Telecommunications in Ethiopia

THE IMPACT OF DEVELOPMENT Telecommunications in Ethiopia

Articles in Finance and Development generally deal with the world's economic problems as they appear to the generals in the operations room or to senior officers in the field. In this series of articles, an attempt is made to give some glimpses of development as it affects the lives of the private soldiers of development.

Peter W. Bocock

©International Monetary Fund. Not for Redistribution HAPED roughly like a diamond flattened at its out the prices he is able to get for his produce, he may S base, Ethiopia is Africa's fourth largest country simply decide not to bother. Similarly, even with im- and its third most populous, with an area of 470,000 proved roads, government officials may still have to square miles and a population of about 23 million. It is travel for a day simply to find out the difficulties faced bordered by the Red Sea on the north and east, Kenya by small communities 100 or 200 miles away. Ethiopia and Somalia on the south and southeast, and the Sudan has a mail service, but this is subject to the inevitable on the west and northwest. delays imposed by the country's terrain. What is more, Ethiopia is a high plateau, studded with even higher in a country with a literacy rate of only 10 per cent a mountains and bisected from north to south by the mail service is of limited value to the ordinary citizen. great Rift Valley. Though there are large areas of desert Ethiopian Airlines operates an excellent internal air or semidesert, most of the land is fertile, and the cli- service, but cannot serve each of the country's many lo- mate is gentle. The terrain is often difficult, however, cal airports daily; some areas have only one flight a and the country's few population centers are relatively week. small and scattered. Given the problems of money and terrain, the need These physical factors, together with the system of to bring large numbers of people into the money econo- land tenure, broadly determine the nature of Ethiopia's my, and the complexities of administering a moderniz- economy—predominantly agricultural, and composed ing nation, Ethiopia has embarked on a major program mainly of small peasant land holdings. Many rural to expand and improve telecommunications. areas have little contact with the outside world. Nine out of ten Ethiopians are engaged in one way or an- 70 Years of Telecommunications other in agriculture, which accounts for about two thirds of the country's gross domestic product and al- A telecommunications network of sorts has existed in Ethiopia for 70 years. The first equipment was installed most all its export earnings. The main items of pro- at the end of the last century, during the reign of the duction are grains, fruits and vegetables, livestock, Emperor Menelik, who also created the city of Addis hides and skins, and coffee, the most valuable crop Ababa and made it the country's permanent capital. It and chief export. was Menelik, too, who established the beginnings of a The wide dispersion of economic activity among central administration, and started the job of subordi- many small units of production and the sheer size of nating independent provincial authorities to a unified the country create economic and administrative prob- imperial government. lems for Ethiopia. Lacking information about prices The present emperor, Haile Selassie I, added to the and demand in the cities, the rural farmer has little mo- system in the early years of his reign, recognizing the tivation to produce more than is needed for subsistence. importance of telecommunications for the political and The administrator in the capital, equally isolated from administrative unification of his country and its eco- the hinterland, often finds it difficult to gather informa- nomic development. Then came the Italian occupation tion, or to frame and put into action the policies needed and the war of liberation. Although the Italians contin- for the unified and rapid development of the empire. ued to improve telecommunications in order to rule the Ethiopia's growth rate in recent years has been a re- country effectively, the network was virtually destroyed spectable 4 per cent per annum, but it could be higher, by the end of the war. Acute shortages of money and given the country's natural advantages. One of the keys staff led to a further deterioration of such telecommuni- to further economic development and to improved ad- cations facilities as still existed after the war. By the be- ministration lies in improving the country's communica- ginning of the 1950's, the system was almost paralyzed. tions network. In recent years, the Government of Ethiopia has given special priority to investment in facilities that will World Bank Mission, 1950 knit the country together—especially roads and tele- In April and May 1950, a World Bank mission vis- communications. Good roads now exist between most ited Ethiopia to examine the possibilities of Bank of the main population centers. But roads are an expen- assistance to the country, and to establish priority areas sive means of communication, costly to build and main- of investment. One of these priorities was telecommuni- tain, and time consuming to use. If an Ethiopian farmer cations. It was proposed that an independent telecom- must make a half-day trip to the nearest market to find munications authority be established, to which the Bank 16

