Being an oldest and independent country, Ethiopia is relatively among the most stable countries in the Horn of Africa. The peaceful transition of power to the new Prime Minister and his colleagues in April 2018 has proven the stability of the nation’s political system and parliamentarian form of government. Radical political and economic reforms have been also undergone unprecedentedly.
Full and partial privatization of State-Owned Enterprises, liberalization of the aviation, logistics, and telecom industries as well as introduction and implementation of Home Grown Economic Reform coupled with unveiling the ten years perspective development plan are facts that place the country in the list of best investment destinations.
Documents from the Ethiopian Investment Commission (EIC) indicate that in line with the legal reforms that have been done in the past 3 years, facilitating ease of doing business through the adaptation of a new commercial code and arbitration and conciliation working procedure proclamation are the major reforms to be recognized.
Notable amount of jobs created; efforts to facilitate the economic growth; poverty reduction and supporting the private sector development bear witness for key successes in the sector.
Besides, stimulating the Foreign Direct Investment (FDI) has been among the pillars of the perspective plan. Henceforth, Ethiopian Investment Commission is determined to work jointly with the government and the stake holders in order to boom the country’s economy through rapidly accelerating the investment inflow.
Briefing the commission’s nine month performance, Investment commissioner, Lelise Neme said that the commission’s 9 month performance indicates its capacity in luring FDI and earning foreign currency. As a result, 2.05 Billion USD forex has been secured from Foreign Direct Investment during the past 9 months, she noted.
Additionally, the FDI has been increased by 70 percent during the same period of the current fiscal year. Illustrating the progress, she further set out that Lemi Green Building Materials, Ethiopians and Britain Joint Venture Company and Indonesian’s company engaged in manufacturing spare parts become among the foreign companies that have joined Ethiopia’s investment with a capital amounting 600 million USD and 100 million USD respectively.
Various promotional and diplomatic works that have been done in collaboration with sector institutes and embassies all over the world have received recognition in the report. According to her, these activities have brought overwhelming opportunity to the country to attract FDI.
Apart from this, the new one stop online service is also the other result achieved in the past months of the fiscal year. The amendment of policies and proclamations also brought a solution in solving investors’ problems, she asserted.
Among the investments attracted during the past nine months, 58 percent were gained from the manufacturing sector while the rest 5 and 37 percent were from service and agriculture sectors respectively. Coupled with these, 137 new investors have been licensed in different investment activities during the aforementioned period.
Furthermore, 12 domestic projects were entered into industrial parks in a way to support domestic investors. In this regard, it has been able to generate 129 million USD from the Industry parks during the past 9 months creating 58,631 jobs for citizens of which 43,206 or 85 percent for women and the rest 15,425 for men.
According to the report from the Commission, in the aspect of projects’ performance, 237 projects have gone through implementation in the past nine months. Key performance indicators have also been identified by the commission. Among these are, improving trade areas, investment inflow, export revenue, job opportunity, inspection and support, infrastructure, reform activities, industry parks, budgeting and financing as well as identifying challenges and providing their respective solutions.
Accordingly, industry park naming and regulation manuals in line with supervision and support strategies were revised by the commission. Regarding the capacity building program, different national and international trainings have been provided for different experts and management staffs at different levels.
She further said that the commission has been working with other public sectors to improve the business environment for the past two years. Additionally, a regulation has been issued based on the investment proclamation and a conference has been set up to respond to investors’ complaints. Besides, work is underway to promote Ethiopia’s investment potential at a time when the world is being shaken by COVID-19.
The commissioner further attributed that slowdown of trade activities, along with conflicts in some parts of the country, together with the impacts of the pandemic in receiving countries, are factors that have hampered industries from producing at their full capacity.
Furthermore, in order to help investors in Tigray region affected by the government’s law enforcement operation, the commission is working with the Ministry of Foreign Affairs, the Tigray regional state command post and the Ministry of Trade and Industry to reinvigorate their businesses.
According to the Ethiopian Industrial Parks Development Corporation (IPDC), over 13 industrial parks constructed at a cost of 1.5 billion USD collectively have exported goods worth 600 million USD over the past three years. The figures indicate that the parks have registered a 40 percent return on investment.
Meanwhile, the commissioner avowed that Ethiopia is aggressively working to join top doing business ranking countries soon while addressing the business webinar jointly Organized by Ethiopian Embassy in UAE and Abu Dhabi Chamber last month.
She further elucidated that Ethiopia has also been opening up more areas for Foreign Director Investment (FDI). To this end, it has undertaken decisive reforms aiming to create conducive and enabling environment for FDI. In this regard, new areas that were reserved for domestic actors have been made available for foreign investors now.
The Macro-economic, structural and sectorial reforms undertaken by the government are based on the homegrown economic reform agenda. Actions being taken to control the inflation, improve access to finance and ensure debt sustainability are enabling the role of the private sector in the economy, according to the commissioner.
The doing business measures are addressing problems in the FDI, she said adding that Ethiopia has made the biggest paradigm shift in the revision of restrictive legal frameworks such as regulations and proclamations of the investment and trade sector, Lelise noted.
Ethiopia’s signing of the African Continental Free Trade Area Agreement (AfCFTA) and the process it is undertaking to join the World Trade Organization has brought about greater opportunities in the Foreign Direct Investment Sector, the commissioner underlined.
Commissioner Lelise further underscored that the AfCFTA enables FDI actors to penetrate the huge regional unlocked market potential with 1.2 billion people and meet the growing domestic demand.
The revision of the laws is aimed at modernizing the investment regulatory, ensuring unrestricted legal framework and to align the investment legal regime with recent changes of economic policy priorities and to open up to the private sector.
The country is exerting its maximum effort to ensure efficient, transparent, predictable and modern administrative framework. The recently revised commercial law will also add an impetus to the reforms, she added.
While small scale areas that need not technological advancement such as urban transport, audio visuals, accounting, advertising and promotion have been reserved for domestic investors, the rest are opened for foreign investors.
According to the commissioner, key areas in the manufacturing sector include Apparel, leather, pharmaceutical, agro processing, and horticulture, among others. Aiming to mitigate climate change, Ethiopia for its energy consumption, is focusing on the renewable and environmentally friendly energy sector including hydroelectric, wind farm, geothermal and solar sources.
Cognizant to these facts, the commission invites both foreign and domestic investors to take advantage in the Ethiopia’s investment opportunities as the time demands to be attracted by the favorable conditions of investment portrays in Ethiopia.
BY HIZKEL HAILU
The Ethiopian Herald May 25/2021
