Open for Business
Privatization and Foreign Investments Are Changing the Project Environment, and Expectations
PHOTO BY GRANT ROONEY / ALAMY STOCK
Addis Ababa Light Rail Transit and a view of Meskel Square, Addis Ababa, Ethiopia
BY NOVID PARSI
PHOTO BY GIOIA FORSTER/PICTURE ALLIANCE VIA GETTY IMAGES
The construction site of the Grand Ethiopian Renaissance Dam in Guba
Ethiopia's staggering economic transformation is ready to refuel. The world's second-poorest country in 2000 is on pace to have the world's fastest-growing economy this year, according to the International Monetary Fund (IMF). The milestone caps a decade in which massive state-led infrastructure projects to expand roads and rail networks spurred an annual GDP growth rate of nearly 10 percent.
Last year, Ethiopia was home to four of East Africa's eight most valuable projects, including the US$4.1 billion Grand Ethiopian Renaissance Dam. When it's completed next year, the dam will generate nearly 6,500 megawatts of energy. Such mega-projects are critical for the continued development of a country in which 58 million people still lack access to electricity and more than 70 percent of the population still works in the agriculture sector.
But Ethiopia is taking radical steps to sustain a growth rate that would make it a middle-income country by 2025. With public funds drained by project activities closed or still underway (roughly US$7.5 billion is needed to complete existing infrastructure projects), the government is starting to sell off signature state-owned companies in sectors such as telecom, energy and aviation. Privatization also is designed to create a more efficient project environment that's more likely to attract spending from foreign and domestic companies. It's all part of a bold reform agenda by Prime Minister Abiy Ahmed, who seized power in April following years of widespread political unrest that led to the surprise resignation of Prime Minister Hailemariam Desalegn.
Yet the ambitious realignment won't help shift the economy into a higher gear unless the country's nascent project management capabilities mature—and fast. “The project management profession has not been given the proper attention here in order to standardize it, and projects tend to be run by people without training or certifications, which contributes to a lot of project failures,” says Yoftahe Yohannes, PMP, project manager, PMI Global Executive Council member Ericsson, Addis Ababa, Ethiopia. “Ethiopian organizations need to pay more attention to developing project management talent.”
On the long road to change, project teams will have to overcome decades of entrenched bureaucracy and inertia to navigate new levels of complexity, says Rekik Asefa, manager, IT project management division, Awash International Bank, Addis Ababa. Government-run projects faced no market pressures, so “many projects have been run for the sake of running them,” he says.
Delays and cost overruns are the norm on large projects, Mr. Yohannes says. A slow project pace helps create a passive culture that teams must shed to achieve efficiencies going forward, he says. “Project managers have to be prepared. They have to get input from all the right stakeholders to plan their schedules and budgets.”
Yacob GebreMedhin Shenkute, PMP, Addis Ababa, experienced this firsthand. He is deputy general manager and project management director at Leoul Consulting, an architecture and engineering consultancy. His company was brought onto a project last year to manage the construction of a university building after the government's project team had completed the planning phases. During the execution, Mr. Shenkute's team identified critical design defects and found that some of the initial construction estimates were insufficient. The project is on track to finish 17 percent over budget and 50 percent beyond schedule.
Improvements are underway, however. Last year, the government established a framework for public-private partnerships that's designed to create more business value by reducing risks and accelerating project delivery. “Privatization is forcing organizations to improve their project governance,” Mr. Asefa says.
—Rekik Asefa, Awash International Bank, Addis Ababa, Ethiopia
To achieve better governance, more project teams need to get back to basics and adopt standard project management processes: project initiation, planning, execution, monitoring and control, and closure. To that end, Mr. Yohannes’ organization maintains a lessons-learned database that helps ensure the organization can leverage experiences and develop competencies with each new project.
Mr. Shenkute agrees with that approach. “International project management standards should be established for every major project,” he says. “Improving project management and execution efficiency is a key part of the national development agenda.”
—Yacob GebreMedhin Shenkute, PMP, Leoul Consulting, Addis Ababa
According to the IMF, foreign direct investment in Ethiopia grew 27.6 percent between 2016 and 2017, the most recent years for which data is available. China has become Ethiopia's biggest foreign investor and trading partner. For instance, in 2017, Chinese apparel manufacturer Indochine International completed a nine-month, US$250 million project to open a clothing factory in Ethiopia.
Project teams in the country must brace for outside influence to increase even more in the years ahead. For example, when the government splits state-run Ethiopian Telecommunications Corp., Africa's largest mobile operator, into two companies, it will seek to sell up to 40 percent of the company to foreign investors.
More investors and project sponsors from foreign countries means new external expectations and requirements for organizations and teams. Delinquent loan payments won't be accepted, and projects will face accelerated delivery schedules that aren't currently the norm for most Ethiopian project teams.
Here and right, Hawassa Industrial Park, home to an Indochine apparel factory
“Foreign organizations will demand world-class, competent resources who can manage projects to achieve business value,” Mr. Yohannes says. As a result, Ethiopian project managers have to invest more in developing their skills and knowledge.
—Yoftahe Yohannes, PMP, Ericsson, Addis Ababa, Ethiopia
But elevating maturity should be a two-way street. Foreign organizations can share project management knowledge with Ethiopian organizations through activities such as training and job shadowing, Mr. Yohannes says. Some foreign investors also can demand that local project professionals earn a Project Management Professional (PMP)® certification and that project-delivery organizations meet International Organization for Standardization criteria, Mr. Shenkute says. “This is not yet the norm in Ethiopia, but it should be.”
