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Ethiopia whetting interest of foreign investors
Fekadu W.
Ethiopia’s Ambassador to India, AsfawDingamo, while inaugurating the Honorary Consul of Ethiopia in Kathmandu, Nepal, on June 14, 2017, said Nepalese investors will benefit from investing in Ethiopia as the country has tremendous investment opportunities, according to Kathmandu Post.
He said he has submitted workable proposals to Nepal’s Ministry of Foreign Affairsto strengthen cultural exchanges and tourism promotion between the two countries. The Ambassador said he has also recommendedsetting up bilateral consultative committee between the foreign ministries of Ethiopia and Nepal. The committee will strive to strengthen bilateral ties and scale up economic and cultural opportunities. It will also help avoid double taxation, waive visa for diplomatic communities and official staffs of the two countries.
Ethiopia is an ideal country of investment destination for foreign investors, including Nepalese. It has offered Nepali investors to invest in agro-processing, manufacturing, chemical, pharmaceutical, textile and apparels, among others. These sectors are currently blooming following the construction of numerous industry parks across the country. Moreover, foreign investors can benefit from the growing market and economy of Ethiopia which is registering commendable growth as much as double digit.
Trade and investment activities are booming and foreigninvestors can exploit every available opportunity in Ethiopia, which is a hub of international diplomacy and get- way of Africa to the rest of the world. Currently, so many foreign investors are investing in agro-processing and manufacturing activities and they are turning out productive as Ethiopia’s economic outlook is moving in upward trajectory.
As a spring board to flourish investment, Ethiopia has identified several strategic investment priorities that deserve incentives. One of the major areas that are currently enjoying a significant amount government incentive is the manufacturing sector. With the objective of substituting the bulk import of manufactured products, which is consuming the scarce resource of the country, the government has been providing tremendous incentives for the private sector interested to be engaged in a range of investment activities.
Currently, nation is beseeching foreign investors to make their way to Ethiopia, invest in profitable sectors and reap bountiful benefit. Cognizant of the availability of numerous packages and investment opportunities, Ethiopia is calling for prospective investors in the areas of agriculture and manufacturing.
To further enhance productivity and provide support selectively, agro-processing such as production of textiles, leather and food processing and packaging are identified by the government as strategic sectors that have the potential to generate huge amount of job. The government has also been encouraging local production of medicines and chemicals, eyed at saving millions of hard currency being spent on import.
Taking nation’s huge opportunities into account, during the Second Growth and Transformation Plan (GTP II: spinning through 2015-2020), Ethiopia envisages raising the contribution of industrial output in the overall economy and eventually changing the style of economy to industry-led, from the current agriculture-led. Currently, manymanufacturers from China, Turkey, India, USA, UK and Israel, among others, are attracted by the various investment opportunities and are engaged in the production of textiles and garments, leather goods, paper, mineral products, cement and chemicals.
The reason that allures investors to invest in Ethiopia includes its economy being one of the fastest growing in the world, with annual GDP of 11%; large amount of irrigable land; enormous quantity of water and mineral deposits; highly developing infrastructure and logistics; pro investment policy, political stability and security; macro-economic stability; regional and international market opportunities; competitive incentive packages, investment guarantee and protection.
As a result of foreign and domestic investment has been steadily growing in Ethiopia, following the encouragement of the federal and regional governments aimedto satisfy the insatiable demand of the country for more investment. Currently, both levels of governments are providingland and incentives such as tax holidays. They have also put in place improved bureaucracy in their investment offices which would help save time and money of investors when starting and undertaking operation.
Seeing the increasing volume of investment, Ethiopia is exerting considerable effort to desirably improve its business and investment climate through the issuance of targeted legislative measures. In this regard, the revised Investment Code of 1996, as well as the Investment Proclamation are providing incentives for development-related investments and have gradually removed most of the sectorial restrictions and red tape on investment.
