According to major economic sources, Ethiopia will be Africa’s star performer, with its industry continuing to improve in line with the country’s economic expansion. With a population of over 107 million, it is definitely a market to target. Ethiopia’s economy is projected to grow by at-least 7-9% in 2020. Ethiopia is Africa’s oldest independent country and its fastest growing economy today.
With a large population and an average annual economic growth rate of 10% over the past 15 years, it presents a unique opportunity. Ethiopia’s location gives its strategic dominance as a jumping off point in the Horn of Africa, close to the Middle East and Europe markets. As one of the fastest growing economies in the world, Ethiopia’s economy has achieved robust, broad-based growth averaging 10.3% a year since 2006/07, compared to a regional average of 5.4%.
The fast economic growth, a conducive investment climate, large market size and high-level government commitment towards FDI attraction have contributed to the growth of FDI inflow into Ethiopia-making the country the second largest recipient of FDI in Africa. East Africa, the fastest-growing region in Africa, received $7.6 billion in FDI, of which Ethiopia absorbed nearly half and is now the second largest recipient of FDI in Africa after Egypt.
Key economic factors in Ethiopia’s growth story
- Ethiopia’s growth is expected to stay high in the future, supported by continued economic recovery and export-import expansion as new manufacturing facilities and infrastructure come online.
- Ethiopia is ranked 57th which, is higher than its regional peers (Kenya, Rwanda and South Africa) for its conducive macroeconomic environment (World Economic Forum, Global Competitiveness Report)
- Growth forecasts of more than 7% from the International Monetary Fund and the African Development Bank place Ethiopia among the world’s growth leaders over the medium term.
- Ethiopia is a member of the Multilateral Investment Guarantee Agency (MIGA), a World Bank affiliate which issues guarantee against non-commercial risks in signatory countries, and of the World Intellectual Property Organization (WIPO).
- Ethiopia has concluded over 30 bilateral investment promotion and protection agreements, of which 11 are with individual European Union Member States. Significant other partners include China, India, South Africa, and Russia, and a number of regional economic partners (Israel, Egypt, and Sudan, among others).
- Addis Ababa has emerged as a regional hub and is home to key international organizations such as the African Union (AU) and the United Nations Economic Commission for Africa.
- Addis Ababa is also the main air hub for Africa and the home of Ethiopian Airlines, which has won repeated recognition as the best airline in Africa. Ethiopian Airlines offers flights to 101 international passenger destinations (57 in Africa, 20 in Europe and America and 23 in the Middle East and Asia), 22 domestic passenger destinations, and 35 cargo destinations (21 in Africa, 11 in the Gulf, Middle East and Asia, and 3 in Europe). It carries two thirds of Africa’s air freight.
- Expanding road networks connecting national and regional markets. Cheapest electricity rate in Africa and the whole world.
- Expanding and improving telecommunication service.
- Power production has increased steadily over the last ten years, with 99% sourced from clean energy in the form of hydropower.
- Ethiopia offers a comprehensive set of incentives, particularly for priority sectors, such as, customs duty payment exemption on capital goods and construction materials, and on spare parts whose value is not greater than 15% of the imported capital goods’ total value;
- Tax exemption of up to 6 years for manufacturing and agro-processing, and of up to 9 years for agricultural investment. Additional 2-4 years income tax exemption for exporting investors located within industrial parks and 10-15 years exemption for industrial park developers.
(Source: https://expogr.com/ethiopia economy_news.php)
The Ethiopian Herald February 18/2020
BY STAFF REPORTER