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would lend the equivalent of US$1.5 million. Most of city, are connected by two separate systems with a total this money was to help finance the reconstruction of the of 17 channels, and despite the efficiency of IBTE's re- old system, although some important new extensions pair crews (which can set off in a truck at a moment's were also planned to cope with the volume of sup- notice to repair a fault on the line), calls between As- pressed demand. mara and Addis Ababa are often subject to delays of The Bank loan to the new telecommunications au- several hours. Similar delays can be experienced on thority, known as the Imperial Board of Telecommuni- calls to less important centers. To remedy this situation cations of Ethiopia (IBTE), finally became effective in IBTE plans to install microwave links with direct dial- February 1954. By 1957 it had been fully disbursed. ing facilities between the capital and the main popula- But a partnership had begun. Subsequently, IBTE has tion centers in the hinterland. received three more loans from the bank amounting to a further $12.2 million. The steady improvement in Finance and Staff telecommunications over the years, both in quality of The improvement of facilities has entailed a continu- service and in its extension to new subscribers and new ing demand for capital. Over the last five years, IBTE areas, has been an important stimulus to Ethiopia's has successfully met over 60 per cent of its capital progress.

Addis Ababa My visit to Ethiopia began at IBTE's headquarters in the capital, Addis Ababa. With a population of 600,000, Addis Ababa is more than twice as large as the second biggest city. It is also by far the largest con- sumer of telecommunication facilities, serving about 65 per cent of all Ethiopia's telephone subscribers. Local calls are connected automatically through the city's two exchanges, which have a total of 19,500 lines; operators handle interurban and international telephone calls. Telegraph and telex services are also available. There are now over 20,000 telephones in Addis Ababa, but the demand for service still exceeds the supply. About 800 installation requests are received each quarter; of these, 600 can be fulfilled. New telephones mean new lines, and new exchange capacity. IBTE plans to increase the number of lines in the city by 16,000 between 1969 and 1973.

Plans and Problems Ethiopia's annual telephone growth rate has averaged 17 per cent over the past six years. Though long-dis- tance lines have been expanded by 125 per cent since the early 1950's, the interurban network between Addis Ababa and the rest of the country is seriously over- loaded. Interurban calls must still be established by operators, over open line circuits. Delays in connection are inevitable. The exchange may become congested, the lines may develop faults or be put out of commis- sion entirely—either by natural catastrophe (falling trees, rockslides, etc.) or by human agency (wire thefts, etc.). These delays can be serious; despite the fact that Addis Ababa and Asmara, Ethiopia's second largest

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needs from its own resources. This impressive level of The Institute's regular courses range from three self-financing reflects the rapid growth of revenue in re- months' intensive training for telephone operators to cent years; between 1962 and 1967, earnings rose at an 21/i-year residential programs for trainee technicians. average annual rate of 17.2 per cent. The expansion of Its Director told me that the Institute was already earnings has come from increases in the volume of training employees to operate the microwave links business and improvements in efficiency: IBTE's which are part of IBTE's 1969-73 investment program; charges have not been increased since its inception 16 the program is being assisted by a $4.5 million World years ago. Bank loan. Between 1969 and 1973, the Institute plans But money is not all the Board must consider when to run courses for more than 1,200 staff members—ba- planning for the future. It must also ensure that it has sic training for new entrants and refresher courses for sufficient staff, trained to deal with the increasingly so- in-service employees. The Institute, which is unique phisticated equipment used in modern telecommunica- in East Africa and hopes to attract trainees from tions. This problem was foreseen when the Board was other countries, expects to invest Eth$735,000 founded; a Telecommunications Institute was set up in (US$294,000) in new buildings and equipment over 1953 to train staff. Today the Institute, which was the next five years. started with assistance from the International Telecom- After his 2l/2 years of training at the Board's ex- munications Union in Geneva, is staffed entirely by pense (during which he is housed and paid), a techni- IBTE employees: about 70 per cent of the Board's cian is assigned to the regular staff, either in Addis staff of 3,000 has been trained there. Ababa or in one of IBTE's seven other regions. The

