History stands a testament that the notion of a defense-sector led industrial revolution has been a dream shared by the various governments of Ethiopia over the past century, if not longer.
From the ammunition factory built under the auspices of the Crown in 1951 and the Derg regime’s subsequent vigorous efforts to expand the defense industry, to the notorious Metals and Engineering Corporation (MetEC) conglomerate under the EPRDF, the ambitions have held strong.
All three administrations poured huge amounts of resources into their respective visions for building an influential military industry. However, records and research show that progress was constantly impeded by factors including internal disputes, financial constraints, regime changes and corruption.
Up until recently, the administration of Prime Minister Abiy Ahmed (PhD) and the incumbent Prosperity Party gave little indication of any intentions to revive the ambitions of raising the defense industry into a sector propellant.
In November 2023, the Prime Minister attended the 20th general conference organized by the United Nations Industrial Development Organization (UNIDO) and told participants that Ethiopia has been investing extensively in multi-sectoral growth sources under the “homegrown economic reform pillars”, which included agriculture, industry, tourism, ICT and mining.
His call to global investors doted on several aspects of the country’s potential growth areas and ongoing reform efforts. But, his speech did not refer to the Ethiopian defense industry, its perceived potential, or any prospective ventures in military businesses.
“We have been making deliberate policy shifts aimed at boosting productivity in all sectors and creating conducive investment and business environments. Our Homegrown Economic Reform Agenda introduced macro -financial, structural and sectoral reforms aimed at liberalizing key economic sectors such as telecom and banking, fostering private sector investment, enhancing external competitiveness, and productive capabilities,” said Abiy.
The economic reform efforts constitute overhauls in specific sectors, including agriculture, manufacturing, mining, construction, tourism and digital technology, with government organs assigned to manage the tasks at the ministerial level.
However, neither the Ministry of Defense nor any of its affiliates were named in the government’s detailed planning documents. The government had also yet to introduce a defense business strategy highlighting its visions for the industry.
Nonetheless, the events of the past few weeks suggest that, despite its conspicuous absence from the reform agenda, the defense industry is re-positioning itself to emerge as a beacon of the country’s efforts towards self-reliance and industrialization.
The industry as it stands today is inextricably tied to MetEC, a state-owned enterprise that began with sky-high ambitions before eventually crumbling as a result of deep-rooted and elaborate corruption scandals.
‘The Failed Experiment of Military Business in Ethiopia: The Case of MetEC’, a study published in 2018 by Zekarias Beshah, research coordinator at Amani Africa, states that the Corporation was established with a registered capital of 10 billion birr and was intended to facilitate an industrialization process geared towards structural economic transformation and spearhead efforts to making Ethiopia a middle-income country by 2025.
By July 2017, MetEC was running 17 large military and civilian industries, which incorporated as many as 75 factories scattered around the country, according to the research.
Its engagement stretched from TV set production to the construction of the government’s multi-billion dollar sugar production projects. MetEC was also in charge of the electromechanical work on the flagship Grand Ethiopian Renaissance Dam (GERD) project.
Following the political upheaval of 2018, MetEC, which at that point was struggling with financial problems arising from corruption and mismanagement, was split into commercial and military wings.
The latter was christened the Defense Engineering Industry Group (DEIG).
DEIG was established in 2020 with 2.35 billion birr in paid-up capital, and eight billion birr in authorized capital. It has since expanded to include more than six industry complexes, including ventures in electronics and vehicle manufacturing.
The Council of Ministers regulation establishing the Group bestowed upon it more than half a dozen objectives, including to design manufacturing industries and products lead the efforts to enhance the country’s defense capacity.
DEIG is mandated to design, manufacture, repair, maintain, modify and also conduct consultations and training services in the artilleries, small and heavy vehicles, tanks, military and transport airplanes and helicopters, firearms with respective spare parts and accessories for sale domestically and abroad.
The Group is also free to enter into joint ventures with international firms.
Accordingly, DEIG’s electronics manufacturing complex launched in August 2024 and the vehicle assembly and manufacturing industry currently under construction are both joint venture endeavors.
The Group is collaborating with Haitra, a Chinese firm engaged in the manufacture of radios and other communication equipment, to locally produce civilian and military handheld tactical medium and long-range radios. The venture is slated to produce up to 32,000 radio sets annually.
On the other hand, the vehicle assembly and manufacturing plant being raised on a 30-hectare plot in Bishoftu, Oromia, is a joint venture between DEIG and Sher Sher, a domestic investment group. Construction on the plant began last April and is scheduled to finish this year.
