The rising investment magnet in the horn of Africa
Bereket Gebru
The great achievements registered over the past couple of decades to make Ethiopia one of the most notable destinations for international investment dealt a huge challenge during the unrest in some parts of the country last year. The violent clashes in parts of Oromia and Amhara led to the destruction of a number of foreign agro-processing and manufacturing industries. News reports indicated that Sebeta city alone had 13 of its manufacturing industries burned to the ground.
Such incidents have their toll on the country’s capacity to draw more investment besides thwarting the economic benefits the country generates from these industries. It also paints the country’s fast improving image with gloom. Investment activities since then have clearly shown that the harm done by the unrest was not big enough to block the years of steady progress in the flow of investment to Ethiopia.
For the last two decades, rapid economic growth and its manifestations have brought sunshine back on to the country scaring off the darkness that seemed to have engulfed it. With international and regional organizations highlighting the miraculous turnarounds in Ethiopia’s economic performance in their regular reports, the Western media started to address these positive reports about the country. The rising number of such reports and the tangible mega-projects on the ground seem to have pushed these media into taking a closer look at the country. Such a move has diversified their reports a bit as they got more than they bargained for once they actually set their feet on to the country.
The media fatigue by the international audience on how certain countries and regions are portrayed might have also contributed to the change. The portrayal of Africa as a place of hungry, poor and backward people living along some of the most dangerous wildlife in the world can no longer be sold as easily as it used to because of the proliferation of information and communication technology. Therefore, these media outlets have been forced to engage themselves with economic, social and political developments in the continent as the audience has grown sick of the old sporadic reports of hunger, wildlife, armed conflict, HIV/AIDs and the likes.
The World Investment Report 2015 by UNCTAD states that East Africa saw its FDI flows increasing by 11 percent in 2014, to $6.8 billion and singled out Tanzania and Ethiopia for claiming a considerable stake of the increased inflows. The report’s findings about Ethiopia’s revamped capacity to draw FDI have also been seconded by recent reports in the international media.
The reports about Ethiopia included two on automobile assemblies and the engine manufacturing plant in the country, the Salini Impregilo contract to build the Koysha dam and Ethio-Sudanese agreement to cooperate in various sectors. The two stories on expanding automobile assembly and manufacturing in Ethiopia deal with foreign investment in Ethiopia while the Koysha dam deals with national investment in social services. The Ethio-Sudanese cooperation also involves various forms of investment.
The country’s FDI drawing capacity has grabbed international attention in recent years as it was identified as Africa’s third largest recipient of FDI in 2013 by UNCTAD’s World Investment Report 2014. The report states that the country registered a 240% increase in FDI inflows from the previous year as it shot up from $279 million to $953 million. The report further states that the country has also registered a significant increase in its Foreign Direct Investment (FDI) stock – the amount of investment from aboard held within the economy.
The report goes on to explain that the inflows to Ethiopia and Kenya lifted the region’s FDI by 15pc to 6.2 billion dollars in 2013. It also tipped the Ethiopian industrial strategy to attract Asian capital to develop its manufacturing base. Various media sources indicated that investment in light manufacturing from China, Turkey and India has the major share in the increase of the amount of foreign investment in Ethiopia.
Bruno Casella from UNCTAD, who presented the major findings of the report, was quoted as saying “Ethiopia is closer to FDI than other parts of Africa.” He also said that the robust economic growth and the growing middle class of Ethiopia have contributed to the attractiveness of Ethiopia as a preferred destination of cross boarder investors.
As one of the champions of the African cause, Ethiopia has risen to become the front runner in painting a positive image of the continent. The long sought marvel and pride at the international stage has been steadily building for years now that the country is mostly associated with progress and a bright future.
In the last three years alone, the country has been recognized as the third fastest growing economy in the world, trailblazer of the Millennium Development Goals (MDGs) and the World’s Best Tourism Destination for 2015. Its capital Addis Ababa has also been acknowledged as the third biggest United Nations hub following New York and Brussels. Prime Minister Hailemariam Desalegn has also been named ‘Man of the Year’ 2015 by Africa World News newspaper for sustaining the country’s rapid economic growth.
A report by the World Bank Group entitled “Ethiopia’s Great Run: The Growth Acceleration and How to Pace it” stated that the country is on track to achieve its goal of becoming a middle income status by 2025. The report applauded the uniquely Ethiopian policies that ensured sustainable economic growth for over a dozen years.
By keeping our eyes on the prize, i.e middle income status by 2025, Ethiopians should exert their efforts to sustain the development they have achieved this far. It is only through such efforts that the issue of poverty that has plagued the country throughout its history would be a thing of the past.