Ethiopia’s recent macroeconomic reforms, implemented during last July, are beginning to yield positive outcomes for the nation’s economic landscape, particularly in the realm of Foreign Direct Investment (FDI). The Ethiopian Investment Commission (EIC) reports a notable 12% increase in FDI flows over the past three months compared to the same period last year, signaling a robust recovery in investment activities.
A key reform allowing foreign wholesalers and retailers to operate within the local market has particularly drawn interest from new investors. EIC Deputy Commissioner Zeleke Temesgen (PhD) noted, “About 72 investors have expressed interest in the newly opened sectors; 42 aim to engage in importing commodities, while 31 seek to invest in the export sector.” So far, 22 proposals have been submitted, with 18 investors already licensed to commence operations.
During a recent address to the joint session of the House of People’s Representatives and the House of Federation, President Taye Atseke-Selassie outlined ambitious economic goals for the fiscal year, projecting an 8.4% growth rate, with value-added exports anticipated to reach five billion USD and total export revenues hitting 10 billion USD.
Zeleke highlighted an influx of Chinese investors following the reforms, which have significantly bolstered Ethiopia’s economy through capital flow, job creation, and technological advancements. Currently, there are about 3,303 Chinese projects in Ethiopia, with a combined portfolio valued at 8.5 billion USD. Since 2022, 322 new Chinese investors have been licensed, demonstrating a significant increase in their activity.
Aggregate job creation linked to these investments has reached 325,470, establishing China as Ethiopia’s leading source of FDI. Notably, the Eastern Industrial Park in Dukem, home to 153 manufacturing companies, is predominantly occupied by Chinese firms.
In the last fiscal year, Ethiopia attracted 3.9 billion USD in FDI, marking a 14% increase from the preceding year.
Chinese firms operating in Ethiopia have expressed optimism regarding the recent reforms. Accordingly, Linda-Ethiopia Garment’s Director General GeYifan noted that the new market-oriented foreign currency regime has eased prior challenges, allowing his company to better serve the local market. “The government has provided us with better opportunities and investment incentives,” he stated.
Similarly, Huajian Aluminum PLC’s General Manager David Zhou praised the government’s efforts to address foreign currency shortages and create new opportunities in various sectors. “While we are currently supplying the local market, we plan to export as challenges are resolved,” he said.
EIC’s another Deputy Commissioner, Dagato Kunbie, emphasized the positive reception of legal reforms enabling foreign participation in wholesale and retail trading. “We have received numerous requests from foreign investors following the announcement of this reform, and several companies will soon enter the local market,” he noted, reiterating the government’s commitment to support foreign investors who make significant contributions to the local economy.
With projections exceeding five billion USD in new investments, Ethiopia is poised for a sharp increase in FDI, promising to enhance its economic landscape further.
BY YESUF ENDRIS
THE ETHIOPIAN HERALD THURSDAY 17 OCTOBER 2024
