• 182 projects operational
ADDIS ABABA – Ethiopian Investment Commission (EIC) disclosed that the country has acquired 559 joint venture investment projects over the last five years.
Mekonnen Hialu, Communication Director at EIC told The Ethiopian Herald that out of the total 559 projects licensed from January 2014 to December 2019, 182 have already gone operational. While 113 of them are at implementation stage, the remaining 264 projects are in pre-implementation phase.
He said that the manufacturing sector took the huge share in joint venture investment whereas agriculture, construction, and service sectors follow. According to Mekonnen, with 113 companies, Chinese inventors have a lion share in terms of joint venture ownership. Among others companies that have owned joint venture businesses are companies from the United States, Netherlands, Turkey, Saudi Arabia, Italy, Germany and Canada, he added.
Working with foreign companies has its own merits for local investors and the country, particularly in filling gaps related to capital, management, capacity, market access and competitiveness, technology transfer, expertise and so on, Mekonnen said. As to him, the government is encouraging investors by providing various incentives especially to facilitate joint venture between local and foreign investors.
For instance, when a foreign company comes to claim license for joint venture investment the deposit required is only 150, 000 USD, against 200,000 USD, which is required for foreign direct investment, he pointed out. The commission says that it is currently facilitating business-to-business relations at international, local levels to increase the flow of joint venture companies.
According to the commission, the on-going economic reform has also availed new investment opportunities for joint venture. The government has opened doors for international investors to join new investment sectors such as sugar, telecom, railway, industrial parks and other projects.
Joint Venture could be ideal to overcome the limitations from both sides. However, the effort to form an effective joint venture in the newly built industrial parks has not been successful mainly due to the fact that some local investors supply low-quality materials; such package containers to foreign companies, Temegen Tialhun, Deputy Commissioner of EIC told The Ethiopian Herald recently.
“There is a need for building the capacity of local investors so that they can take part on an equal footing in the value chain with the foreign ones,” he added. Industrialization would not be realized by merely attracting FDI. Countries that achieved industrialization in a short period of time have also adopted an effective joint venture investment as one pillar of their industrialization, he stated.
According to the commission, facilitating Joint Venture investment is crucial to boost investment in the country as combining resources and expertise from different companies offers greater opportunity to grow faster, increase productivity and generate better profits.
The Ethiopian Herald, December 26/2019
BY TSEGAYE TILAHUN
