Investment is expanding, much to be done yet
“There has been a growing evidence of the link between investment and economic growth,” Kurabachew Menber, Lecturer at Dire Dawa University in the Department of Economics, stated on Public and Private Investment Analysis in Ethiopia. “But when it is viewed at sector-wise, public and private investment, there has been a debate on the relationship between them.” Adding he said that in some countries there was evidence of the crowding out effect of public investment on private investment, while there has been the crowding in evidence in other countries. But for sure, a complementary relationship between the two is preferred for better economic growth.
According to Mesfin Tafesse & Associates (MTA) Lawyers, The Ethiopian Government has formulated and started the implementation of the second five year Growth and Transformation Plan (GTP) to carry forward the important strategic directions to maintaining a fast growing economy in all sectors.
The Government of Ethiopia has attempted to promote private sector investment through the provision of investment incentives, by implementing an investor friendly taxation, Trade and credit system, and by simplifying and clarifying business and administrative procedures for investors, MTA stated.
It is a duty and mission of Ethiopian investment commission (EIC) to magnetize deluxe investment and assuring its sustainability, to create job and augment income from export trade. As per this, the commission is endeavoring to carry out its mission of boosting the nation’s economy through expanding foreign direct investment based on government’s policy direction, as EIC report.
It has prepared a five year strategic plan and implementing by identifying major duties. During this budget year, it has converted its strategic plan to result focused plan and engage in to the process of accomplishing strategic performance and measuring level.
Among the major focus areas of the commission for the budget year are drawing and bolstering foreign direct investment; expanding industrial parks with public and private participation; carrying out appropriate follow up and inspection and making policy amendments based on study aiming at creating conducive environment for the investment.
Evaluating its nine months performance of the budget year with regard to the strategic goals, the commission has provided report to the House of People’s Representatives (HPR) recently. The report includes positive outcomes registered, challenges encountered due process and successive focus areas.
To start from the positive outcomes, augmenting the investment flow through introducing the country’s investment potential, option and opportunity is the leading one. Introducing investment options and opportunities has been carried out by attending on different international forums during the past nine months. Thus, selection and drawing of potent investors has been conducted by participating on forums held in China, Hong cong-China, France, England, Tunisia and Morocco and China – Africa forums.
Therefore, attraction of and signing with high level investors such as Volkswagen and Simon’s car manufacturing companies including the huge Eagle Hills Investment Group which is owned the integrated Legehar development and versatile village project amounted 1.6 billion Dollars was conducted. And also, 16 foreign enterprises were drawn to industrial parks and become operational during the past nine months as a result of massive attraction works.
Including Eagle Hills Investment Group, 225 projects have been licensed during last nine months and all together, a capital amounting 2.5 billion Dollars could be drawn from foreign direct investment. And this is 40 percent growth over the past year similar time. In addition, among the successes registered are planning to license 227 inland projects with 13.4 billion Birr investment and 103 million Dollars could be gained by industrial parks from direct export trade.
Policy and legal framework amendments have also been carried out with proper attention aiming at creating conducive environment for the investment and assuring the sustainability and effectiveness of the reform induced by nationwide change. Consequently, formation of legal council that amends investment legal framework consistent to the economic reform and encouraging investment is done. Study of legal amendment is over and the draft of the study outcome got ready for discussion with concerned stakeholders in the near future.
Study of different sectors that are backing growth of investment involvement into the economy has been conducted. As a result, study of printing industry and logistics is finalized, referred to investment board for policy proposal, approved and become operational.
The commission is thus, undertaking revision of institutional arrangement to carry out its new mission and backing the commenced national economic reform. As a result of its new mission, the commission has undertaken arrangement of sub institutions such as Horticulture and Investment Authority Industrial Parks Development Corporation; approved by civil service commission and engaged into action.
Challenges have also been encountered due process. Among these the major ones are; projects fail to be operational because of the instability occurred in the country, foreign currency deficit, delayed power supply to the projects, states’ cabinets lagging in making land related decisions and problems encountered while execution. In addition, insufficient infrastructure in the industrial parks, shortage of water and power supply, repeated internet breakdown and land provision problems remained as barriers to the industries’ expected production. The commission has forcefully asked the standing committee for help while solving the problem.
Focus areas of the commission for the upcoming time are fundamental amendment on the investment law under inquiry, approving and put in action; upgrading the nation’s convenience by improving investment atmosphere; accomplishing the institution’s duties as per government’s new arrangement. It is also underlined that communicating sub- institutions with regard and acting accordingly.
Enhancing introduction of investment options and opportunities sustainably and integrated work with concerned bodies aiming to uplift the investment flow to its level of demand are also among the duties of the commission to be done in the future. Solving problems surrounding the industrial parks by working hand in glove with government and assuring the beneficiary of the community from projects underway outside the industrial parks; supporting inland investors to engage in the industrial park and become competitive are still the focus areas or home works of the commission.
The Ethiopian Herald June 25, 2019
BY BACHA ZEWDIE
