are factors that need to be improved for the ICT industry.
The Ethiopian government reviews the above improvements as a policy and opens an Innovation Office (IO) within the Ministry of Innovation and Technology (MInT) to identify and address difficulties in the project through sufficient communication with private operators and related government agencies. plan to include it in the policy.
For this digital transformation, the Ethiopian government is proposing the following short-term (within 18 months) and mid-long-term (18 months to 5 years) projects as follows, digital infrastructure, digital ID, cybersecurity, e-government, e-commerce, digital workforce training It covers a wide range of fields such as policy improvement and related policies.
Short-term (within 18 months) target project
Project 1 Mobile telecommunication industry reform (privatization of Ethio Telecom)
Project 2 Deregulation of Mobile Phone Market to Reduce Import Access and Price
Project 3 Modernization of 'WoredaNet', a government administrative system
Secure universal access to the Internet through Project 4 digital communication service
Introduction of Project 5 National Digital ID
Project 6 Reinforcement of Private Security: Focusing on Education Program Development and Awareness Improvement Campaign
Project 7 e-Government: A User-Centered Approach to Maximizing E-Portal Design and Use
Project 8 e-Government: Application of e-commerce technology and user-centered government website pilot operation
Project 9 E-commerce: Focusing on Capital Attraction and Market Building
Project 10 Initiative to reduce digital literacy rates for all citizens
Digital skills education optimized for Project 11 jobs, creating digital jobs and building a digital economy
Project 12 Improving and expanding incubation services to meet the needs of startups and innovators
Project 13 Ethiopian Government with Private ICT Companies: Hosting Private Business Conferences, etc.
Project 14 Establishment of system for mobile phone online payment system
Project 15 Accelerate policy preparation and system application for e-commerce and digital payment
Mid/long-term (18 months to 5 years) target project
Project 16 Establishing an environment for improving electric power safety and revitalizing private investment
Project 17 Activate Ethiopian Electric Authority (EEA) Operations for Electricity Sector Control
Project 18 Grid Code (regulations related to private participation and overseas transactions in Ethiopia’s electricity sector) 2016 applied
Improvement of e-commerce logistics by preparing Project 19 policy, attracting infrastructure investment and building capacity
Improvement of the regulatory environment related to Project 20 investment (forgiveness of investor losses, deregulation of foreign currency and loan regulations, etc.)
Project 21 IT Industry Investment Revitalization
Project 22 Ethiopian stock exchange development
implication
The Ethiopian government highly regards Korea as a country that has achieved a digital economy. This suggests that it can be a great opportunity for Korean companies to preoccupy digital technologies and industries in line with Ethiopia's digital transformation policy. In fact, as a result of the trade official meeting with the Prime Minister's Office and the Ministry of Technology and Innovation about the digital ID issuance project, the Ethiopian government has consistently appealed to international organizations and organizations for funding, which has already secured funds from some organizations such as the WB and the Vilmelinda Foundation; project is in progress. The person in charge of the project is a KOICA scholarship student who has experience studying in Korea and is interested in collaborating with Korea, so he is actively requesting additional support and interest from the Korean government.
In particular, the physical and digital infrastructure of Ethiopia, which is currently in poor condition, will be gradually improved. Based on this, various major IT projects will be promoted and placed in the future. If the two countries actively support through ODA, etc. and close cooperation between the two countries is achieved, it is expected that the foundation for the advancement of related IT companies will be created.
Source: Comprehensive data held by the Korea Trade Center