Liberalization of trade sector: A timely policy reform

The Ethiopian Investment Board has issued a new directive outlining that foreign investors can engage in specific trade investments. The board has unveiled a new directive to regulate foreign investors’ participation in previously reserved businesses including export, import, wholesale and retail trade investments.

It seems impractical nowadays promoting restriction forever economically, politically and socially since the dynamic world is ever changing as the globalization is overwhelming our planet through digital advancement. Being isolated is not only impossible this time; it rather imposes adverse impact especially on the economic activities of a country and Ethiopia is not unique in this regard.

Ethiopian Investment Commission (EIC) Commissioner Hanna Arayaselassie briefed recently the details of the new directive that will create better competitiveness and increase quality in trade investment. She stated that the government has taken privatization measures to realize the homegrown economic reform in a bid to ensure competitiveness of businesses.

Accordingly, the objective of this directive is to list out investment areas in the export, import, wholesale and retail trade sectors reserved for domestic investors in which foreign investors may participate, establish the conditions that apply, and indicate details of the facilitation and regulatory functions of the appropriate government bodies.

The policy reform the government has recently formed will take into account several advantages. The decision speeds up the journey to prosperity the country is pursuing. Without belittling the impact the presence of foreign investors pose on indigenous investors as a result of capital imbalance, and the gap in terms of experience, knowledge and technology, liberalizing the sector worth more even for the local investors in myriads of ways like enabling them integrate into the global trade value chain, and eventually transit to value-added investments. In so doing, they become competent in the global market by providing standard products in quality and quantity.

Importantly, enacting the directive will stabilize the market via encouraging fair competition so that local consumers can purchase commodities with reasonable price. Also it avails our country in utilizing its resources of different kinds that could not provide any significant use to date. To tell the truth, our country is blessed with natural surface, underground and aquatic resources as well as productive labor but benefited a minimum partly because of lack of finance, knowledge and technology and largely because of the restrictive policies the previous governments used to apply.

Now, however, it is the time to level the ground for investors from all corners of the world to play as per the requirements the directive has put. For the country to exploit its resources properly, the presence of foreign investors here with their accumulated experience, finance and technology is commendable for the reason that domestic investors gain experience which gives them opportunity to participate in the global market.

As Ethiopia is drudging to get membership in the World Trade Organization (WTO) that requires competency in terms of quality and quantity of the products, the experience Ethiopian inventors will acquire from foreign investors is of paramount importance in this regard. In line with this, the country will earn hard currency via exporting value added products especially from the products local investors export. Moreover, knowledge and technology transfer benefits Ethiopian youths to get employment in various aspects of business.


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