Description
A team of two cadets, Evan Szablowski and Zachary Langhans and Senior Researcher, Dan Evans visited Addis Ababa.
August 2011
Network Science Center Research Team’s Visit to Addis Ababa,
Ethiopia
Daniel Evans, Evan Szablowski, and Zachary Langhans
A team of two cadets, Evan Szablowski and Zachary Langhans and Senior Researcher,
Dan Evans visited Addis Ababa, Ethiopia from 1 through 8 J uly in support of two
ongoing Network Science Center projects that are assisting in the analysis and
understanding of economic development in frontier markets.
1) The Network Anal ysi s “ Tool Kit”
The Network Science Center has established a collaborative relationship with the State
Department and during a visit to Ethiopia in May; Dan Evans demonstrated an initial
version of the “Took Kit” to Mr. Dan Rosenthal, the Commercial Officer at the US
Embassy. This network analysis software package which will provide policy and
decision makers with a “tool kit” that assists in the development of policy backed by a
rigorous quantitative analysis package. Mr. Rosenthal indicated an interest in
collaborating on the further development of this project.
Over the last month, 2 of our college apprentices, Marc J ohnson and Lauren Kewley,
and the two cadet researchers collected data on all key actors and organizations in the
2 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Ethiopian “economic development network.” Based on this data, they developed an
extensive network model and then built several visualization tools that quickly identified
the most prominent nodes based on several different characteristics and developed a
proposed node classification methodology.
2) Entrepreneur Network Model
The team also continued to develop an entrepreneur network model. Based on the visit
in May, we developed a draft survey that captures data about the local environment in
which entrepreneurs are operating. During this visit, the team met with local
entrepreneurs and conducted a survey with each of them. The team has collaborated
with CORE Lab at the Naval Postgraduate School and utilized an application they have
developed called Lighthouse. This application allowed the team to conduct interviews
with local entrepreneurs and collect the data on an Android-platform “smart phone.” This
application uploads the data to the cloud, which then allows the team to quickly upload
the data into network analysis software. This collaborative effort will be discussed in
more depth in a future Network Science Center paper.
Ethiopia Background:
Ethiopia is unique among African countries in that the ancient Ethiopian monarchy
maintained its freedom from colonial rule with the exception of a short-lived Italian
occupation from 1936-41. In 1974, a military junta known as "the Derg," deposed
Emperor Haile Selassie, who had ruled since 1930, and then established a socialist
state. Torn by bloody coups, uprisings, wide-scale drought, and massive refugee
problems, the regime was finally toppled in 1991 by the Ethiopian People's
Revolutionary Democratic Front (EPRDF). A constitution was adopted in 1994, and
Ethiopia's first multiparty elections were held in 1995.
The new African Union headquarters complex was inaugurated in Addis Ababa on 28
J anuary 2012. The complex was built by China State Construction Engineering
3 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Corporation as a gift from the Government of China, and consists of a 2,500-seat
plenary hall and a 20-story office tower.
Ethiopia's economy is primarily focused on agriculture. According to the US State
Department, agriculture accounts for 41% of GDP and 85% of total employment. Coffee
was "discovered" here and is the major export crop. The agricultural sector has
historically suffered from poor cultivation practices and frequent droughts.
The Government unveiled a five-year Growth and Transformation Plan in 2010. This
plan is an ambitious government-led effort to achieve the country's development goals.
According the US State Department, Ethiopia has attracted significant foreign
investment in commercial agriculture and manufacturing. However, the finance,
insurance, and micro-credit industries are restricted to domestically-owned firms.
Ethiopia's constitution mandates that the state owns all land and, subsequently,
provides long-term leases to the tenants. The Government has started to issue land use
"certificates" so that tenants have some type of recognizable rights to continued
occupancy. While GDP growth has remained high, per capita income is among the
lowest in the world.
Day 1 (Jul y 2 2012)
The research team met with two important leaders of iceaddis, Ethiopia’s first high tech
innovation hub. iceaddis is located on the beautiful campus of the Ethiopian Institute of
Architecture, Building Development, and City Development (EiABC). We were fortunate
to be able to meet with the hub’s managing director, Sarah Abdulhafiz and Markos
Lemma, the Community Manager for iceaddis and Project Coordinator from
Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH (GIZ), a German federal
4 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
enterprise that supports the German Government in achieving its objectives in the field
of international cooperation for sustainable development.
Construction of Road Interchange in Addis Ababa
The hub is also supported by Center for Creative Leadership (CCL). CCL is a top-
ranked, global provider of executive education headquartered in North Carolina and led
by Admiral (Retired) J ohn Ryan, a former Superintendent of the US Naval Academy.
The Center has recently established an office in Addis Ababa and is heavily involved in
a mentoring program with a group of 25 women college students who are associated
with iceaddis.
The Ethiopian Institute of Architecture, Building Development, and City
Development
5 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Sarah further explained that iceaddis provides the following capabilities in order to
accomplish its mission:
Provision of Open Space: iceaddis works closely with local entrepreneurs, students,
and other local “communities” who share their innovative and entrepreneurial ideas and
offers their “open space” for hosting meetings, conferences, and community summit
events.
Prototyping Facilities: iceaddis has access to EiABC’s small-scale prototyping
facilities. This gives the start-up companies to capability for customized fabrication.
Additionally, Sarah explained the iceaddis “Membership Model.” She told me that
iceaddis currently has about 500 members. Basically, you can join the community at
one of three membership levels:
White: White Membership is free of charge and is designed to open the
innovative community to all interested individuals. White Members can access
the online innovation forums and online resources. Generally, White Members
can attend selected events.
Green: A 12-week Green Membership cost 850 Ethiopian Birr, or about $48.
This three month intense program takes talented, high-potential people, and
turns them into elite, determined, and focused entrepreneurs. Green Members
are required to give a presentation at the end of their program that is focused
around their personal takeaways from the program, their ideas for the future, and
possible business plans. Green Members have access to the lower floor of
iceaddis which includes a general collaboration lounge, as well as computers that
can be used for printing, and iceBookshelves.
Red: Red Membership cost 2,500 Ethiopian Birr a month, or about $142. This
membership level gives its participants a fully equipped workspace to work on a
real start-up idea and gives the entrepreneurs all the facilities needed to
successfully start their business. Red Members have access to the whole
iceaddis building which includes a general collaboration lounge, as well as
computers that can be used for printing, iceBookshelves, and most importantly a
private desk, fully equipped with all necessary office equipment. iceaddis
consultants provide professional support to network the technology and business
facets of the start-up, as well as to enable them to create synergies, pool
knowledge and source investment.
Sarah indicated that there are currently 7 active Red Members-none of these Members
have “graduated,” or become independent of the hub yet. Of the 500 total members,
there are approximately 35 Green Members.