©International Monetary Fund. Not for Redistribution Board considers each individual's background and tries Addis Ababa is another example of IBTE's self-suffi- to send him where he will be as near to his family as ciency—the Board's own workshop, comprising a forge, possible. Concern for employee welfare is indicative of a carpentry shop, and a concrete molding shop. Here IBTE's excellence as an employer. The staff benefits are manufactured concrete conduits for underground provided compare well with those offered anywhere in telephone cables, crossbars and angleirons for telephone the world. A pension scheme, group life insurance, poles, and the prefabricated wooden "pay stations" sickness and accident insurance, free medical care, and which are distributed all over Ethiopia. The workshops club and recreation facilities are available. IBTE's pres- also manufacture IBTE's furniture, resulting in substan- ent administrative headquarters is to be turned into a tial savings. clubhouse when the new headquarters building—a modern eight-story block in the heart of Addis Ababa, Users (rive Their Views costing Eth$3 million—is completed. While in the capital city I talked to some of the users of Ethiopia's telecommunications system. The Com- A Modern System mercial Bank of Ethiopia is the country's largest bank, Everywhere I went in Addis Ababa and in the re- with 52 branches: its General Manager told me that he gions, I found well-designed, new buildings housing hopes to open 13 more branches this year. One of the IBTE's exchanges. The Board's forward-looking atti- bank's prime criteria for selecting a site for a new tude is not expressed only in new buildings, however; it branch, he said, was the availability of telecommunica- is also reflected in the wide and steadily expanding tion facilities in the area. Telecommunications were not range of services IBTE offers to its customers. For ex- only of great value to the bank in its own operations: ample, subscribers in Addis Ababa and a number of they also indicated a relatively high degree of general other centers can obtain a wake-up call for about the economic activity and hence an adequate demand for equivalent of 8 U.S. cents; subscribers in the capital can banking services. find out the time by telephone, and it is planned to ex- Later, I asked the Minister responsible for munici- tend this to other centers; telegrams can be sent by tele- palities in the Ministry of the Interior about the role tel- phone in major cities. Nor are the special needs of rural ecommunications played in his work. His department is areas, where telephones are scarce, forgotten: for about responsible for the administration of programs for the 20 cents, a "messenger call" can be sent to a public provision of roads, water supplies, sanitation, welfare telephone; the Board will send out a messenger and services, and in some cases power to Ethiopia's 205 bring the person called to the phone, provided he lives municipalities. A municipality might have a population within 10 kilometers. of only 3,000 people and one or two shops; neverthe- IBTE maintains and repairs all subscribers' equip- less, about 80 per cent of existing municipalities have ment. The facilities offered to telex subscribers are par- telecommunication facilities of some kind, and the ticularly impressive: if a telex develops a fault, the Minister said that these were invaluable for officials in Board will instantly replace it with a spare machine free the field. He gave me an example: suppose a Ministry of charge while the fault is mended. IBTE is currently engineer ran into difficulties with a local water supply testing specially-developed Amharic-script telex ma- project; without a nearby telephone he might have to chines to eliminate the mistakes resulting from inaccur- spend three to four days traveling to Addis Ababa, get- ate transliteration of Amharic and Roman characters. ting advice or new instructions, and returning to the The Board's head office now boasts an IBM computer, site. If telecommunications facilities were available, he which has improved customer service by providing an could get an answer to his problems within a few min- accurate and regular monthly bill for each subscriber. utes. Alternatively, spare parts might be needed for IBTE plans to computerize staff salary payments in the some piece of machinery; to be able to telephone for near future; the computer will also be used for other them, rather than having to travel to Addis Ababa and management functions such as inventory control and back, would halve the time lost. demand forecasting. These examples would be praiseworthy in a telecom- Field Trips munications authority in the developed world; they are I made a number of field trips to see the effects of all the more impressive in an organization which has telecommunications development in the country at large. been created virtually from scratch in 16 years. Five These provided an all-too-brief chance to see the varied minutes walk from the Telecommunications Institute in beauties of Ethiopia's landscape, ranging from starkly

