ADDIS ABABA –Promoting joint ventures between local and foreign investors is critical to enhancing successful investment activities in the financial sector, an economics researcher said.
In an exclusive interview with The Ethiopian Herald, Ethiopian Economics Association (EEA), Senior Economics Researcher,Molla Alemayehu (PhD), stated that encouraging partnerships among local and foreign investors, mainly in the financial sector, is crucial to navigate potential pitfalls, ensure economic benefits, and protect national security.
Although foreign investors bring knowledge, expertise, capital, technology, and other resources, they could potentially impact nascent domestic investors, monopolize markets, and create other issues. To address these risks, the government should design strategies to prioritize collaboration or partnership between firms, he suggested.
Allowing foreign investors to invest independently in the country, especially in critical sectors, requires due attention. Forming partnerships is crucial for the success and growth of investment. Furthermore, the government should monitor investors’ financial outflows, Molla noted.
According to the researcher, encouraging joint ventures and other partnerships, rather than allowing independent foreign investment, particularly in critical financial sectors, would bring economic benefits. Moreover, it would foster trust-building and enhance risk-sharing mechanisms, he stated.
As Ethiopia is actively promoting Foreign Direct Investment (FDI) by opening previously restricted sectors to foreign participation, the effort requires negotiating with foreign investors to establish collaboration with local investors, he said. He added that this approach would also contribute to reducing potential risks and enhancing the overall stability of investments.
Documents in the area show that partnering with both local and foreign investors offers a synergistic approach to investment, leveraging each type of investor’s strengths to achieve broader economic and social benefits. Local investors provide valuable insights into the market and regulatory landscape, while foreign investors contribute capital, technology, and managerial expertise.
BY TSEGAYE TILAHUN
THE ETHIOPIAN HERALD SATURDAY 31 MAY 2025