6 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Under the current business model, iceaddis supplies resources but no funding to the
entrepreneurs. When the business signs on as a Red Member, it signs an agreement
with iceaddis that grants iceaddis a percentage of the new business’ equity. Sarah told
me that each contract is customized based on the specific circumstance surrounding
the business establishment. Although iceaddis supplies no funding, the hub does have
an extensive network that facilitates introductions to potential funding sources such as
local businessmen or NGOs.
The majority of the current iceaddis start-ups are “designed-based.” The hub
encourages entrepreneurs to focus on ideas, services, or products that are “green,
innovative, and meet the demands of the local market.” One example of an ongoing
project is a new model of the bike trailer, an item that is ubiquitous in Ethiopia, which is
to be constructed of more “green” components that the current models that are typically
hand-made from scrap metal and old axles. The new model will primarily be constructed
of bamboo which is abundant in Ethiopia and is a very durable material. Another
example is a solar-powered lamp in which the battery charges during daylight hours and
then the lamp supplies light during darkness and has an outlet that also allows the user
to charge their mobile phone.
The purpose of the visit was to gather information in order to support the initiation of a
project that will develop models of entrepreneur networks in frontier markets. The team
has identified the network in Addis Ababa as one of great potential and at a state in its
growth trajectory where we can capture vital data before the explosion. The staff at
iceaddis has graciously agreed to collaborate on this project.
7 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
A Prototype of a “ Green” Bicycle Trailer in the Lab
During the course of our meeting, we discussed basic small business issues in order to
better understand the local business environment. From this conversation we received
our first glimpse into what became a common thread throughout the trip: the presence
of a gap between microfinance and large corporate investments in the business market.
The creative environment in Ethiopia is energetic, with a large population of innovative
Ethiopians both young and old wanting to enter into the market. However the common
obstacle is acquiring initial funding to help build their ideas. Commercial loans are not
accessible like they are in the developed world and many of the entrepreneurs we
talked to discussed how their next step is to simply find some funding to kick start their
projects.
Although there is a lot of current interest for investing in Ethiopia, it is mostly taking
place on the grand scale. Large firms are not interested in looking at the small market of
startups because of the lack of promise in profit turnaround. We were surprised by how
far the definition of “small” stretches, with examples of some companies shunning
million-dollar projects as too small. One interesting quote was how many Private Equity
firms have the mindset that “it is better to manage 1 twenty million-dollar company than
10 two-million dollar companies.” So even though the need exists for investment
funding, there are not many willing participators who want to play on the “smaller” level.
It requires too much management and on-the-ground commitment, and is unattractive to
foreign investors.
8 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Meeting with an Entrepreneur at iceaddis
We also discussed the foreign presence in the Ethiopian market. The obvious first
player mentioned was China, due to their ongoing extended investments in
infrastructure across the country. After the Chinese, Turkey was mentioned as having
the most influence. They are much more recent, described as just “popping up” in the
markets. The United States was not mentioned so much in market influence, but instead
in just on-the-ground presence. American citizens are prevalent in the country through
many NGOs, but they are largely limited to this sector.
Another obstacle discussed was prejudice against domestic production due to
stereotypes and old ideas of quality. One member mentioned how wine production is
limited because citizens have the mindset that “Wine should be made in Italy or
France.” Development is restricted because people are not willing to give domestic
products a chance. Imported products are automatically believed to be of higher quality.
Although this is usually true, it is restricting areas of the market where there is promise
for comparable or even superior quality Ethiopian products.
Center for Creative Leadership (CCL)
The team also met with Mr. Tewodros Tadesse, the CCL’s Faculty Development
Manager for the Africa Region. The CCL is “a top-ranked, global provider of executive
education” headquartered in North Carolina and led by Admiral (Retired) J ohn Ryan, a
former Superintendent of the US Naval Academy. The Center has recently established
an office in Addis Ababa and is heavily involved in a mentoring program with a group of
25 women college students who are associated with iceaddis.
9 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Day 2 (Jul y 3 2012)
The Network Anal ysis " Tool Kit" Briefing and Demonstration:
The cadets presented their findings to members of the Political and Economic Sections
at the US Embassy. Part of their presentation included several new visualization
techniques that enable “everyday decision-makers and policy makers” with the
capability to more effectively understand the analysis and recommendations. The
presentation was well received and the discussion and feedback session after the
presentation was particularly fruitful. Based on the recommendations, the Network
Science Center will make adjustments to the current model and electronically submit to
the Embassy staff in Ethiopia for and additional review.
Overall, the staff members were very intrigued by the network analysis methodology
and are very interested in continuing to cooperate with the Network Science Center as
the project progresses. The post-briefing discussion focused on the following ideas:
• Asymmetric relationships:
o Considering the senior-subordinate relationship and its potential effects on
a link (Influence possibly only travels in a single direction).
o Consider weighting links. It was suggested that we explore spliting all
symmetric links into directed links, and treat them separately depending
on the relationship.
o Consider establishing negative links. The staff members mentioned that
animosity is often present in this “network”-they suggested that we
consider some people as “enemies” (better term might be rivals?). These
“negative” links could capture important aspects of the network that we
currently don’t capture.
• Data considerations
o Fighting factions-“Who fought with whom” during the revolutions against
the Derg is the “most important” social connection in Ethiopia. “Nothing
tops that.”
o Ethnicity- It’s a “huge” consideration in Ethiopia. Ethiopian’s have a
different image of nationality identification. An individual’s home province
(kilil) is where their true loyalty and identity lies.
• Political Party subdivision
o The Ethiopian People’s Revolutionary Democratic Front is the ruling
coalition of four political groups: the Oromo Peoples’ Democratic
Organization, the Amhara National Democratic Movement, the South
Ethiopian Peoples’ Democratic Front, and the Tigrayan Peoples’
Liberation Front.
o The “sub-parties matter-It doesn’t mean anything to consider them
members of the EPRDF because everyone identifies with them politically.
10 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
The sub-parties have an influence to themselves, and most relationships
are connected through that level of the party
“ Tool Kit Visualization” Example Developed for the Embassy Staff
• Foreign influence
o Can we quantify China’s presence in our network – what type of influence
does it exert?
• Educational weighing
o The embassy staff downplayed educational connections-“Of course
everyone went to Addis Ababa University.”
o Secondary school is almost inconsequential
o In many countries, these ties are amazing influential.
• Scope of the network – “How far to cast the net”
o Sub-ministers play a huge role-Even mentioned an instance where it was
clear that the government minister did not hold the power, but his
subordinate was the decision maker
o State level government important
o More government organizations need to be included:
? Local and national chamber of commerce
? Parastatal Organizations
11 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
• Foreign influence
o Can we quantify China’s presence in our network – what type of influence
does it exert?
• Educational weighing
o The embassy staff downplayed educational connections-“Of course
everyone went to Addis Ababa University.”
o Secondary school is almost inconsequential
o In many countries, these ties are amazing influential.