Blueprints for such interactions already exist, says Dagem Alemayehu Goshu, PMP, service delivery manager, IE Network Solutions, Addis Ababa. Ms. Goshu learned project management standards and practices five years ago when her Ethiopian employer at the time, ComNet, partnered with Chinese telecom company Huawei on a project. She worked as a project coordinator alongside Huawei project managers for two years. “I learned by doing,” she says.
PHOTOS BY JOERG BOETHLING / ALAMY STOCK
Ethiopian teams can return the favor by helping foreign organizations navigate the country's tricky business terrain. “They need local experts who know the local rules, conditions and ways of working,” Mr. Yohannes says. For instance, outside organizations have to learn how to conduct financial transactions, which often face delays in Ethiopia. “Using local project managers will help foreign organizations minimize the time spent on understanding the local project environment,” he says.
TALENT FOR TOMORROW
The need to develop project talent across all sectors also creates opportunities. Ethiopia will see increased demand for tech projects, Mr. Yohannes says. And with about 40 percent of Ethiopia's population under 15, and 28 percent between 15 and 29, there's a particular need to develop project management talent from those generations in information and communications technology, he says. “There are a lot of opportunities for ICT projects, but the risk is a lack of knowledge and expertise.”
At Ms. Goshu's organization, senior project managers are compensated to attend PMI-certified training centers to prepare for the PMP® exam. Junior project managers at IE Network Solutions start with a 45-day trial period that includes inhouse training to take the Certified Associate in Project Management (CAPM)® exam. “We deploy PMI's practices in our day-to-day activities,” she says. “We're still in the learning phase, but we're moving in the right direction.”
Mr. Asefa says his organization covers the full cost for project team members to take the PMP exam, and the project management office has a weekly knowledge-transfer meeting so team members can discuss various project challenges they faced during the week—and how they resolved them.
Local consulting and training institutes have begun teaching project management know-how, and Ethiopian organizations are hiring foreign project management trainers, Mr. Yohannes says. “I am seeing organizations start to build the competencies and skills of their project managers,” he says.
Ethiopian entities have to train not only their own staff in project management standards, but their clients as well, which Ms. Goshu often experiences firsthand. For instance, this year, IE Network Solutions wrapped up a two-year project for a new university to deliver a data center and other IT services. Along the way, Ms. Goshu had to educate the client on project fundamentals, such as having a kickoff report and sharing project risk registers. “We had to explain to the client that such procedures would benefit the project,” she says. “We had to teach the client what it means to manage a project.”
—Dagem Alemayehu Goshu, PMP, IE Network Solutions, Addis Ababa
PHOTOS BY MINASSE WONDIMU HAILU/ANADOLU AGENCY/GETTY IMAGES
The Reppie Waste to Energy plant in Addis Ababa was completed this year.
Ethiopian Prime Minister Abiy Ahmed, left, at Ethiopia's parliament
Ultimately, time is on Ethiopia's side. The annual GDP growth rate is forecast to stay well above 9 percent through at least 2020, and Mr. Yohannes believes the country will narrow the project talent and maturity gap as the environment keeps changing and the economy churns.
“I'm very optimistic. Projects for the sake of projects will go away as industries become more business-focused and value-focused.” PM
Ethiopia at a Glance
1 million square kilometers (386,102 square miles)
GDP growth rate (2017)
GDP growth forecast (2019)
Agriculture, construction, energy, manufacturing, textiles, telecom, transportation
Gross national income per capita (2016)
Source: The World Bank
These sectors will drive continued project demand across Ethiopia:
With more than half of Ethiopians lacking access to electricity, the need for energy infrastructure projects isn't waning anytime soon. A signature initiative is the US$4.1 billion Grand Ethiopian Renaissance Dam on the Nile River's main tributary. When completed in 2019, it will be the largest hydroelectric dam in Africa, generating up to 6,450 megawatts of energy, compared to Ethiopia's current overall power generation of 4,730 megawatts.
Housing needs are critical in the capital. Addis Ababa's population is expected to double to more than 8 million over the next decade. In July, the government launched a US$1.2 billion project to build more than 16,000 homes in the city by 2021. But the need to acquire some of the needed 26 hectares (64.2 acres) will be a major stakeholder-management challenge for project sponsor Federal Housing Corporation.
About 64 people per 10,000 vehicles die every year on Ethiopia's roads—making its road safety the eighth worst in Africa. And about two-thirds of the streets in Addis Ababa lack pedestrian walkways. In 2016, the World Bank agreed to fund a US$300 million program to improve mobility in Addis Ababa and road safety countrywide. The projects include expanding the capital's traffic signal and control systems, improving pedestrian conditions and modernizing the city's bus system.
Learning Curve We asked project professionals: What project man agement skills are in demand in Ethiopia?
“Project managers here would benefit greatly from improving their project integration management knowledge and skills so they can understand a project's bigger picture and manage it effectively.”
—Yacob GebreMedhin Shenkute, PMP, deputy general manager and project management director, Leoul Consulting, Addis Ababa
“We have to work on better communication, because communication with sponsors and other stakeholders isn't really strong. Project managers might not reply quickly to stakeholder calls or might not give them regular status updates.”
—Dagem Alemayehu Goshu, PMP, service delivery manager, IE Network Solutions, Addis Ababa
“Leadership. Project managers need to be good leaders, and they need to be able to communicate to stakeholders the value that their projects will create. They also need to work on cost and schedule management, which is where most project managers fail here.”
—Yoftahe Yohannes, PMP, project manager, Ericsson, Addis Ababa
“Risk mitigation and follow-up throughout execution to make sure the project goes to plan and meets its objectives.”
—Rekik Asefa, manager, IT project management division, Awash International Bank, Addis Ababa