Ethiopia’s Mega Projects and Their Role in the Country’s Economic Development

The author of this article is of the opinion that Ethiopia’s mega projects that have already been constructed and those which are under construction are already playing a major role in Ethiopia’s economic development. Therefore the writer found it necessary to give readers glimpse of some of the mega projects in the country. It must be stressed that those mentioned in this contribution are only few of them as there are more mega projects that are already completed and under construction while more of them are at the level of feasibility study for further investments.

Ethiopia has initiated several mega projects over the past two decades aimed at transforming its economy, enhancing infrastructure, and improving the standard of living. These projects span across sectors such as energy, transportation, industrialization, and urban development. These sector oriented projects have already continued to play a major role in the economic transformation of the country setting the basis for the nation’s vision of becoming a middle level developed country.

GERD is one of such flagship mega projects of the country revolutionizing the expansion of renewable energy resource not only in Ethiopia but also in the entire Africa. The significance of this project is not limited to its contribution to the energy sector also contributes to food security initiative of the country through the development of fishery industry on the dam.

It is a large hydropower project with a dam that is 145 meters high and 1,800 meters long, with a total reservoir volume of 74 billion cubic meters. The reservoir will flood 1,874 square kilometers. The dam is designed to generate 6,450 MW of electricity.

Upon completion after several months it will be the largest dam in Africa: 1,800 m long, 175 m high and with a total volume of 10.4 million m³. It will create a reservoir covering 1,875 square kilometers and contain 74 billion cubic meters of water.

A smart city is planned to be constructed around the dam over time.Ethiopia’s bold push toward energy self-sufficiency and regional power exportation continues with major progress on the Koysha Hydropower Dam, now 65% complete as of March 2025. Located in South West Ethiopia on the Omo River, the Koysha project is one of the country’s largest and most ambitious energy undertakings to date, with an expected capacity of 1,800 megawatts (MW).

Spearheaded by Ethiopian Electric Power (EEP), the $2.7 billion dam includes a 200-square-kilometre artificial lake. Upon completion, it is expected to significantly boost Ethiopia’s electricity generation capacity, meeting the country’s growing energy demand and supporting regional power exports. More than just a power plant, Koysha promises to deliver wide-reaching socio-economic benefits–such as job creation, improved irrigation, fishing opportunities, and increased tourism potential.

Ethiopia’s industrial parks are a critical part of the nation’s development agenda, aiming to transform the economy by promoting industrialization, attracting foreign investment, and creating job opportunities. Below is an analysis of Ethiopia’s industrial parks and their economic significance:

Ethiopia has developed numerous industrial parks to foster economic growth. The industrial parks are part of the government’s efforts to diversify the economy, which has historically been agriculture-dependent, and focus on manufacturing, trade, and service sectors.

These parks are strategically designed to attract both local and foreign investments, enhance exports, and improve Ethiopia’s competitiveness in global markets. The parks are primarily located in regions such as Addis Ababa, Hawassa, and Dire Dawa.

Hawassa Industrial Park (HIP) is considered one of Africa’s largest and most advanced industrial parks, focusing on textile and garment production. Bole Lemi Industrial Park hosts numerous manufacturing industries such as textiles, leather, and agro-processing. Dire Dawa Industrial Park focuses on light manufacturing and agro-processing, contributing to job creation in the eastern region. Other parks

The industrial parks in Ethiopia have several key economic benefits:

They have provided thousands of jobs, particularly in the textile, garment, and leather sectors. For example, the Hawassa Industrial Park alone has created direct employment for tens of thousands of workers. They have also contributed to improving the skills of the workforce through on-the-job training and industrial capacity-building.

Industrial parks have significantly boosted Ethiopia’s manufacturing sector, which is critical for the country’s export economy. Garment and textile exports, for instance, have grown due to the presence of industrial parks. Ethiopia is also increasingly becoming a hub for exporting products like apparel, leather goods, and agro-processed items.

Industrial parks in Ethiopia have attracted foreign investors from countries like China, India, and Turkey. The Ethiopian government offers incentives like tax breaks, low-cost electricity, and affordable land leases to encourage investment. Foreign investment has provided Ethiopia with access to global markets and facilitated technology transfer and knowledge exchange.

Export earnings from the industrial parks help Ethiopia reduce its trade deficit. The export of finished goods, rather than raw materials, adds higher value to the Ethiopian economy. By improving export capacity, Ethiopia’s balance of payments is expected to improve, though challenges remain in achieving a trade surplus.

The Ethiopian-Djibouti railway line lives one of the largest projects Ethiopia has undertaken with development and transformation plans (GTP). This air pollution-free railway line, operated by electricity, is 656km long and 1.43 standard gauge.

In 2011 the railway contraction from Addis Ababa to the Djibouti was started by two Chinese state-owned companies, the China Railway Group (CREC) and the China Civil Engineering Construction Corporation (CCECC). In January 1 2018 has started transportation service.

The railway line was built with a $4 billion loan from China’s Export-Import Bank of China provided funding. The railway has 19 stations and designed to run at speeds of up to 120 km per hour. The construction was carried out by the EPC Turnkey Contract. China International Engineering Consulting Corporation acted as consultant and supervisor.

The railway line reduces transport costs and time for goods to the port of Djibouti. It also enhances Ethiopia’s trade competitiveness and integration with global markets. It facilitates regional trade and movement of people and goods.

All weather Roads and infrastructure projects across the country have been instrumental in improving national connectivity and facilitating international, national regional, zonal and district trade truncations. The roads in Ethiopia also facilitate agricultural commercialization, tourism and in reducing development disparities between regions.

Ababa Riverside Green Development Projects like Dining for the Nation, Dining for Sheger and Dining for the Generation Corridor Development financed under the initiative of Prime Minister Abiy have helped to further promote tourism, for generating income for the youth in green jobs and for enhancing environmental sustainability. This projects have particularly promoted eco-tourism which have attracted hundreds and thousands of tourists to visit the country

In June 2020, the Government of Ethiopia launched the Digital Ethiopia 2025 Strategy, aiming to lay the foundation for a digital economy by the end of 2025.

The main goal of Digital Ethiopia 2025 Strategy is to develop digital infrastructure and ensure access to digital services for all Ethiopians, Acknowledging the achievements and progress made by the Digital Ethiopia 2025 Strategy in developing digital infrastructure, expanding digital services and commerce, digital finance, and digital literacy over the past five years.

The Digital Ethiopia 2025 Strategy has completely transformed digital transactions and payments, which were almost inaccessible before the strategy. Currently, financial transactions conducted digitally surpass cash transactions, Telebirr, CBE Birr, Ethio Telecom’s mobile financial service, on line payments and purchases of goods and services were effectively put in place. .The strategy promotes digital economy and e-governance, enhances financial inclusion, education, and health services. The strategy boosts youth employment and startup ecosystem.

The expansion of Bole International Airport and the ongoing construction of airport city close to Addis Ababa will certainly make Ethiopia a continental aviation hub and global nodal point for international aviation services and would further promotes Ethiopian tourism industry, trade and investment inflow

Ethiopia’s mega projects are strategic investments that aim to support economic diversification, structural transformation, and inclusive growth. Their long-term success depends on effective implementation, sustainability, community participation, and regional cooperation.