“ Tool Kit Visualization” Example Developed for the Embassy Staff
• Scope of the network – “How far to cast the net”
o Sub-ministers play a huge role-Even mentioned an instance where it was
clear that the government minister did not hold the power, but his
subordinate was the decision maker
o State level government important
o More government organizations need to be included:
? Local and national chamber of commerce
? Parastatal Organizations
12 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
• Suggestions for inclusion in the network
o MIDROC (a conglomerate of 41 companies owned by Sheikh Mohammed
Hussein Ali Al Amoudi an Saudi/Ethiopian businessman) of heavy
influence, look at the sub-companies
o Parastatal organizations
o Deputy-state ministers
o Directors General
o Chamber of Commerce
TechnoServe
The team also had the opportunity to meet with Ms. Heather Oh, the Technoserve
Country Director for Ethiopia. Technoserve is a 501(c)3 organization with that works
“with enterprising people in the developing world to build competitive farms, businesses,
and industries.”
Ms. Oh told us that in Ethiopia TechnoServe is focusing on empowering local farmers in
order to assist them in increasing their potential output and make production more
efficient. In Ethiopia their regional office specializes in helping coffee production
throughout the country. They equip the farmers to develop their coffee processing
potential, allowing them to refine the coffee beans further before sending them to other
production facilities. By increasing their control over this production process, they are
cutting out other middlemen and increasing their own profits. Some even sell directly to
major coffee names (such as Starbucks).
In our discussion it seemed that TechnoServe emphasized the business aspect of their
organization model over any notions of charity work. Ms. Oh mentioned how it all comes
back to the organizations ideas concerning the “Theory of Change.” They treat the
projects with farmers as business interactions and not as aid work. Instead of handouts,
they are giving loans with interest and expectations of repayment. She also mentioned
how this makes farmers nervous because they are not accustomed to any
accountability in funding.
Ms. Oh also mentioned that Technoserve invests “intensely” in their own staff members’
development. She mentioned that the lingering effects of history (the Derg regime and
the experiment with Marxism) still hinder economic development. She also mentioned
that the members of “the Diaspora” who have recently returned to Ethiopia and now
lead many successful businesses.
Day 3 (Jul y 4 2012)
The team met with the directors of several investment firms with a focus on emerging
markets. These firms have asked us to not publicize then names of their firms or the
13 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
staff members. The team had a wide-ranging discussion with these investment
professionals. The major points of discussion are summarized:
• Challenges in investing
o Foreign money is typically associated with grants from NGOs. It was also
stated that these small businesses are “not used to receiving foreign
investment funds that come with the expectation of higher standards of
accountability.”
o Additionally, it was noted that “Private equity is a new concept” to the
native business environment.
• Solutions
o The firms described themselves as being “Hands on with their
investments”-much more than typical private equity firms or other
investors.
• Investment Vision in Ethiopia
o The firms hope to be models of change and it was stated that they will
“focus on financial return first,” but associated with positive environmental,
social, and governance outcomes.
o On mentioning of the statement we heard: “500 Thousand Dollars is too
little for a single deal” the replies were “not for many businesses in
Ethiopia.”
o Consensus was that a domestic stock exchange is a “long way off”
because the building blocks are not present for a stable market.
• Ethiopian Investing Idiosyncrasies: It was explained that foreign investing is not
allowed in the following sectors:
o Retail
o Wholesale
o Telecom
o Banking
• Foreign Grants to Businesses: The investors were very negative about its impact
on its own:
o Does not force business to focus on the “bottom line.”
o The investors were more concerned about the accountability investment
brings to companies.
• Entrepreneurship: The investors were very interested in our Entrepreneurship
Network Model- It was mentioned that “everything happens because of business
networks” and “that’s how African countries work.”
• Final Thoughts: The investors emphasized the following facts:
o “Americans aren’t taking advantage of this in Africa”
14 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
o China is doing a lot, but there are many challenges:
o Trust of American Products is high
o Government is so focused on exports:
- Domestic market is growing though!
- Ripe for foreign investment!
Day 3 & 4 (4-5 Jul y)
The team met with local entrepreneurs. The notes from these meetings follow. The
team is only using the “first names” of the entrepreneurs and has “anonymized” the
business names in order to protect any intellectual property or capital.
Michael:
Michael started a business with his brother in the Information Technology sector.
Michael specializes in software, while his brother focuses on hardware. Michael’s main
objective is to “localize” business management software such as Enterprise Resource
Planning (ERP) or E-Business applications by converting it to Amharic. This will allow
businesses in Addis Ababa who operate primarily in Amharic to run their businesses
more efficiently without the difficulties of using English based software. In order to start
this business, he had to obtain 5 licenses all from different agencies. The complex
bureaucratic system in place requires Michael to physically apply at the agencies and is
a very expensive and time-consuming process. The government requires him to have
financing in order to get his licenses, which can be gained through various sources,
such as a commercial bank with an interest rate around 11%. His business currently
has virtually no competition due to his innovative concept and his innovation. Even
though the market is small, he is well known in this sector. He hires employees on a
project-based or time-based contract and on average has 80 employees. One current
challenge he faces is the ability to pay his employees on time because of late payments
from some Chinese firms that have recently hired his company. Michael has worked as
a sub-contractor for the Chinese firms several times and he made note that these firms
were very difficult to work with. The Chinese firms were often very corrupt and would
manipulate the tax system. Additionally, Michael has a second, smaller company that
designed apps for mobile devices.
15 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Interviewing a Local Entrepreneur
Michael is also involved with the One Laptop initiative based out of MIT. The idea is
that children in remote communities with no prior access to schools or technology will
have the ability to learn English through a tablet based interface. The program is still in
its initial testing stages, but Michael is the man on the ground overseeing the program
that includes approximately 20 kids ranging from age 4 to 12. We were able to visit the
project site with him and this will be discussed later in this report. The children have
made great progress over just a 3 month period and were already able to recite the
ABCs and identify letters from verbal cues. Once they work out the systems kinks, they
will be able to spread this program throughout Ethiopia in order to provide millions of
children with this opportunity that they would otherwise not have.
Children working with Tablet Computers at One Laptop per Child Project Site
16 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Berhane:
Berhane, an electrical engineer, is working with iceaddis while in the initial phases of
initiating a manufacturing business. Berhane is addressing the prevalent issue of
malaria. His idea is to create a small device that emits a frequency only audible to the
mosquitoes that will irritate them in order to deter the mosquitoes from coming near the
device. The concept is still in the design phase with a prototype already developed. He
is still attempting the find the ideal frequency to a deter the mosquitoes. Interestingly,
during his research he found that mosquitoes have the ability to adapt to their
environment and would be able to tune out a certain frequency is exposed to it for a
long enough period of time. Therefore, Berhane’s device would utilize a frequency
hopping technique that would alternate through a series of 10 frequencies,
incapacitating the mosquitoes’ adaptation ability. His target market is the 85% of
Ethiopians who live in rural areas that are highly susceptible to malaria. Even though
Berhane has a innovative idea to address a real world issue plaguing Ethiopia, he is
hindered by access to financing. Currently, he is unable to get the financing necessary
to continue to make progress on his concept. This is also preventing him from renting
his own workshop. Therefore, he joined iceaddis to help him develop his business
model, use the incubator’s workshop facilities, and continue his search for funding.
iceaddis will allow him continue to make progress on his concept and eventually
become a licensed business.