©International Monetary Fund. Not for Redistribution dramatic mountain vistas to pastoral scenes which Not all the Governor's stories were gloomy, however. could have come straight from the Bible. Scenery, cli- He told me how coffee merchants had previously had mate, and architectural attractions such as the ancient to travel for two days to Jimma, spending perhaps two rock churches of Lalibela and the castles of Gondor days in the town and another two days on the return make Ethiopia a country with great tourist potential. trip, just to find out the ruling price of coffee. Today, For this potential to be fully realized, however, further they could make one telephone call instead. The lines development of communications in general, and tele- from Jimma to the outside world, he said, were solidly communications in particular, is essential. occupied every morning by coffee merchants telephon- The first town visited was Jimma, about 200 miles ing to find out the going price in Addis Ababa, or New southwest of Addis Ababa. Jimma is the capital of York, or London. The existence of telecommunications Kaffa province; the bulk of Ethiopia's coffee crop, links meant that more Jimma coffee could be sold at which provides about 60 per cent of the country's ex- better prices and more quickly than ever before. port earnings, is produced here. During the six-hour A day later I was in Dire Dawa (population drive from the capital, I counted ten of the rural public 60,000), another coffee center about 200 miles east of telephone boxes, or pay stations, of the type which I Addis Ababa. The local crop, Harar coffee, is smaller had seen being prefabricated at the IBTE workshops in than Jimma's, but because of its world-renowned qual- Addis Ababa. ity, sells at a higher price. Dire Dawa's strategic position Jimma is a small, attractive town, situated in a lush on the railroad between Ethiopia's capital and Djibouti, tropical landscape. The IBTE regional manager, who the port in French Somaliland which serves most of had worked in telecommunications since the days be- southern and central Ethiopia, makes it something of a fore the Board was established, had been appointed to commercial enterpot. It is also an industrial town in his present post five years ago. At that time there were embryo; founded as the site of the maintenance work- only about 100 telephone subscribers in the town: now shops for the Franco-Ethiopian railway, today Dire there are 400. Dawa's factories include a long-established cement The Jimma region has no telephone installation works linked by a private railway to its own quarry, backlog. In the areas which have any kind of telecom- Ethiopia's largest cotton mill (the Cotton Company of munications connections, anyone requesting a telephone Ethiopia, in which the International Finance Corpora- can have it within a day or two. The region's real prob- tion, the World Bank's subsidiary which works with pri- lems are the inadequacy of existing interurban connec- vate enterprise, has invested), an important meat can- tions to cope with current demand and the proportion nery, and a soft drink plant. Driving around the streets of the local population still lacking any kind of tele- one saw advertisements bearing such familiar names as phone facilities. The regional manager illustrated the Fiat, Landrover, Shell, Sony, Philips, and Singer. first point by saying that as many as 50 interurban calls Dire Dawa is surrounded by fertile agricultural land. a day were canceled—usually because of delays in Much of the area's fruit and vegetable production is connection due to traffic congestion. The second point sent to Djibouti to supply the ships which call in there was made very forcefully by the Deputy Governor of —a useful source of foreign exchange for Ethiopia, and Kaffa province: of the six districts in the province, of business for the town's export-import merchants. three (with a total population of 450,000) had no telecommunications service at all; the other three, with an estimated population of 1,555,000, were served, but only scantily. The Governor estimated that only 20 per cent of those theoretically served had anything like rea- sonable access to a telephone. This, the Governor said, was not just an inconveni- ence; it was an economic tragedy. He spoke about areas not far from Jimma where the local farmers, lacking telephone links, were completely cut off from the outside world. As a result they did not know that their products would fetch a price in Addis Ababa, or even in Jimma, two or three times as high as they could get locally.