These measures have leveled theground for enhancing FDI flows to the country and Ethiopiahas ranked the third largest FDI recipient country in Africa since 2013. The private sector and foreign investors are playing significant role in the economy. To further facilitate the business climate of the country, the government has responsively set up offices vested with special duties to manage and facilitate matters of investors in custom offices and investment destinations. In addition, the government is and has been organizing various forums and events targeted to exchange views and gain invaluable ideas from investors; to proactively iron out possible hindrances that may encounter the investment sector.
The government believes that encountered problems and legislative issues could be alleviated through regular forums and dialogues.Boldly, it is also implementing measures to further privatize and liberalize the trade regime and, in turn, create a safer and more attractive investment environment to foreign and domestic investors.
Furthermore, the amended Investment Proclamation(2012) has introduced practicable provisions for the establishment of industrial development zones, both state-run and private, with favorable investment, tax and infrastructure incentives. Other measures include the revision of regulations for potential investors, standardization of appropriate accounting practices (to more accurately assess tax and other operating liabilities), increased protection for shareholders, provisions for bankruptcy filings, and the modernization of trade and registration processes. These all tailored improvements are expected to further attract investors and fostertheir investment activity.
However, some allegations are surfacing despite the government’s commitment to effect economic reforms, realize liberalization and level ideal investment climate. The allegation states that Ethiopia has tightened its control on the service sector, with a state monopoly on the telecom market and firmly gripping and controllingthe activity and the ownership ofbanks; letting no room to foreign investment in the banking and insurance sector.
In addition, the constraints alleged by some individuals include high interference of the state in the economy, poor condition of infrastructure, difficulties related to land acquisition, strict foreign exchange controls, very high transaction costs and weakness of institutions.
Despite all the challenges, secret in public, the investment code identifies certain sectors reserved for the state and Ethiopian nationals only. The restricted areas include air transport service using aircraft with a seating capacity of more than 20 passengers or with a cargo capacity greater than 2700 kilograms, rail transport, and telecommunication and internet services.
Ethiopia has also reserved various services for domestic investors including banking, insurance, forwarding and shipping agency, broadcasting, retail and wholesale trade (except in petroleum and locally produced goods), import and export trade of local agricultural products, small and medium-scale construction, bars and nightclubs, small hotels and restaurants, travel agencies, car and taxi services.
Indubitably, some sectors like telecom and broadcast services are considered as very much sensitive and essential to the peace and security of the country. Hence, it has become the better option of the country to manage them under the ownership of the greater public and boost them with the generous investment of the government.
So far wise performances and decisions have enabled to enhance healthy growth of the country and secure safety of financial activities in a desirable manner. The measures even help curb illegal out flow of foreign currency which might otherwise be aggravated by racketeers acting in the name of investment.
Besides, the very glaring fact on the investment and development history of the country, nation hasreached the current level of development due to the unreserved effort of the government which selectively investsin public sectors that are not favored by private investors( and the government will go on carrying out same duty until convenient time to fully taken over by capable investors). Hence, the government has been investing heavily to improve infrastructures. And as a result, the road network has burgeoneddramatically in the last few years enabling the country to be opened up for large volume of trade and investment.
Generally speaking, Ethiopia accepts investment proposals in a non-discriminatory manner; the screening process is not regarded as an impediment to investment, a limit to competition, or a means of protecting domestic interests. Starting from opening its doors to capable investors, Ethiopia will continue to undertaking activities that may whet their interest.Hence, foreign firms are welcome to invest in broadly privatized economy of Ethiopia.
Taking into account instrumentality of foreign investment in job creation and lifting millions of citizens out of grinding poverty, the Second Growth and Transformation Plan (GTP-2) has given emphasis to investment, especially increasing flow of FDI in to Ethiopia. In this regard, Ethiopia will tirelessly work to promote its investment opportunities and attract more foreign investors; the government is committed to offer further assistance to investors and enhance development of the country through mass flow of investment; selectively wooing capable investors with feasible projects that can create thousands of jobs, increase quality of export produce and foreign currency earning.