Samson:
Samson is the owner of a film and production company. Samson is hired by other
companies or people to create video and multimedia productions. During filming,
Samson has a crew of seven employees. Samson took his firm to the next level by
creating a innovative camera crane that allows his crew to film from higher angles. He
has received a patent on this device which will allow him to protect his idea or sell
camera cranes to other filming companies. This camera crane is just one example of
Samson’s ingenuity and mechanical knowledge. Interestingly, he is passionate about
restoring cars. He has a collection of cars that he has personally restored ranging from
a Chevy truck to a VW Bug. Ethiopia does not always have access to many of the parts
and tools that are available in the developed world so Samson has become very adept
in designing the items that he needs. Samson plans to apply his innovative drive to
other projects in the future. One of his current projects includes designing a cheap
tractor powered by old Volkswagen engines (these are plentiful in Ethiopia and easy to
repair and maintain) that would allow farmers to plow their fields more efficiently. He is
also exploring an idea that would design an ultra-light aircraft that would allow farmers
to treat their crops from above.
17 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Fitsum:
Fitsum, an electrical engineer and IT specialist, created a company that builds and
operates large-scale networks. He gained some on the job experience by working for a
local satellite campus of J ohn Hopkins University and other IT corporations. Fitsum
realized the void of skilled professionals in the IT field and decided to try to fill that gap.
He told us that financing is the largest problem facing entrepreneurs trying to start a
business. Therefore, Fitsum and his partners did various consulting projects in order to
raise 1 Million Birr for startup capital. Then, he had to register the business in order to
get licenses. He explained that this was a very difficult and long process because there
are no clear procedures to how to apply for the different licenses at the various
agencies. The majority of his time and effort spent obtaining licenses was just trying to
navigate the confusing bureaucratic system. Eventually, he was able to get the
company established and now they work as subcontractors for other companies who
need IT work. This includes setting up and operating networks for large-scale events,
like Google’s recent convention in Addis Ababa.
There are still many issues facing Fitsum’s company. The biggest challenge for Fitsum
is retaining his staff of highly trained and experienced engineers. He has explored
many methods in order to retain the quality employees such as attractive salary
packages and other fringe benefits such as company cars. To Fitsum’s surprise,
administration work takes up about 60% of the time and he has had to hire more
employees to meet his rising administration demand.
A major issue hindering the company is the fact that none of the materials are produced
in Ethiopia and must be imported. The best approach to getting over this barrier is his
professional network and building partnerships. Fitsum knows a supplier of IT
equipment in the U.S. which allows him to get discounts and other deals that others
would not normally have, which gives his company a distinct advantage against its
competitors. Also, going through customs can be very time consuming and expensive,
but contacts in the Customs Agency help. A challenge that he mentioned is that before
you can even order the equipment, you must obtain a letter of credit from the bank
which allows the Ethiopian Birr to change over to the U.S. Dollar. This process can take
up to 6 months, severely impeding upon the company’s ability to conduct business.
Unfortunately, Fitsum’s company is still a small, like similar firms in Addis Ababa, and
some larger projects are being outsourced to large Indian companies. Therefore,
Fitsum and his company are making an effort to partner with the other small IT firms in
Addis Ababa in order to keep contracts local, even if the job is too large for a single
company.
18 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Yonas:
Yonas is also an electrical engineer who previously worked at a Government Institute.
3 months ago he formed a company that develops Radio-Frequency Identification
(RFID) inventory applications and is a member of iceaddis. Yonas believes that there is
incredible potential for this technology in Ethiopia. He has one partner in the firm and a
partner in the US who assist in procuring hardware. With the growth of the Ethiopian
manufacturing and construction sectors, he believes that the RFID capabilities will be in
great demand. To his knowledge, there are no other firms in this business. He is
currently coordinating to test his system in several warehouses in the Addis Ababa
area. He also emphasized that he believes by creating a successful business, he will be
improving Ethiopian society and providing opportunities to its people. Yonas’ firm
currently has four main challenges:
1. Importing Hardware (RFID Chips and Scanners): The bureaucracy makes it
difficult to import this equipment. It’s more efficient to order “in bulk” but based on
his firm’s current size, a large inventory of hardware presents a challenge. It is
also simply difficult to get items through customs in a timely manner and
corruption is present.
2. Obtaining funding for near-term growth is a challenge as it is throughout Sub-
Saharan Africa. Yonas is currently working on small jobs to fund growth and
working with iceaddis as well.
3. Yonas’ firm needs to improve their own infrastructure. They are currently utilizing
space at iceaddis and another small space for an office. Eventually, they will
need a professional space with access to reliable power and a reliable and fast
internet connection.
4. The firm needs to be able to demonstrative the “value” of this technology to a
potential customer base that may not have ever heard of it and are likely
resistant to changing their operating procedures.
Day 5 & 6 (6 & 7 July)
The team spent these two days driving to, and visiting a “One Laptop per Child” study
site located near Lake Wenchi. This visit is discussed in a blog post authored by Evan
Szablowski:http://blog.netsciwestpoint.org/2012/08/13/one-laptop-per-child/. The team
also took advantage of this visit and walked to the lake, which is actually a crater of a
dormant volcano. At the lake shore, a local villager took us in a boat to an island in the
lake that contained an old Ethiopian Orthodox Christian Church as well as a monastery.
After a short tour, the group returned to the lake shore and rode horses back to the
main ridgeline.
19 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
The Road to the Project Site
One Laptop per Child Project Site
20 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Children at the Project Site
Conclusion
The briefing to the embassy staff yielded great insights and the team is currently
adjusting our network model. We will share this modified network with them and
published a paper that illustrates our methodology as well as the visualization tools that
team has developed.
Local Villager transporting the Team to Island at Lake Wenchi
21 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Ethiopian Orthodox Church on Island at Lake Wenchi
The entrepreneur interviews were also amazingly beneficial. The only “negative” was
the limited time available to the team “on the ground” in Ethiopia. We could have used
several more days meeting with additional entrepreneurs in order to expand our data
set. Through coordination with iceaddis and several other organizations in Ethiopia, we
have distributed a web-based survey in order to reach additional entrepreneurs in the
local network.
doc_291339722.pdf
A team of two cadets, Evan Szablowski and Zachary Langhans and Senior Researcher, Dan Evans visited Addis Ababa.
