Ethiopia has recently developed an integrated Sustainable Development Goals (SDGs) financing roadmap and monitoring plan as a core element of the country’s first-ever ten-year Perspective Development Plan.
As the country is aspiring to industrialize and bring solutions to the unemployment and hard currency shortage problems, foreign direct investment (FDI) has a central place in the plan.
The plan was developed after conducting a country-wide needs assessment to identify over 110 key interventions necessary to meet SDG targets in Ethiopia. For this reason, the financing roadmap should align all financing flows and policies of the country with economic, social and environmental priorities.
As well, the integral part of the plan, Home Grown Economic Reform Agenda, sets to sustain the rapid economic growth of the nation. It also requires addressing challenges on the macroeconomy including forex management, inflation, and debt sustainability.
Therefore, the roadmap focuses on mobilizing all sources of finance which could be domestic and international as well as public and private. FDI is among the key sources in the private sector.
True, in the last year, Ethiopia has been among the top African countries in terms of attracting a large amount of FDI. The 2020 United Nations Conference on Trade and Development (UNCTAD) Report also revealed this fact.
Foreign direct investment inflow to Ethiopia was 2.5 billion USD during the stated year. When compared with the FDI received in 2018, which was a peak year at 3.3 billion USD, the amount declined by 800 million USD, the report noted. Hence, mobilizing the FDI necessitates forwarding progresses registered and improving the weaknesses in various sectors.
To mention a few of the progress, the government of Dr. Abiy has been taking essential measures to attract FDI. It has decided to privatize key public-owned development sectors such as telecommunications, sugar factories, an airline, and electricity.
However, it still has many to-do lists. It should give emphasis to rebalancing the sources of growth from the public to the private sector. The government needs to enact the revised laws, regulations and procedures to attract and encourage a pipeline of bankable SDG investment and address impediments.
Though the concert measures are taken by the government to put a robust Public-Private Partnership (PPP) legal framework are appreciable, identifying a list of infrastructure projects and creating a strong institutional structure needs attention.
Likewise, since FDI assists to seize the utilization of potential financial innovations, new technologies and digitalization, the government has to provide reasonably accesses.
To further attract FDI in Ethiopia and the Horn of Africa, Ethiopia should continue dealing with international financial institutions to manage vulnerability to climate conditions and changes in world commodity prices.
Similarly, the nation must strengthen the relationship with the neighboring countries to have alternative ports and focus on mutual benefits to avoid the insufficient level of foreign exchange reserves.
In the same way, the government must assess the difficulties in the business and ease the bureaucracy further besides ensuring peace and security both at national and regional context.
By the same token, all the local claims often arising from the use of resources and land disputes should be resolved by the government to attract many more FDI in Ethiopia particularly and the Horn in general. In general, if Ethiopia commits itself to attract more FDI, it would be able to finance the roadmap to sustainable development.
The Ethiopian Herald, January 30/2020
