Ethiopia is recording steady economic growth with its large population and significant landmass that attracted the attention of many international companies. Over the last ten years, the country has achieved double-digit growth in real terms, averaging 10.6 percent per year, which is the second-fastest in Africa
While presenting the nine months performance report for the House of People’s Representative (HPR) this week FDRE Prime Minister Dr. Abiy Ahmed said that even though the country is achieving steady economic growth unemployment persists as a serious economic challenge.
Dr. Abiy added that the government would attach a special place to reduce inflation by modernizing the logistics system and taking measures against an artificial price hike. The Prime Minister also underscored the need to use local knowledge and address Foreign Direct Investment (FDI) barriers. In line with this Ethiopian Investment Commission (EIC) has drafted a new law, which enables the country to attract more FDI by ensuring better the ease of doing business.
Ethiopia does not yet have a specific investment policy. However, elements of investment policy can be derived from the country’s broad statement of development policies and the investment law like sustainable development and poverty reduction strategy as well as plan for accelerated development.
Ethiopian Investment Commissioner Abebe Abebayehu told The Ethiopian Herald that over the past few years several reasons necessitated the revision of the Ethiopian investment legal regime and substantive issues that call for the revision of the Ethiopian investment legislation have been identified.
Among them is the need to catch up with changes in Ethiopia is recording steady economic growth with its large population and significant landmass thatattracted the attention of many international companies. Over the last ten years, the country has achieved double-digit growth in real terms, averaging 10.6 percent per year, which is the second-fastest in Africa.
While presenting the nine months performance report for the House of People’s Representative (HPR) this week FDRE Prime Minister Dr. Abiy Ahmed said that even though the country is achieving steady economic growth unemployment persists as a serious economic challenge.
Dr. Abiy added that the government would attach a special place to reduce inflation by modernizing the logistics system and taking measures against an artificial price hike. The Prime Minister also underscored the need to use local knowledge and address Foreign Direct Investment (FDI) barriers. In line with this Ethiopian Investment Commission (EIC) has drafted a new law, which enables the country to attract more FDI by ensuring better the ease of doing business.
Ethiopia does not yet have a specific investment policy. However, elements of investment policy can be derived from the country’s broad statement of development policies and the investment law like sustainable development and poverty reduction strategy as well as plan for accelerated development.
Ethiopian Investment Commissioner Abebe Abebayehu told The Ethiopian Herald that over the past few years several reasons necessitated the revision of the Ethiopian investment legal regime and substantive issues that call for the revision of the Ethiopian investment legislation have been identified. Among them is the need to catch up with changes in
global and local issues.
By doing so EIC has drafted a new investment proclamation to modernize the service delivery and attract more Foreign Direct Investment (FDI). Ease of doing business is among the prior agenda of the government and EIC draft investment law and discussed with development partners and investors to collect input from the concerned bodies regarding issues that are challenges for both local and foreign investors.
Abebe noted that the country is using an investment proclamation, which was last amended seven years ago. The commissioner says to create a conducive business climate and provide active service delivery for private sectors the proclamation needs to be amended to accommodate modern ways of service delivery.
Investment flow to the country is increasing from time to time and the country is now one of the top investment destinations in Africa and top from East Africa. Even though the country attracts a large amount of FDI over the past year, compared to its potential the flow is still very low. Hence it needs to take further actions to raise the FDI to the maximum of its potential.
One of the measures is adopting a new proclamation that is assisted by modern technology.
Abebe further stated that the new proclamation which is going to be adopted soon will be referred to the Ethiopian investment board chaired by the Prime Minister and expected to be ratified in the next fiscal years.
Among the challenges with the existing proclamation is the registration and application procedure which requires the applicant to be physically present. To overcome these kinds of hardship EIC has launched an online service platform where investors can apply for new investment license and renewing investment permit online.
The platform aims at providing efficient and reliable investment for investors regardless of geographical locations and allows them to access and register their investment licenses online.
On the other hand sectors like tourism and ICT which are capable of creating jobs were not given due attention. The new proclamation which will be adopted soon gives priority to the sector. Besides, the proclamation will strengthen the relations of foreign and local investors and able to transfer technology and experience sharing, as to him.
The revision of investment law has been dictated by the need to modernize the investment regulatory and administrative framework and align investment legal regime with recent changes in economic policy. Besides, it is important to revisit the investment areas and open to the private sector, he stressed. Moreover, it is important to adopt best practices for efficient investment administration service and develop a faster and more transparent way of providing service, Abebe says.
The existing rule says Ethiopia is closed for investors in some sectors and the new proclamation aims at changing the perception and reverses the long-held perception that Ethiopia is closed for business and portrays the message that the country welcomes productive investment in all sectors.
Dr. Tilahun Esmael, Senior Investment Policy Advisor at the Ethiopian Investment Commission (EIC) for his part said that the need to remain competitive makes the required reforms to match competitors. Over the past years, many gaps and ambiguities have been identified that hindered the application of the law. The draft legislation attempts to address these gaps and ambiguities through incomplete amendment of the laws as well as the decision of the Ethiopian Investment Board (EIB).
The new proclamation indicates that the government’s attention to attract FDI in the manufacturing sector and agriculture to strengthen domestic production capacity. Ethiopia has become a preferred destination for FDI and an emerging hub for manufacturing in Africa due to its Political stability and committed government, stable socio-economic governance with sustained peace and security. High-level political commitment for investment promotion and protection; investment policymaking is led by the Ethiopian Investment Board (EIB) which chaired by the Prime Minister, Dr. Tilahun says.
Effeson Hailemichael the Co-Founder and Chief Scaling Officer of Startup Factory Ethiopia told The Ethiopian Herald that the government needs to modernize infrastructural sectors to ease doing business.
The role of infrastructure is broadly admitted to being vital for economic achievement, and infrastructure assets are encouraged as leading to economic growth, either at the domestic or national level. The country is at a good step in facilitating the infrastructural networks but still much effort required concerning road and electricity.
As to him, infrastructure is important for faster economic growth and alleviation of poverty in the country. The adequate infrastructure in the form of road and railway transport system, logistics, power, airports, and their efficient working is also needed for integration of the economy of the country.
It needs to be emphasized that good quality infrastructure is important not only for faster economic growth but also to ensure inclusive growth. By inclusive growth, we mean that the benefits of growth are shared by the majority of the people of a country. Thus the inclusive growth will lead to the alleviation of poverty and reduction in income inequality in the country.
The necessity of ease of doing business is crucial to stimulate the country’s economy, ensure sustainable development, and deal with economic challenges and to transform the economy from state-led to private sector-led one. These economic reform measures are essential to stimulate the economy, sustain economic growth, reduce unemployment and maintain macroeconomic stability.
The Ethiopian Herald July 13/2019
BY HAILE DEMEKE