August 2011
Network Science Center Research Team’s Visit to Addis Ababa,
Ethiopia
Daniel Evans, Evan Szablowski, and Zachary Langhans
A team of two cadets, Evan Szablowski and Zachary Langhans and Senior Researcher,
Dan Evans visited Addis Ababa, Ethiopia from 1 through 8 J uly in support of two
ongoing Network Science Center projects that are assisting in the analysis and
understanding of economic development in frontier markets.
1) The Network Anal ysi s “ Tool Kit”
The Network Science Center has established a collaborative relationship with the State
Department and during a visit to Ethiopia in May; Dan Evans demonstrated an initial
version of the “Took Kit” to Mr. Dan Rosenthal, the Commercial Officer at the US
Embassy. This network analysis software package which will provide policy and
decision makers with a “tool kit” that assists in the development of policy backed by a
rigorous quantitative analysis package. Mr. Rosenthal indicated an interest in
collaborating on the further development of this project.
Over the last month, 2 of our college apprentices, Marc J ohnson and Lauren Kewley,
and the two cadet researchers collected data on all key actors and organizations in the
2 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Ethiopian “economic development network.” Based on this data, they developed an
extensive network model and then built several visualization tools that quickly identified
the most prominent nodes based on several different characteristics and developed a
proposed node classification methodology.
2) Entrepreneur Network Model
The team also continued to develop an entrepreneur network model. Based on the visit
in May, we developed a draft survey that captures data about the local environment in
which entrepreneurs are operating. During this visit, the team met with local
entrepreneurs and conducted a survey with each of them. The team has collaborated
with CORE Lab at the Naval Postgraduate School and utilized an application they have
developed called Lighthouse. This application allowed the team to conduct interviews
with local entrepreneurs and collect the data on an Android-platform “smart phone.” This
application uploads the data to the cloud, which then allows the team to quickly upload
the data into network analysis software. This collaborative effort will be discussed in
more depth in a future Network Science Center paper.
Ethiopia Background:
Ethiopia is unique among African countries in that the ancient Ethiopian monarchy
maintained its freedom from colonial rule with the exception of a short-lived Italian
occupation from 1936-41. In 1974, a military junta known as "the Derg," deposed
Emperor Haile Selassie, who had ruled since 1930, and then established a socialist
state. Torn by bloody coups, uprisings, wide-scale drought, and massive refugee
problems, the regime was finally toppled in 1991 by the Ethiopian People's
Revolutionary Democratic Front (EPRDF). A constitution was adopted in 1994, and
Ethiopia's first multiparty elections were held in 1995.
The new African Union headquarters complex was inaugurated in Addis Ababa on 28
J anuary 2012. The complex was built by China State Construction Engineering
3 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Corporation as a gift from the Government of China, and consists of a 2,500-seat
plenary hall and a 20-story office tower.
Ethiopia's economy is primarily focused on agriculture. According to the US State
Department, agriculture accounts for 41% of GDP and 85% of total employment. Coffee
was "discovered" here and is the major export crop. The agricultural sector has
historically suffered from poor cultivation practices and frequent droughts.
The Government unveiled a five-year Growth and Transformation Plan in 2010. This
plan is an ambitious government-led effort to achieve the country's development goals.
According the US State Department, Ethiopia has attracted significant foreign
investment in commercial agriculture and manufacturing. However, the finance,
insurance, and micro-credit industries are restricted to domestically-owned firms.
Ethiopia's constitution mandates that the state owns all land and, subsequently,
provides long-term leases to the tenants. The Government has started to issue land use
"certificates" so that tenants have some type of recognizable rights to continued
occupancy. While GDP growth has remained high, per capita income is among the
lowest in the world.
Day 1 (Jul y 2 2012)
The research team met with two important leaders of iceaddis, Ethiopia’s first high tech
innovation hub. iceaddis is located on the beautiful campus of the Ethiopian Institute of
Architecture, Building Development, and City Development (EiABC). We were fortunate
to be able to meet with the hub’s managing director, Sarah Abdulhafiz and Markos
Lemma, the Community Manager for iceaddis and Project Coordinator from
Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH (GIZ), a German federal
4 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
enterprise that supports the German Government in achieving its objectives in the field
of international cooperation for sustainable development.
Construction of Road Interchange in Addis Ababa
The hub is also supported by Center for Creative Leadership (CCL). CCL is a top-
ranked, global provider of executive education headquartered in North Carolina and led
by Admiral (Retired) J ohn Ryan, a former Superintendent of the US Naval Academy.
The Center has recently established an office in Addis Ababa and is heavily involved in
a mentoring program with a group of 25 women college students who are associated
with iceaddis.
The Ethiopian Institute of Architecture, Building Development, and City
Development
5 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Sarah further explained that iceaddis provides the following capabilities in order to
accomplish its mission:
Provision of Open Space: iceaddis works closely with local entrepreneurs, students,
and other local “communities” who share their innovative and entrepreneurial ideas and
offers their “open space” for hosting meetings, conferences, and community summit
events.
Prototyping Facilities: iceaddis has access to EiABC’s small-scale prototyping
facilities. This gives the start-up companies to capability for customized fabrication.
Additionally, Sarah explained the iceaddis “Membership Model.” She told me that
iceaddis currently has about 500 members. Basically, you can join the community at
one of three membership levels:
White: White Membership is free of charge and is designed to open the
innovative community to all interested individuals. White Members can access
the online innovation forums and online resources. Generally, White Members
can attend selected events.
Green: A 12-week Green Membership cost 850 Ethiopian Birr, or about $48.
This three month intense program takes talented, high-potential people, and
turns them into elite, determined, and focused entrepreneurs. Green Members
are required to give a presentation at the end of their program that is focused
around their personal takeaways from the program, their ideas for the future, and
possible business plans. Green Members have access to the lower floor of
iceaddis which includes a general collaboration lounge, as well as computers that
can be used for printing, and iceBookshelves.
Red: Red Membership cost 2,500 Ethiopian Birr a month, or about $142. This
membership level gives its participants a fully equipped workspace to work on a
real start-up idea and gives the entrepreneurs all the facilities needed to
successfully start their business. Red Members have access to the whole
iceaddis building which includes a general collaboration lounge, as well as
computers that can be used for printing, iceBookshelves, and most importantly a
private desk, fully equipped with all necessary office equipment. iceaddis
consultants provide professional support to network the technology and business
facets of the start-up, as well as to enable them to create synergies, pool
knowledge and source investment.
Sarah indicated that there are currently 7 active Red Members-none of these Members
have “graduated,” or become independent of the hub yet. Of the 500 total members,
there are approximately 35 Green Members.
