Ethiopia’s Astounding Achievement in Attracting Foreign Direct Investment

Various sources indicate that the rapid inflow of Foreign Direct Investment to Ethiopia has continued over the past years. But the question here is that even when the country has passed through various political ups and downs, why is this tremendous FDI upward trajectory continued? What is the reason behind?

Zemedeneh Nigatu, economist by profession recently told the Amharic daily Addis Zemen that while the country’s FDI inflow was 100 million USD some ten years ago, it has been increasing significantly to reach four billion USD in recent y

According to him, Ethiopia ranked fifth out of five giant

FDI attracting African countries in last fiscal year. This is another indicator that Ethiopia has become successful in attracting huge sums of FDI, he added.

The construction of industrial parks is one of the main contributing factors for this achievement, he said. This is because the parks enable investors to directly commence production in two or three month duration without bothering about the supply of land, water, electricity and other infrastructures.

The country’s success in infrastructure development and investment has also improved capacity to attract investors. Moreover, the annual economic growth that ranges between 8.5 up to 10 percent has also played its own role, he stressed.

Dr. Tekae Alemu another economist said the country’s FDI policies and proclamations have played a great role in attracting huge sums of FDI.

Investors do not merely come to Ethiopia only because of the presence of suitable investment policies and proclamations. They also come with confidence about selling their products and being profitable, he underlined.

As to Dr. Kibur Gena, another economist, since 2014, FDI inflow to Ethiopia has doubled. Government’s policies and strategies as well as extensive infrastructural development are behind the reason for the rapid increase in FDI inflow, he pointed out.

Improvement in power supply has highly attracted foreign investors. Moreover, the government’s incentive has also indispensible role besides establishment of industrial parks, he indicated.

While exerting efforts to attract investment from all countries is an important decision, it would be wiser to look for advantages to speed up the inflow, Kibur said. China, Turkey, Saudi Arabia and other countries are supporting Ethiopia’s transformation, he added.

As to him, the presence of these foreign investors would benefit the country more in the future than present.

When Hawassa industrial park commences production with full capacity, it will create better opportunity to generate more foreign currency and it will also create more than 60 thousand direct job opportunity for citizens, he further added.

Dr. Tekae recommended that to sustain the ongoing investment activities in the future, ensuring sustainable peace across the country should be the first priority.

Moreover, availability qualified personnel, efficient bureaucracy and the effectiveness of the industrial parks are also necessary, he suggested.

Despite the astounding FDI inflow, there are still issues that need to be improved, particularly the supply of foreign currency and effective service delivery to attract more investors, Tekae recommended.

According to Ethiopian Investment Commission, in the first six months of the 2017/18, more than 2.2 billion US dollar investment capital came to Ethiopia in the form FDI, showing a 22 percent increment from last year.

In various corners of the country, state-of-the-art industrial parks have been constructed by the government. Bole Lemmi- I and Hawassa industrial parks have commenced full operation while Mekelle and Kombolcha commenced production partially. Adama and Diredawa industrial parks are also in the pipelines to commence operation. Additional five industrial parks (Jimma, Debrebirhan, Bahir Dar, Bole Lemmi II, Kilinto, and Adama II) and two private industrial parks in Arareti and Diredawa are under construction.

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Source: The Ethiopian Herald

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