It has been repeatedly stated that events related to the war in the northern part of Ethiopia were an obstacle for the investment sector. The suspension of Ethiopia’s “AGOA” related to the war and the pressure of the international media are among the challenges that tested the investment sector. The Tigray region, which was the main war zone, suffered multiple casualties. The region’s investment sector is one of the most affected sectors by the war.
Tigray Region Investment Commission Commissioner, Daniel Mekonen, pointed out that the war has caused huge human and material damage in the region. Thus, a lot of effort is needed to revive the investment sector. According to him, following the relative peace in most areas of the region, efforts are being made to revive the existing investment activities.
To achieve this, there are several questions that need to be answered. Among the demands raised by investors are shed rent and interest cancellation, loan and foreign exchange provision, compensation payment, expedited business and work permit service and tax relief.
“It is known that most investors work with loans. This loan is counting interest every day. Because of the war, the investor did not use the money. Therefore, the investors are asking for cancellation of interest and debt and for compensation to be paid to them,” he said, pointing out that the investors’ demands should be answered in order to stimulate the existing investment and attract new investors.
He said that there should be an official call for foreign investors to return to their jobs and in this regard, the Ethiopian Investment Commission and the Industrial Parks Development Corporation have greater responsibility. Pointing out that one of the issues that play a major role in stimulating investment in the region is the task of amending investment laws and preparing new guidelines, Daniel explained that this task mainly concerns the federal government.
“Investment laws are carried out according to the laws of the federal government of the country. Therefore, the responsibility of amending and preparing these laws is the authority of the federal government.”
As he said, before the war, there were investors who were given tax breaks. However, due to the war, the investors did not take advantage of this tax break. Since the task of granting tax relief is the responsibility of the federal government, it must respond to investors who request the extension of tax relief.
Foreign investors mentioned the need for work permits for the professionals they bring in from abroad, and they say that there are many challenges faced by investors in obtaining work permits and importing investment resources. Therefore, he pointed out that simple, fast and convenient procedures should be established to facilitate these activities.
Recalling that the federal government had prepared clear guidelines for investors who were injured due to problems caused in various areas due to the political crises in the country in the past, he explained that investors in the Tigray region are also raising this question. Local investors are also asking for compensation for their destroyed properties. Compensation and other incentives given to properties destroyed in other regions should be implemented in Tigray as well, he said.
According to the investment commissioner of the region, it should be known that the development of Tigray means the development of Ethiopia. The gold and sesame produced in the Tigray region contributed greatly to the country’s foreign exchange. Thus, supporting the investor in Tigray means supporting Ethiopia; stimulating the economy in Tigray is stimulating the economy of Ethiopia.
“The region’s investment has contributed significantly to job creation, technology transfer and foreign exchange earnings. Therefore, a solution should be given based on this idea. Failure to do this has prevented the region’s investment activities from progressing as expected,” he said, explaining that the sector needs an urgent solution.
He pointed out that the measures taken by the National Bank will allow investors who are in financial trouble to get new loans and extend the loan repayment period and will give relief to investors. “There are laws, support frameworks and procedures that the federal government should improve based on the damage that has been done. But they are facing many hurdles as they are not fully implemented. A legal framework is needed that can repair the damage done. In general, a detailed system that can compensate the damage should be prepared,” he said.
Daniel further said that while the responsibilities of the federal government are maintained, the region is making efforts to fulfill its responsibilities in order to stimulate the region’s investment sector.
Budget is becoming a big problem. The region was at war and was not collecting taxes. Even the subsidy from the federal government is not sufficient for the salaries of government employees. Cities cannot currently pay compensation and provide land to investors. Therefore, there is a big problem in giving new land.
“Despite these problems, we are calling for investors because we believe that the regional government should pay great attention to investment. Although most of the investment laws concern the federal government, we are trying to improve the laws of the state which can be improved at the state level. We are making the investors who come with machines get land directly. We are clearly transferring the lands for which compensation was paid before the war,” he explained. .
One of the industrial parks in the war zone is the Mekelle Industrial Park. The Head of Marketing and Communication Department of the Industrial Parks Development Corporation, Zemen Jonedi, previously explained to Ethiopian Press Agency that the corporation had no information about the Mekelle Industrial Park for two years. Following the Pretoria Peace Agreement, a group of experts formed by the Corporation went to Mekelle and observed the condition of the park. As a result, the park was not looted or vandalized. Therefore, works are being carried out to quickly put the park into operation. It was possible to talk to the eight investors who were in the park by phone and e-mail; Joint discussions will be held soon.
Explaining the steps taken to alleviate the problems of the industrial park and the ongoing solutions, he said, a committee led by the CEO of the corporation has been established and started work to find investors and convince them to start working. In order to find out the condition of the workers who were working in the park and to prevent the investors from having problems with the supply of workers when they start work, a consensus was reached by discussing with the labor and social affairs sector of the Interim Regional Administration (IRA) of Tigray.
The process of solving the transport problem was also facilitated through discussion with the transport office of the interim administration. Discussions have been held to eliminate power, data, and voice interruptions, and work is being done to resolve the problem in a short period of time.
Many international experiences can be presented as evidence that post-war economic construction, especially the management and leadership of the investment sector, requires a different approach. Economists also recommend the need to implement a post-war investment management system that takes into account the existing conditions in order to revive the investment sector damaged by the war and to be in a better position than the previous performance.
In this regard, it is important to speed up the development of the investment sector of the Tigray region and the construction of the national economy by preparing and effectively implementing post-war investment stimulation strategies that can guarantee the revival of the investment sector after the peace agreement signed between the FDRE government and the TPLF.
Daniel said that the Tigray region follows a different system in terms of post-war investment management. “The post-war economic recovery system has many applications. Investment requires peace, finance, infrastructure, market linkages… A legal framework is needed that can repair the damage done. The federal government must fulfill its responsibilities so that the post-war economic recovery system can be effective,” he said.
BY BACHA ZEWDIE
The Ethiopia Herald September 14/2023