©International Monetary Fund. Not for Redistribution Three years ago Dire Dawa had 400 telephone sub- last as long as two or three hours. These will be elimi- scribers and three lines to Addis Ababa. Then the ex- nated when microwave links and direct dialing are in- change was automatized; today there are 650 subscri- stalled. Meanwhile, an emergency radio link exists be- bers, and the lines between Dire Dawa and Addis tween the two cities to cope with breakdowns on the Ababa have been increased to 27. When I arrived, telex 1,000-kilometer line. facilities had just been installed. I talked to the first IBTE has recently established direct dialing facilities telex subscriber, a coffee merchant with a world-wide between Asmara and the port of Massawa, 50 kilome- business. ters away. The Governor-General of Eritrea told me His machine had been installed for only two weeks, that the new link was a great step forward; better com- but he had already transmitted 50 messages, received munications would improve the efficiency of the export 29, and had had ten overseas conversations. I saw the trade and provide important economic benefits to the telex log, which showed messages to Norway, the province and to the country as a whole. By contrast, he United States, Sweden, and Switzerland within the said, delays on the Addis Ababa-Asmara route were previous 24 hours—an impressive document to come hampering both commerce and administration. He him- across in a small town in Ethiopia. self had installed a radio transmitter-receiver for his own use, rather than depend on the telephone. The Asmara's "Expo '69" shortcomings of the existing telephone services, and the Asmara, the capital of Eritrea in northern Ethiopia, price people were prepared to pay to overcome them, is a thriving and attractive place with a population of were shown by the fact that licenses had been issued lo- 300,000 and over 4,000 telephone subscribers. As- cally for 46 such private radio links. mara's "Expo '69," a trade fair I saw during my visit, These meetings—and many other conversations dur- gave a good indication of the extent of the area's eco- ing my brief stay—proved far more clearly than ab- nomic activity. Light industry and large-scale agricul- stract statistics just how much telecommunications tural production are the basis of the city's prosperity. means to the economy and administration of Ethiopia. Significant export commodities include oilseeds, meat, To unify a country; to promote efficient public adminis- and fruits and vegetables. To maximize export earnings, tration; to stimulate production of goods and services; an efficient network of communications with overseas to facilitate existing trade and create new business, in- customers is essential. IBTE is constantly planning im- ternal and external; to provide the infrastructure re- provements in the quantity and quality of its service to quired for the establishment of industry—these are cope with rising demand. some of the purposes directly served by good communi- IBTE's regional manager told me that he expected cations. If power plants are a country's muscles, and the Asmara exchange to reach capacity—10,000 lines transportation networks its veins and arteries, telecom- —within the next five years. He was already looking for munications are the nervous system without which it a site for a new exchange. Each day 450 to 500 tele- could not possibly function properly. As a modern, phone calls are made between Addis Ababa and As- efficient telecommunications authority, IBTE has mara alone, but the cancellation rate—30 per cent—is played and will continue to play an integral part in the high because of frequent connection delays which may successful economic development of Ethiopia.

Peter W. Bocock joined the World Bank's Department of Informa- tion and Public Affairs in April 1968. He graduated from Oxford University in Philosophy, Politics, and Economics in 1964. After working some months with a management consultant firm, he was with the Conservative Party Research Department in London from 1965 to 1968. During 1967-68 he taught at Oxford University, where he was Junior Lecturer in Politics at Magdalen College.