Having a rapidly growing population and predominantly agrarian economy, one of the key agendas of Ethiopia is achieving industrialization and sustainable economic transformation. In this regard, achieving economic transformation seems to be the only way the country would be able to diversify its economic base and create job opportunities to its rapidly growing youth population.
However, industrialization is a huge endeavor and Ethiopia urgently needs to attract an increasing inflow of Foreign Direct Investment (FDI) and foreign companies with adequate capital and technological capabilities to come to the country. Moreover, the country also has abundant potential for commercial agriculture which requires a huge capital to develop.
That is why in the past decade or so, the government has prioritized the effort to attract FDI. As the nine-month performance report of the Ethiopian Investment Commission indicates, FDI has become a burning issue to the country as it’s mostly a means to address the queries of the ever increasing unemployed youth, obtain sufficient foreign currency and establish integrated urban centers. Thus, in the year 2018/19, the commission has set to attract 2.6 billion USD from FDI. Consequently, remarkable results are being registered.
During the current fiscal year, various foreign-based companies have been coming in to invest in Ethiopia. During the first nine months of Ethiopian fiscal year started July 8, 2018, Ethiopia has attracted foreign direct investment of 1.83 billion USD. The investments are made by a total of 152 new foreign companies, according to the Ethiopian Investment Commission. The sources of the foreign direct investments include China, Indonesia, Malaysia, Hong Kong, Saudi Arabia, Sir Lanka, Korea, Egypt, Sudan and Norway, while the investment areas range from sugarcane and rubber plantations and processing to manufacturing of mobile phones, cable, metal, and real estates and LPG, among others.
These heterogonous investment sources show how the country is becoming a preferred investment destination. The heterogeneity is not only limited in terms of investors generating countries but in attracting investors who are engaged in diverse sectors and sub-sectors. This gives citizens, particularly the youth, a variety of advantages to be hired in companies based on their interests and skills.
To mention some of the instances of FDI; Joint ventures between Ethiopian and Saudi Arabian nationals have taken investment license to invest 105 million USD in real estate, Liquefied Petroleum Gas (LPG) and production of pipes. Chinese companies are also planning to invest 10 million USD in electronics industrial park and 2.5 million USD in production of LED (light-emitting diode,) a semiconductor light source that emits light production.
While a joint venture of an Indonesian and a Malaysian company is registered to invest 50 million USD in rubber tree and sugar plantations, a Sri Lankan company is also set to invest 10 million USD in metals and steel production. In addition, companies from Egypt and Sudan are set to invest 10 million USD in mobile manufacturing and production of medicines.
Norwegian and Korean companies, as well as a joint venture between Yemeni and Ethiopian investors, are also investing more than eight million USD in various sectors. Here it should be underlined that the government’s devotion in the construction of industrial parks equipped with the necessary infrastructure facilities has been imperative in attracting the FDI to the country.
The trend of the FDI inflow is a testimony to the fact that will in the near future become a major investment destination in the world. This enables the country to realize industrialization, overall structural transformation and reduce the ever-growing unemployment.
The Ethiopian Herald, May 16/2019