6 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Under the current business model, iceaddis supplies resources but no funding to the
entrepreneurs. When the business signs on as a Red Member, it signs an agreement
with iceaddis that grants iceaddis a percentage of the new business’ equity. Sarah told
me that each contract is customized based on the specific circumstance surrounding
the business establishment. Although iceaddis supplies no funding, the hub does have
an extensive network that facilitates introductions to potential funding sources such as
local businessmen or NGOs.
The majority of the current iceaddis start-ups are “designed-based.” The hub
encourages entrepreneurs to focus on ideas, services, or products that are “green,
innovative, and meet the demands of the local market.” One example of an ongoing
project is a new model of the bike trailer, an item that is ubiquitous in Ethiopia, which is
to be constructed of more “green” components that the current models that are typically
hand-made from scrap metal and old axles. The new model will primarily be constructed
of bamboo which is abundant in Ethiopia and is a very durable material. Another
example is a solar-powered lamp in which the battery charges during daylight hours and
then the lamp supplies light during darkness and has an outlet that also allows the user
to charge their mobile phone.
The purpose of the visit was to gather information in order to support the initiation of a
project that will develop models of entrepreneur networks in frontier markets. The team
has identified the network in Addis Ababa as one of great potential and at a state in its
growth trajectory where we can capture vital data before the explosion. The staff at
iceaddis has graciously agreed to collaborate on this project.
7 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
A Prototype of a “ Green” Bicycle Trailer in the Lab
During the course of our meeting, we discussed basic small business issues in order to
better understand the local business environment. From this conversation we received
our first glimpse into what became a common thread throughout the trip: the presence
of a gap between microfinance and large corporate investments in the business market.
The creative environment in Ethiopia is energetic, with a large population of innovative
Ethiopians both young and old wanting to enter into the market. However the common
obstacle is acquiring initial funding to help build their ideas. Commercial loans are not
accessible like they are in the developed world and many of the entrepreneurs we
talked to discussed how their next step is to simply find some funding to kick start their
projects.
Although there is a lot of current interest for investing in Ethiopia, it is mostly taking
place on the grand scale. Large firms are not interested in looking at the small market of
startups because of the lack of promise in profit turnaround. We were surprised by how
far the definition of “small” stretches, with examples of some companies shunning
million-dollar projects as too small. One interesting quote was how many Private Equity
firms have the mindset that “it is better to manage 1 twenty million-dollar company than
10 two-million dollar companies.” So even though the need exists for investment
funding, there are not many willing participators who want to play on the “smaller” level.
It requires too much management and on-the-ground commitment, and is unattractive to
foreign investors.
8 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Meeting with an Entrepreneur at iceaddis
We also discussed the foreign presence in the Ethiopian market. The obvious first
player mentioned was China, due to their ongoing extended investments in
infrastructure across the country. After the Chinese, Turkey was mentioned as having
the most influence. They are much more recent, described as just “popping up” in the
markets. The United States was not mentioned so much in market influence, but instead
in just on-the-ground presence. American citizens are prevalent in the country through
many NGOs, but they are largely limited to this sector.
Another obstacle discussed was prejudice against domestic production due to
stereotypes and old ideas of quality. One member mentioned how wine production is
limited because citizens have the mindset that “Wine should be made in Italy or
France.” Development is restricted because people are not willing to give domestic
products a chance. Imported products are automatically believed to be of higher quality.
Although this is usually true, it is restricting areas of the market where there is promise
for comparable or even superior quality Ethiopian products.
Center for Creative Leadership (CCL)
The team also met with Mr. Tewodros Tadesse, the CCL’s Faculty Development
Manager for the Africa Region. The CCL is “a top-ranked, global provider of executive
education” headquartered in North Carolina and led by Admiral (Retired) J ohn Ryan, a
former Superintendent of the US Naval Academy. The Center has recently established
an office in Addis Ababa and is heavily involved in a mentoring program with a group of
25 women college students who are associated with iceaddis.
9 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Day 2 (Jul y 3 2012)
The Network Anal ysis " Tool Kit" Briefing and Demonstration:
The cadets presented their findings to members of the Political and Economic Sections
at the US Embassy. Part of their presentation included several new visualization
techniques that enable “everyday decision-makers and policy makers” with the
capability to more effectively understand the analysis and recommendations. The
presentation was well received and the discussion and feedback session after the
presentation was particularly fruitful. Based on the recommendations, the Network
Science Center will make adjustments to the current model and electronically submit to
the Embassy staff in Ethiopia for and additional review.
Overall, the staff members were very intrigued by the network analysis methodology
and are very interested in continuing to cooperate with the Network Science Center as
the project progresses. The post-briefing discussion focused on the following ideas:
• Asymmetric relationships:
o Considering the senior-subordinate relationship and its potential effects on
a link (Influence possibly only travels in a single direction).
o Consider weighting links. It was suggested that we explore spliting all
symmetric links into directed links, and treat them separately depending
on the relationship.
o Consider establishing negative links. The staff members mentioned that
animosity is often present in this “network”-they suggested that we
consider some people as “enemies” (better term might be rivals?). These
“negative” links could capture important aspects of the network that we
currently don’t capture.
• Data considerations
o Fighting factions-“Who fought with whom” during the revolutions against
the Derg is the “most important” social connection in Ethiopia. “Nothing
tops that.”
o Ethnicity- It’s a “huge” consideration in Ethiopia. Ethiopian’s have a
different image of nationality identification. An individual’s home province
(kilil) is where their true loyalty and identity lies.
• Political Party subdivision
o The Ethiopian People’s Revolutionary Democratic Front is the ruling
coalition of four political groups: the Oromo Peoples’ Democratic
Organization, the Amhara National Democratic Movement, the South
Ethiopian Peoples’ Democratic Front, and the Tigrayan Peoples’
Liberation Front.
o The “sub-parties matter-It doesn’t mean anything to consider them
members of the EPRDF because everyone identifies with them politically.
10 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
The sub-parties have an influence to themselves, and most relationships
are connected through that level of the party
“ Tool Kit Visualization” Example Developed for the Embassy Staff
• Foreign influence
o Can we quantify China’s presence in our network – what type of influence
does it exert?
• Educational weighing
o The embassy staff downplayed educational connections-“Of course
everyone went to Addis Ababa University.”
o Secondary school is almost inconsequential
o In many countries, these ties are amazing influential.
• Scope of the network – “How far to cast the net”
o Sub-ministers play a huge role-Even mentioned an instance where it was
clear that the government minister did not hold the power, but his
subordinate was the decision maker
o State level government important
o More government organizations need to be included:
? Local and national chamber of commerce
? Parastatal Organizations
11 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
• Foreign influence
o Can we quantify China’s presence in our network – what type of influence
does it exert?
• Educational weighing
o The embassy staff downplayed educational connections-“Of course
everyone went to Addis Ababa University.”
o Secondary school is almost inconsequential
o In many countries, these ties are amazing influential.
