Making Ethiopia a preferable investment destination

African countries have tremendous economic potentials, with rewarding opportunities for investors and partners.

Recently, Business Insider, a magazine with a wide circulation, has ranked Ethiopia among the top ten investment destinations in Africa in 2022, and mentioned the country as “Rewarding for investors”, with high GDP and resilient economy.

It also indicated the country as the second largest flower exporter in Africa, among the biggest producers of coffee worldwide and put it at seventh place out of the top ten investment destinations in Africa.

The magazine also put Nigeria, Egypt, and South Africa, respectively, as the top three countries that are suitable for investment. Ethiopia with a population estimated to surpass 115million people, The country’s economy registered a 6.1-percent growth between the budget years of 2019 and 2020. Its GDP stood at 93.97 billion USD, despite the ongoing war in the northern part of the country. Investors can get benefit if they invest in the country.

In this regard, the Ethiopian Press Agency (EPA) had a brief stay with scholars of the field who explained about the unique investment opportunity and the activities that should be done to attract foreign direct investment.

Applauding the Business Africa Insider’s report Wossenseged Assefa, an economist said that, the country is selected as the best investmentdestination based on various criteria.

Every individual, team, country or organization can report its own list that make them sutible to to investment. The surge in the country’s GDP and per capita income has paramount importance for attracting foreign direct investment (FDI).

As to the magazine, high per capita income and GDP are the essential factors for attracting investment. There is a positive correlation between higher per capita income and the higher purchasing power of the public.

The assumption is, therefore, investors will build confidence to put their money for making business.

Economic growth also boosts the country’s investment in one way or another The total capital of the country, its financial system, the political and economic stability as well as free from foreign threat are also amongst the other criteria for investors to choose their destination said Wossenseged. He added that Ethiopia should work hard to create more conducive environment.

Stable currency exchange rate better macro- economic performance also have role in attracting investors. In this regard, the National Bank of Ethiopia (NBE) needs to increase the confidence of investors through working exhaustively in creating stable and secure foreign exchange rate across the country.

In addition, conducive investment policy and viable institutions are essential elements in attracting investment flow. Where there is war, terrorism, and armed gangs, investors do not want to invest their wealth.

Therefore the government needs to fight and bring down terrorism. As to him, if there is political instability, foreign direct investment will be curtailed. Therefore, ensuring peace and stability must be a priority agenda. Easing doing business also can be taken as tool for creating better opportunities.

When Bureaucratic bottle-neck and corruption become the day to day phenomena, pulling FDI will be unthinkable. Wossenseged further said that all stakeholders should play their role in making the country an attractive investment destination.

In order to solve the problems in the sector, first, the House of Peoples’ Representatives must be able to enact laws that create conducive business environment. Second, the Ministry of Trade and Regional Integration (MTRI) should provide various tariff reductions to incentivize investors which in turn encourage them to venture in FDI.

The government should also consider other incentives such as provision of tax holiday and shades in industrial parks and energy and water and internet service in fair price.

The availability of well -educated manpower is also the other prerequisite for attracting foreign investors. In this regard, the Ministry of Education must answer the question of how much competent manpower would be trained to join the labor market. Therefore both the public and private higher institutions should work hand in hand in producing qualified citizens to meet the demand and utilizes as inputs in industries production.

Unless the country can get adequate number of educated humanpower in every field , the foreign companies might be forced to hire their own foreign experts which intern put the nation in dis advantageous position. As to him, diplomacy is another important issue.

The Diaspora, diplomats and ambassadors, should play their own role in introducing the investment opportunities in Ethiopia in the host countries and fail to do their assignment in this regard mean investors will opt for finding other destinations. The public also should give due attention and priority to purchase domestic products in order to support the local investors so that they will engage energetically.

Atlaw Alemu (Ph.D.), Lecturer of Economics at Addis Ababa University for his part stated that peace and security is the backbone of investment.

As to him, it is a great opportunity for Ethiopia to be selected as the top ten business destination in Africa. But instability in some part of Ethiopia will be difficult for securing the expected FDI , he noted. On the northern part of Ethiopia and some part of the Oromia region, there are terrorist groups who are destroying infrastructures and brutally murdering innocent civilians.

Therefore, the government should bring lasting solution in solving these problems once and for all. As to him, currently the nation is paying heavy price due to the outbreak of war which the terrorist TPLF started in the northern part of Ethiopia. Hence, postwar economic recovery program should be implemented.

The senior researcher at the Ethiopian Economics Association (EEA), Arega Shumetie (PhD) stated that Ethiopia can get lesson from the experiences of Germany and Japan, which had been severely damaged by WWII, and recovered with in only few decades.

Several countries are overcoming similar challenges through mobilizing resources and unleashing the public’s potential and Ethiopia has no option but derives lessons from it.

The expert further noted that the Ethiopian economy has also been challenged by soaring inflation, high level of unemployment, debt burden and lack of sustainable growth and other macroeconomic gaps.

Ensuring peace and stability is a prerequisite to address these challenges and the Ethiopian government has to make maximum efforts to that end. Achieving sustainable peace, avoiding threats, motivates investors to invest in various fields propels economic growth.

Therefore, standing together for the common goal and preparing a strategic plan and implementing will bring significant change especially in facilitating the inflow of FDI.

The government has tried its level best to attract foreign and local investment through constructing industrial parks, improving laws which have been hampering the flow of investment and the provision of land.

In addition, it has created conducive environment to diaspora to invest here and open bank accounts in hard currency.

It also liberalizes the financial sector to provide loan to diaspora for their import and export business. Not only these, the government also adjusted, in various times, the Dollar – Birr exchange rate to encourage exporters and so far the enhancement of investment helps job creation, stimulate the economy and boost export.


The Ethiopian   16 February  2022

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