BY BACHA ZEWDIE
Following the consecutive discussions on Ethiopia’s amended investment law with stakeholders such as ambassadors, foreign and local investors as well as government officials, EIC has conducted a closing discussion with the heads of city administration and regional states’ investment commissions here in Addis.
The prospect of economic growth in Ethiopia is heavily reliant on the country’s ability to attract investment said Lelise Nemie, Commissioner of the Ethiopian Investment Commission (EIC).
In her opening speech, the commissioner underlined that as far as it is clear for everyone, it is investment that uplifts the country’s massive economy.
“It is crystal clear for all of us that unless we lead the investment properly and move it forward, united in a collaborative effort, it will, without a doubt, impose negative impact on our economy both in the short and long term,” she said.
Attracting investment, as to her, is a big deal and its functionality takes a central place in augmenting the country’s economic growth. The functionality of the investment can be assured by its capability to create job opportunities, manufacturing exportable products at the needed amount and substituting the imported products. “To this end, all commissioners and other concerned bodies must up their commitment and devotion to the development of investment in Ethiopia.”
Among the basic lessons learned from the series of discussions conducted with various stakeholders such as the investors of Africa, the Americas, Europe and Asia among others, the commissioner admitted that the effort to attract and encourage investors has not been sufficient.
Therefore, according to Lelise, the investment commissions at the states and city administration level are duty-bound to support investors based on the new investment law and in line with the general economic ambitions of the country.
Lelisie called on the heads of the investment commissions of each state and city administrations to pay attention and value the importance of coordinated effort. “Well managed and coordinated activities will help us achieve our plans in investment,” she said.
Mekonnen Hailu, Public Relations Director of the Ethiopian Investment Commission for his part told The Ethiopian Herald that there are three basic reasons that made the investment law amendment an urgent issue.
One is, according to the director, there has been a perception among investors that Ethiopia is an attractive country for investment which is mainly due to the previous investment law. Therefore, the amendment would help to correct this perception and encourage the investors to come to Ethiopia.
The other reason is that the political reform that was introduced in the country almost three years ago also necessitated economic reform. Investment being the major pillar of the economic reform, it was a must to amend the then investment law to reinforce the sector.
The economic reform in turn allowed the participation of local and international investors in some sectors which were not previously allowed or were totally controlled or monopolized by the government. In order to fully apply the economic reform on the ground, revisiting and amending the investment law seemed a prerequisite.
According to the director, the third factor that made the investment law amendment crucial is the competitive behavior of the global business. As countries in the world are engaged in competition with each other to win the interests of investors, Ethiopia cannot operate separately from the rule of the game.
Therefore, in order to come out victorious in a highly competitive world, it has to come up with the best strategies to effectively promote its investment potentials.
“In this regard, the investment law is expected to become the driving engine of investment with a particular emphasis on Foreign Direct Investment (FDI),” he added.
In this regard, as it is learned from their comments following the consecutive discussions, investors of different countries and representatives of embassies affirmed that fact that they found the new investment law to be more enabling and favorable than the previous one for various reasons, Mekonnen said.
“Prior to the amendment, when the previous law was in action, there was no clear communication process between the federal and regional states’ investment offices, Mekonnen said. “Consultancy forums, for instance, used to be conducted once or twice a year. However, the new law provides an opportunity to work more closely and in a coordinated manner for a common purpose.”
Mekonnen further said that the closing discussion forum held with regional state investment officials was different from the earlier ones that were conducted with investors and embassies’ representatives. “Here the major focus was raising the awareness of the officials and their staff as they are the ones who are going to implement the new investment law and facilitate favorable environment for investors.”
The investment law amendment primarily serves as a means to improve the role of the private sector. It is expected to augment the participation of the private sector. In line with this, it paves way to draw foreign direct investment to the country to reap the economic advantages in the form of job creation, knowledge and technology transfer as well as foreign currency earning.
The major task of the federal and states’ investment offices is to effectively implement the new law. For this two happen, the officials are expected to raise the awareness of their staff at middle and lower level and bring attitudinal change for the successful implementation of the plan, Mekonnen stressed.
Fantu Faris, International Finance Specialist, while presenting a paper on the forum said that Ethiopia’s competitiveness in the investment sector is not at the desired level. Compared to other countries, the government’s support to investment has not been encouraging, besides the prohibitive nature of the laws were also a major hurdle for the growth of investment.
“During the past 10–15 years, many countries have gone forward a long distance in the investment sector. But in the case of our country, it has only shown steady progress which is not enough.”
With the reformed investment law, however, improving ease of doing business becomes part of the national economic competitiveness agenda. In this regard, the government has designed a reform agenda to encourage investment activities of local and foreign investors in all investment sectors. To this end, a reform task force, which is coordinated by the prime minister, was established with the aim of facilitating favorable investment condition.
One of the major moves in this regard allowing investors to access loan using their moveable assets as collateral, Fantu said. As the nation’s competitiveness is the accumulated result of the states’ competitiveness, it is timely that the commission prioritizes the task of strengthening states’ competitiveness.
The Ethiopian Herald January 21/2021