“ Tool Kit Visualization” Example Developed for the Embassy Staff
• Scope of the network – “How far to cast the net”
o Sub-ministers play a huge role-Even mentioned an instance where it was
clear that the government minister did not hold the power, but his
subordinate was the decision maker
o State level government important
o More government organizations need to be included:
? Local and national chamber of commerce
? Parastatal Organizations
12 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
• Suggestions for inclusion in the network
o MIDROC (a conglomerate of 41 companies owned by Sheikh Mohammed
Hussein Ali Al Amoudi an Saudi/Ethiopian businessman) of heavy
influence, look at the sub-companies
o Parastatal organizations
o Deputy-state ministers
o Directors General
o Chamber of Commerce
TechnoServe
The team also had the opportunity to meet with Ms. Heather Oh, the Technoserve
Country Director for Ethiopia. Technoserve is a 501(c)3 organization with that works
“with enterprising people in the developing world to build competitive farms, businesses,
and industries.”
Ms. Oh told us that in Ethiopia TechnoServe is focusing on empowering local farmers in
order to assist them in increasing their potential output and make production more
efficient. In Ethiopia their regional office specializes in helping coffee production
throughout the country. They equip the farmers to develop their coffee processing
potential, allowing them to refine the coffee beans further before sending them to other
production facilities. By increasing their control over this production process, they are
cutting out other middlemen and increasing their own profits. Some even sell directly to
major coffee names (such as Starbucks).
In our discussion it seemed that TechnoServe emphasized the business aspect of their
organization model over any notions of charity work. Ms. Oh mentioned how it all comes
back to the organizations ideas concerning the “Theory of Change.” They treat the
projects with farmers as business interactions and not as aid work. Instead of handouts,
they are giving loans with interest and expectations of repayment. She also mentioned
how this makes farmers nervous because they are not accustomed to any
accountability in funding.
Ms. Oh also mentioned that Technoserve invests “intensely” in their own staff members’
development. She mentioned that the lingering effects of history (the Derg regime and
the experiment with Marxism) still hinder economic development. She also mentioned
that the members of “the Diaspora” who have recently returned to Ethiopia and now
lead many successful businesses.
Day 3 (Jul y 4 2012)
The team met with the directors of several investment firms with a focus on emerging
markets. These firms have asked us to not publicize then names of their firms or the
13 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
staff members. The team had a wide-ranging discussion with these investment
professionals. The major points of discussion are summarized:
• Challenges in investing
o Foreign money is typically associated with grants from NGOs. It was also
stated that these small businesses are “not used to receiving foreign
investment funds that come with the expectation of higher standards of
accountability.”
o Additionally, it was noted that “Private equity is a new concept” to the
native business environment.
• Solutions
o The firms described themselves as being “Hands on with their
investments”-much more than typical private equity firms or other
investors.
• Investment Vision in Ethiopia
o The firms hope to be models of change and it was stated that they will
“focus on financial return first,” but associated with positive environmental,
social, and governance outcomes.
o On mentioning of the statement we heard: “500 Thousand Dollars is too
little for a single deal” the replies were “not for many businesses in
Ethiopia.”
o Consensus was that a domestic stock exchange is a “long way off”
because the building blocks are not present for a stable market.
• Ethiopian Investing Idiosyncrasies: It was explained that foreign investing is not
allowed in the following sectors:
o Retail
o Wholesale
o Telecom
o Banking
• Foreign Grants to Businesses: The investors were very negative about its impact
on its own:
o Does not force business to focus on the “bottom line.”
o The investors were more concerned about the accountability investment
brings to companies.
• Entrepreneurship: The investors were very interested in our Entrepreneurship
Network Model- It was mentioned that “everything happens because of business
networks” and “that’s how African countries work.”
• Final Thoughts: The investors emphasized the following facts:
o “Americans aren’t taking advantage of this in Africa”
14 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
o China is doing a lot, but there are many challenges:
o Trust of American Products is high
o Government is so focused on exports:
- Domestic market is growing though!
- Ripe for foreign investment!
Day 3 & 4 (4-5 Jul y)
The team met with local entrepreneurs. The notes from these meetings follow. The
team is only using the “first names” of the entrepreneurs and has “anonymized” the
business names in order to protect any intellectual property or capital.
Michael:
Michael started a business with his brother in the Information Technology sector.
Michael specializes in software, while his brother focuses on hardware. Michael’s main
objective is to “localize” business management software such as Enterprise Resource
Planning (ERP) or E-Business applications by converting it to Amharic. This will allow
businesses in Addis Ababa who operate primarily in Amharic to run their businesses
more efficiently without the difficulties of using English based software. In order to start
this business, he had to obtain 5 licenses all from different agencies. The complex
bureaucratic system in place requires Michael to physically apply at the agencies and is
a very expensive and time-consuming process. The government requires him to have
financing in order to get his licenses, which can be gained through various sources,
such as a commercial bank with an interest rate around 11%. His business currently
has virtually no competition due to his innovative concept and his innovation. Even
though the market is small, he is well known in this sector. He hires employees on a
project-based or time-based contract and on average has 80 employees. One current
challenge he faces is the ability to pay his employees on time because of late payments
from some Chinese firms that have recently hired his company. Michael has worked as
a sub-contractor for the Chinese firms several times and he made note that these firms
were very difficult to work with. The Chinese firms were often very corrupt and would
manipulate the tax system. Additionally, Michael has a second, smaller company that
designed apps for mobile devices.
15 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Interviewing a Local Entrepreneur
Michael is also involved with the One Laptop initiative based out of MIT. The idea is
that children in remote communities with no prior access to schools or technology will
have the ability to learn English through a tablet based interface. The program is still in
its initial testing stages, but Michael is the man on the ground overseeing the program
that includes approximately 20 kids ranging from age 4 to 12. We were able to visit the
project site with him and this will be discussed later in this report. The children have
made great progress over just a 3 month period and were already able to recite the
ABCs and identify letters from verbal cues. Once they work out the systems kinks, they
will be able to spread this program throughout Ethiopia in order to provide millions of
children with this opportunity that they would otherwise not have.
Children working with Tablet Computers at One Laptop per Child Project Site
16 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Berhane:
Berhane, an electrical engineer, is working with iceaddis while in the initial phases of
initiating a manufacturing business. Berhane is addressing the prevalent issue of
malaria. His idea is to create a small device that emits a frequency only audible to the
mosquitoes that will irritate them in order to deter the mosquitoes from coming near the
device. The concept is still in the design phase with a prototype already developed. He
is still attempting the find the ideal frequency to a deter the mosquitoes. Interestingly,
during his research he found that mosquitoes have the ability to adapt to their
environment and would be able to tune out a certain frequency is exposed to it for a
long enough period of time. Therefore, Berhane’s device would utilize a frequency
hopping technique that would alternate through a series of 10 frequencies,
incapacitating the mosquitoes’ adaptation ability. His target market is the 85% of
Ethiopians who live in rural areas that are highly susceptible to malaria. Even though
Berhane has a innovative idea to address a real world issue plaguing Ethiopia, he is
hindered by access to financing. Currently, he is unable to get the financing necessary
to continue to make progress on his concept. This is also preventing him from renting
his own workshop. Therefore, he joined iceaddis to help him develop his business
model, use the incubator’s workshop facilities, and continue his search for funding.
iceaddis will allow him continue to make progress on his concept and eventually
become a licensed business.