In the first week of March 2025, the government unveiled two defense industrial complexes: a reconstructed ammunition factory and the first domestic drone manufacturing plant, SkyWin Aeronautics.
The Prime Minister hailed the launch as a “significant milestone”.
In a social media post, Redwan Hussein, head of the National Intelligence and Security Service (NISS), revealed the drone factory was built through a joint venture between the Information Network Security Administration agency (INSA) and an unnamed private company.
The details of the agreement between the two entities, and indeed the identity of the second, remain unknown to the general public. Despite DEIG’s status as a public enterprise, its financial statements, procurement procedures, and partnerships are a closely kept government secret.
Observers argue that financial transparency is crucial for DEIG’s success and its efforts not to repeat the extravagant criminal misconduct associated with its predecessor, MetEC.
Among the most scandalous corruption allegations of the EPRDF era were accusations that MetEC had carried out dozens of international procurements valued at USD one billion in the eight years since 2010 without competitive tenders.
MetEC’s failures were referred to during the 116th Army Day celebrations on October 20, 2023, by Field Marshal Berhanu Jula, Chief of the General Staff of Ethiopian Nation Defense Forces (ENDF).
“The presence of corruption and dissipation has led the country into huge domestic and local debts. Despite its establishment as a manufacturing enterprise equipped with several industries, its loss of more than 70 billion birr has led both the Corporation and the country into foreign debt,” he said.
The Field Marshal iterated that in establishing the DEIG, fundamental changes have been applied to assure success, and claimed the Group is already making profits.
On March 6, during the inauguration of the Homicho Ammunition factory, Berhanu told those in attendance that DEIG’s accomplishments indicate that a new industry is flourishing in the country.
The Prime Minister echoed the statement. Abiy characterized the growth in the defense industry as “promising.”
According to him, Homicho Ammunition Engineering Industry, which was built at a cost of 306 million birr, has already secured contracts for the export of ammunition valued at over USD 30 million within the past three months alone.
During the inauguration ceremony, the Prime Minister highlighted the linkage between the country’s military production and broader economic goals.
“This achievement, along with our progress in environmental protection, mineral production and AI/ICT, contributes to Ethiopia’s resilience and progress. Ethiopia is recovering. Our capacity to initiate, execute and complete projects has increased. Seeing an industry that meets our needs and exports within one or two years is a source of great honor and pride,” he said.
On the other hand, studies warn that the manifold ramifications of military business in the realm of politics, economy, and other aspects need to be well studied.
Zekarias’ 2018 paper argues that military business can have huge impacts on civil-military relations and the democratization process, as well the national economy.
“Budgetary control is considered as one of the oversight mechanisms whereby the civilian ensures its control over the military. Off-budgetary means such as military entrepreneurship will give more autonomy and leverage to the military against the civilian authorities,” reads the study.
The author asserts that unfair advantages granted to the armed forces, such as tax cuts, easy access to state resources, and favoritism in public project contracts, could lead to market distortions and monopoly.
A 2012 Transparency International (TI) study paper titled ‘Military-owned Businesses: Corruption and Risk Reform’ concludes that military-owned businesses are inherently risky ventures for any country because of the potential consequences.
The publication from the civil society organization warns that once the military begins to engage in economic activities, it is often difficult to end its involvement.
“Business engagements are detrimental to the professionalism of the armed forces, as it serves as a major distraction from its core duties. One of the most harmful consequences of such practices is that the element of profit-making breeds corruption within the military,” reads the paper.
However, some analysts argue that strategizing and implementing action plans to pursue ambitions to modernize a country’s armed forces, advance technological innovation and ensure military self-reliance, is worth every risk.
The argument was part of the core message of the Prime Minister’s remarks during the inauguration of SkyWin Aeronautics.
“In recent times, there were sellers and other entities trying to influence our efforts and ability to buy the types of drones we want to acquire in the format and design we desired them to be provided. Operating the drones we acquire has also been a challenge in some regard. In light of these experiences, the fact that we are able to produce drones with diverse capabilities—designed and built by our own young professionals—is a significant milestone. We are developing capabilities like these—along with the advancements at Homicho Ammunition Engineering Industry—not to fuel conflict, but to prevent it. Through deterrence, we seek to secure peace and stability in the face of belligerent actors,” said Abiy.
It remains to be seen whether Ethiopia’s renewed endeavors in military industrialization will pave a new path towards improved security, economic strength, and geopolitical influence or awaken the ghosts of past failures.
