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 15 ©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 ©International Monetary Fund. Not for Redistribution ' •••• •*•• ••• •••• •• •• •* •*•••• - ** • • •• • •••••• •• • • ••• *• •*• •• •• •*• ••* •* •- • -- ••• * •*••• ••• ••• _-_ __,,_•••---»»--- •••• ••* •• •• •••• ••• ••• *•• -I ••• • •• - ••••••**•••••••• • •*• 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; opera- tors 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 sup- ply. 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 op- erators, 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 17 ©International Monetary Fund. Not for Redistribution • *• •• • • •••••••••••••• •••••••• •• ••••••• •• • ••••••••••*••••••• ** • • •• • ••• •• • • *•»* •*» •• •* •••» • ••** •• •*•• •••• ••• • • •••* ••• ••• • • • • • • ••• •••• •• ••• •••*•*•* *• *•• • •••••• * • •*• .. • ••• •• ••• • •• • •*•••* •• - • • *• *• *** . " < 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.