Samson:
Samson is the owner of a film and production company. Samson is hired by other
companies or people to create video and multimedia productions. During filming,
Samson has a crew of seven employees. Samson took his firm to the next level by
creating a innovative camera crane that allows his crew to film from higher angles. He
has received a patent on this device which will allow him to protect his idea or sell
camera cranes to other filming companies. This camera crane is just one example of
Samson’s ingenuity and mechanical knowledge. Interestingly, he is passionate about
restoring cars. He has a collection of cars that he has personally restored ranging from
a Chevy truck to a VW Bug. Ethiopia does not always have access to many of the parts
and tools that are available in the developed world so Samson has become very adept
in designing the items that he needs. Samson plans to apply his innovative drive to
other projects in the future. One of his current projects includes designing a cheap
tractor powered by old Volkswagen engines (these are plentiful in Ethiopia and easy to
repair and maintain) that would allow farmers to plow their fields more efficiently. He is
also exploring an idea that would design an ultra-light aircraft that would allow farmers
to treat their crops from above.
17 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Fitsum:
Fitsum, an electrical engineer and IT specialist, created a company that builds and
operates large-scale networks. He gained some on the job experience by working for a
local satellite campus of J ohn Hopkins University and other IT corporations. Fitsum
realized the void of skilled professionals in the IT field and decided to try to fill that gap.
He told us that financing is the largest problem facing entrepreneurs trying to start a
business. Therefore, Fitsum and his partners did various consulting projects in order to
raise 1 Million Birr for startup capital. Then, he had to register the business in order to
get licenses. He explained that this was a very difficult and long process because there
are no clear procedures to how to apply for the different licenses at the various
agencies. The majority of his time and effort spent obtaining licenses was just trying to
navigate the confusing bureaucratic system. Eventually, he was able to get the
company established and now they work as subcontractors for other companies who
need IT work. This includes setting up and operating networks for large-scale events,
like Google’s recent convention in Addis Ababa.
There are still many issues facing Fitsum’s company. The biggest challenge for Fitsum
is retaining his staff of highly trained and experienced engineers. He has explored
many methods in order to retain the quality employees such as attractive salary
packages and other fringe benefits such as company cars. To Fitsum’s surprise,
administration work takes up about 60% of the time and he has had to hire more
employees to meet his rising administration demand.
A major issue hindering the company is the fact that none of the materials are produced
in Ethiopia and must be imported. The best approach to getting over this barrier is his
professional network and building partnerships. Fitsum knows a supplier of IT
equipment in the U.S. which allows him to get discounts and other deals that others
would not normally have, which gives his company a distinct advantage against its
competitors. Also, going through customs can be very time consuming and expensive,
but contacts in the Customs Agency help. A challenge that he mentioned is that before
you can even order the equipment, you must obtain a letter of credit from the bank
which allows the Ethiopian Birr to change over to the U.S. Dollar. This process can take
up to 6 months, severely impeding upon the company’s ability to conduct business.
Unfortunately, Fitsum’s company is still a small, like similar firms in Addis Ababa, and
some larger projects are being outsourced to large Indian companies. Therefore,
Fitsum and his company are making an effort to partner with the other small IT firms in
Addis Ababa in order to keep contracts local, even if the job is too large for a single
company.
18 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Yonas:
Yonas is also an electrical engineer who previously worked at a Government Institute.
3 months ago he formed a company that develops Radio-Frequency Identification
(RFID) inventory applications and is a member of iceaddis. Yonas believes that there is
incredible potential for this technology in Ethiopia. He has one partner in the firm and a
partner in the US who assist in procuring hardware. With the growth of the Ethiopian
manufacturing and construction sectors, he believes that the RFID capabilities will be in
great demand. To his knowledge, there are no other firms in this business. He is
currently coordinating to test his system in several warehouses in the Addis Ababa
area. He also emphasized that he believes by creating a successful business, he will be
improving Ethiopian society and providing opportunities to its people. Yonas’ firm
currently has four main challenges:
1. Importing Hardware (RFID Chips and Scanners): The bureaucracy makes it
difficult to import this equipment. It’s more efficient to order “in bulk” but based on
his firm’s current size, a large inventory of hardware presents a challenge. It is
also simply difficult to get items through customs in a timely manner and
corruption is present.
2. Obtaining funding for near-term growth is a challenge as it is throughout Sub-
Saharan Africa. Yonas is currently working on small jobs to fund growth and
working with iceaddis as well.
3. Yonas’ firm needs to improve their own infrastructure. They are currently utilizing
space at iceaddis and another small space for an office. Eventually, they will
need a professional space with access to reliable power and a reliable and fast
internet connection.
4. The firm needs to be able to demonstrative the “value” of this technology to a
potential customer base that may not have ever heard of it and are likely
resistant to changing their operating procedures.
Day 5 & 6 (6 & 7 July)
The team spent these two days driving to, and visiting a “One Laptop per Child” study
site located near Lake Wenchi. This visit is discussed in a blog post authored by Evan
Szablowski:http://blog.netsciwestpoint.org/2012/08/13/one-laptop-per-child/. The team
also took advantage of this visit and walked to the lake, which is actually a crater of a
dormant volcano. At the lake shore, a local villager took us in a boat to an island in the
lake that contained an old Ethiopian Orthodox Christian Church as well as a monastery.
After a short tour, the group returned to the lake shore and rode horses back to the
main ridgeline.
19 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
The Road to the Project Site
One Laptop per Child Project Site
20 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Children at the Project Site
Conclusion
The briefing to the embassy staff yielded great insights and the team is currently
adjusting our network model. We will share this modified network with them and
published a paper that illustrates our methodology as well as the visualization tools that
team has developed.
Local Villager transporting the Team to Island at Lake Wenchi
21 | P age
Network Science Center, West Point
www.netscience.usma.edu
845.938.0804
Ethiopian Orthodox Church on Island at Lake Wenchi
The entrepreneur interviews were also amazingly beneficial. The only “negative” was
the limited time available to the team “on the ground” in Ethiopia. We could have used
several more days meeting with additional entrepreneurs in order to expand our data
set. Through coordination with iceaddis and several other organizations in Ethiopia, we
have distributed a web-based survey in order to reach additional entrepreneurs in the
local network.
doc_291339722.pdf