BY MENGESHA AMARE
If a given country would like to make a difference and bring about economic sovereignty, it has to capitalize on home grown economic advancement and investment attraction. For example, Ethiopia is these days well identifying its investment potentials and exercising all means of economic development to end poverty and enlist itself under the category of middle income countries.
To well elaborate this concept and know the whereabouts of Ethiopia in terms of attracting investment for the overall economic advancement, The Ethiopian Herald had a stay with Aynalem Balcha, an agricultural economist graduated from Addis Ababa University working for a private firm as an economic advisor.
He said, “Without a shadow of doubt, Ethiopia is endowed with untapped resources, tangible and intangible heritages, committed and productive human power as well as appealing climate conditions highly suitable for attracting investors. As far as the latter concept is concerned, a number of investors from different nations of the planet have shown keen interest to invest in Ethiopia through deploying a great deal of capital assuming that investing in Ethiopia would help them come up with a difference and foster common growth.”
The expansion and production rife of various industrial parks in different parts of the country is the right avenue for Ethiopia to trek towards achieving marvelous economic growth thereby emancipating itself from dependency syndrome and habit of running many aspects depending on aid and grant, he added.
In principle, a country that is economically advanced could never be, but not limited to, twisted its arms and bowed to borrowers and loan granters. Dependency syndrome, incapability of feeding own population, lack of infrastructural development following devoid of finance to execute projects and incurring local or international loan can be cancelled through reinvigorating economic advancement born to investment expansion. This is really true in countries where every place is potentially rich in investment opportunities like Ethiopia, he opined.
“Ethiopians’ poor working culture, low level of knowledge about what their country has possessed, the sporadic skirmishes breakout here and there for very minor reasons, ill intended competitions among regional states have to be done away with as these factors are of cancerous for development and the wide ranging investment across the nation,” he added.
If this is so, said Aymanlem that the country would unequivocally have ample opportunities to harness all the investment potentials at every part of the country optimally. The very thing that has to be taken into account in this regard is the issue of peace which is an incomparable one. Yes, peace is the source of all sacred deeds and the path to growth and change.
Cognizant of the fact that peace and security should come at the forefront to have all what one desires, the Ethiopian government is duty bound to ensure peace and security. In so doing, all local and foreign investors can confidently pump their capital into a range of areas and untapped sectors; thus the country would economically be developed and defeat poverty and backwardness as per its years long aspiration and plan to do so, he recommended.
Investors would love to embark on agriculture, mining, fruits and vegetables, garment and apparel among others, recognizing that Ethiopia is a suitable nation to run activities on these areas and it possesses a rewarding investment climate, he said. As to him, major policy initiatives in a variety of areas are highly required such as reforming the regulatory framework for institutional investors—policy makers need to promote greater professionalism and expertise in the governance of institutional investors.
Collaboration and resource pooling can also be encouraged, in order to create institutions of sufficient enough scale to implement a broader investment strategy as well as more effective risk-management systems that take into account long-term risks. As learnt from Aynalem, regulators are needed to address challenges revolving around investment funding, and relax quantitative investment restrictions to allow potential investors to invest in less liquid, long-term assets.
Besides, they are peculiarly useful in encouraging institutional investors to be active shareholders as policy makers should remove regulatory barriers, allowing institutional investors to engage in active share ownership. They can also reduce the burden of active engagement, particularly for smaller investors, by encouraging collaboration via investor groups and can support national or international codes of good practice, designing policy frameworks that are supportive of long-term investing.
This means that the general investment policy environment for long-term investments should not lack transparency and stability. Government support, such as long-term policy planning, tax incentives and risk-transfer mechanisms may be required to engage investors in less liquid, long-term investments, such as infrastructure and venture capital as well as addressing knowledge gaps and behavioral biases, he added.
As to him, regulators should also become better acquainted with long-term risks and new financial instruments. In order to achieve these objectives, the Ethiopian governments and other stakeholders should support information collection, public awareness and financial education campaigns that promote long-term investment and risk management across the nation.
He said, “A new regulatory framework, as well as new accounting rules, tax incentives and new financial instruments for financing infrastructure could help foster long-term investment and overcome problems. Restoring confidence in financial markets lost during the crisis is also crucial for private investors to resume the provision of risk capital, and enhanced transparency, improved governance and more active shareholders are important elements in this effort. The contribution of investors plays a key role in boosting the nation’s economy, he added.
As to him, the mobilization of private-sector funding is essential in bridging the infrastructure-funding gap that is being generated by the dramatic increase in infrastructure needs. The government of Ethiopia is managing heavy debt burdens, can foster investment in long-term assets such as infrastructure by aligning financial regulation with infrastructure policy objectives, implementing targeted public financial support for strategic projects, promoting active involvement in the management of infrastructure investments by institutional investors and creating a stable regulatory framework for project procurement that takes into account optimum risk transfer and the availability of funding.
True, a carefully designed policy framework has been encouraging investors, who can provide the state with stable cash flow. The implementation of such a framework could generate a double benefit for the government: fostering the financial stability of retirement-savings systems, which would be relying more on palpable assets, and enabling the development of strategic infrastructure projects that contribute to long-term national growth, he opined.
The potential financial, social and environmental returns need to use public budgets to stimulate growth via private sector investment, the next generation of Public Private Partnerships (PPPs), he added. Undeniably, investment requires long-term policy planning so as to be credible and rewarding step for economic growth. Yes, stable and accessible programs for infrastructure projects and public-private partnerships (PPPs) are key in attracting private sector investors, complemented by adequate regulation.
He said, “If one would like to build a great business, getting out and networking within the local startup and investing community can be a great way to meet investors. Networking is one of the most natural methods organizations or companies can utilize to inform other professionals and investors about their business and the potential opportunities it may offer.”
As to Aynalem, as successful investing is a journey, not a one-time event, and Ethiopia should be well focus on it as it is a means to boost economic development. Yes, most successful investors start with low-risk diversified portfolios and gradually learn by doing.
THE ETHIOPIAN HERALD 21 JUNE 2023
