The increase of the inflow of businesses and companies signifies that Ethiopia has been committed to attract as many investors as possible following its appealing atmosphere, reasonable human labor and alluring working conditions in different sectors.
The country has been undertaking significant steps to create thriving digital business environment from strengthening infrastructure to implementing policies stated Yesherun Alemayehu (PhD) while speaking at the event organized to inaugurate Alibaba Global Initiative (AGI) in collaboration with Digital Transformation Ethiopia Association (DTEA).
Alibaba Global Initiative (AGI) in collaboration with Digital Transformation Ethiopia Association (DTEA) did recently inaugurate the global training center in Ethiopia to equip Ethiopian entrepreneurs and business leaders in the contemporary digitalized world.
Speaking at the inauguration summit, State Minister of Innovation and Technology, Yesherun Alemayehu (PhD) said that the opening of AGI training center marks a new chapter in Africa’s journey to digital innovation, entrepreneurs’ resilience and unprecedented technological advancement. Such a remarkable step opens doors wide for a number of investors, indeed!
Recently, the country has witnessed digital economic transformation fueled by the vision and relentless dedication of entrepreneurs. It has undertaken significant steps to create an environment where digital businesses can thrive from strengthening infrastructure to implementing growth policies, he added.
“We are creating a foundation for digital transformation that aligned with country’s goals and the aspiration of our people. In partnership with initiatives like AGI program, we are equipping entrepreneurs with necessary skills, tools and resources to make this vision reality.”
Minister-Counselor for Economic and Commercial Affairs at the Economic and Commercial Office of the Chinese Embassy in Ethiopia, Yang Yihang, on his part said that the cooperation between the two countries in the field of digital economy will be huge near future. It opens doors for further cooperation between the two countries.
“The digital technology has brought the transformation and revolutionary change to the global trading as well as the change of the trading routes. Currently, more and more SMEs are participating in the global trade. Still, they are facing critical challenges such as complexity of trading routes, high cost of logistics, cross-border payments, low efficiency in customs and clearance and others,” Senior Advisor, Alibaba International Co-founder of Alibaba Global Initiatives, eWTP Dan Liu said.
“We have been contemplating e-commerce, technology, logistics, infrastructure and others to empower the SMEs around the world. As part of the Electronic World Trade Platform (eWTP) initiative, Alibaba started the training programs in collaboration with different countries, training institutes and universities,” he opined.
DTEA President, Fikir Andargachew stressed that the summit marks an extraordinary commitment to put in place the foundation for the digitalizing not only Ethiopia, but Africa as a whole.
Basically, Ethiopia has to capitalize on creating much more conducive environment for the purpose of further attracting investors via providing all sorts of these individuals or entities with doable scenario, fostering network and building relationships, developing a solid business plan, creating a persuasive pitch deck, building a strong management team, showcasing a unique value proposition, demonstrating market potentials as well as developing financial projections and a clear path to profitability.
Here, Ethiopia should work hard to widely attract foreign direct investment (FDI) as such a fundamental step helps the nation have a number of benefits. For instance, economic growth—FDI can contribute to economic growth in the short and long term. It can also generate export revenue, increase corporate tax revenues, and connect the domestic economy to the global market. The second is job creation—FDI can create new jobs and absorb large amounts of labor. Third, technology transfer—FDI can transfer knowledge, skills, and technology to Ethiopia.
Yes, an apt environment can attract investors to a country or business by making it easier for them to invest. Making the economy attractive is also another lucrative way as investors can build trust and operate, and being realistic for interested investors is really crucial to do so.
One of the most critical steps Ethiopia must take is to enhance the ease of doing business. More can be done to simplify regulations, reduce bureaucratic hurdles, and improve government services. A more business-friendly environment will encourage existing multinationals to stay and attract new ones. By adopting attainable reforms, Ethiopia can create a more conducive environment for business growth.
Besides, Public-Private Partnerships (PPPs) are another crucial component in addressing the challenges that multinationals face in the nation. These partnerships can be effective in bridging infrastructure gaps, which are often cited as a significant barrier to business operations. True, expanding PPPs across various sectors, including transport, energy, and technology, could provide the necessary infrastructure support that multinationals need to operate efficiently across Ethiopia.
Thus Ethiopia must address its tax and fiscal policies to create a more predictable and stable environment for businesses and investors. Offering targeted tax incentives for companies that invest in strategic sectors across the nation could further encourage multinationals to maintain and expand their operations.
He said, “Developing strong local industries can reduce the country’s dependence on imports and make the economy more resilient to external shocks. For instance, the agriculture sector, which remains a cornerstone of country’s economy, could benefit greatly from value-addition initiatives. By processing raw agricultural products locally, this great east African state, Ethiopia, can increase its export value and create more jobs.”
Since the country, Ethiopia is a springboard to Europe, Asia, and other African countries as it is found at a strategic location, it can easily attract investors and investment. The economic performance of the country has also shown a remarkable step to well transform. Yes, Ethiopia has doubled its GDP and per capita income over the last five years.
As far as energy is concerned, the country has the Grand Abbay Dam, which is Africa’s largest hydroelectric generation dam. It also has low utility rates for electricity. If the issue of land is raised for instance, Ethiopia offers land for investment on a lease-hold or rental basis. The Ethiopian Investment Commission (EIC) is an autonomous government institution that helps attract foreign and domestic investments to Ethiopia. The EIC offers promotional, facilitation, and aftercare services to all interested investor coming to Ethiopia and doing business following a win-win fashion.
Fundamentally, he said, political stability and sound economic policies have to be put into practice as they are fundamental to maintaining investor confidence; the country has to capitalize on such a decisive issue, too. The government must also work towards ensuring a stable and predictable political climate. Addressing corruption is critical to improving the business environment. Equally, investing in education and training to build a skilled workforce is crucial for Ethiopia’s economic future.
“Some countries have attracted more investments and installed more power plant generating capacity which will require less use of traditional power generating sets. If the Ethiopian government makes the economy attractive for investors to invest and build power plants, there is the likelihood that investments in the power sector would increase,” he added.
In a nutshell, Ethiopia should create apt environment to attract more infrastructure investment. Development finance institutions, banks and private investors are collectively pushing the economic growth forward. International investors are people or companies based outside of a country that invests in a business. Since before a country seeks international investors, it should prepare as much research, data, analytics, and information as possible, Ethiopia has to understand the way how to confidently attract investors.
The nation should come up with improved infrastructure since it helps improve the domestic road network as well as enables the country have a well defined and improved balance of payments. Undeniably, Ethiopia has several factors that can attract investors. In the first place, incentives—Ethiopia offers incentives such as income tax exemptions, customs and duty exemptions, and guaranteed repatriation of funds. Second, labor force—the country has a large, young, and trainable workforce. The issue of infrastructure can come next as it is quite decisive.
True, Ethiopia has a well-connected transportation system, including a railway, dry ports, and highways though a lot remains to be done and a range of aspects have to be well bridged to make the nation an investment hub. It also has 13 industrial parks with infrastructure and services to help investors start operations quickly. Investment policies are also important. Ethiopia has a legal framework that governs investments, including the Investment Proclamation No. 1180/2020.
BY MENGESHA AMARE
THE ETHIOPIAN HERALD FRIDAY 8 NOVEMBER 2024
