The Reporter (Addis Ababa)

16 August 2014

Ethiopia: Turkish Investors Top List for Quality

The newly restructured Ethiopian Investment Commission announced that Turkish Foreign Direct Investment (FDI) to Ethiopia is leading the group of emerging economies that have shown interest in investment opportunities in Ethiopia.

Although the Chinese lead in terms of number of companies that have invested in the country, the Turks lead others in combined capital outlay, the commission said.

Thus far, some 2,010 investors have joined the Ethiopian market with a total capital investment of 89 billion birr; however, the combined capital investment by the Turks is just shy of 20 billion birr, constituting 22.5 percent of the overall outlay. The Chinese, who have 367 companies already invested in the country, are second to the Turks in capital expenditure. The explanation of the commission states that Turkish companies are number one in the quality of the investment on account of having the highest share of overall capital investments by FDI in Ethiopia. Experts, on the other hand, argue that the nature of the industries these companies went into should have been considered when talking about quality of investment.

Still, the conclusion of the commission about the quality of the FDI can be observed easily since most of the Turkish companies like Ayka Addis, Saygin Dima Plc., BM Cables and MNS Textile are those in the manufacturing that have already started operations and have entered the export market.

In connection to that, the commission is undertaking measures to cancel investment licenses of companies who are taking a long time to start operations and those keeping investment lands idle without developing them. During a press conference held at the offices of the commission, it was announced that so far it has canceled licenses of over 2,980 investors who were identified as inactive and are keeping their land without the intended development.

Director of public relations at the commission, Getahun Negash, told The Reporter that the government has given priority to the improving internal service delivery in order to attract more high quality investments.

He also revealed that government has identified the major problems that hindered the progress of investment including its setbacks such as challenges related to provision of investment land. He added that major steps are in place to solve the setbacks such as developing the industrial zones with the cooperation of both the federal and regional governments.

He also made it clear that poor coordination among government institutions is one of the longstanding problems and that it is now able to address the problem by providing a one-stop service to ease the bureaucratic red-tape to acquire investment services.

According to Getahun, an investor has the responsibility to develop or go operational within two years of the land being granted.

"For the time being, we are taking action against those who keep their land fenced without developments. Next we extend our actions on those who developed the land but have not gone operational," Getahun told The Reporter.

Based on the commission, it has been identifying those license holders since 2011 and, out of 3,069 who took investment licenses, 2,980 projects have been canceled for the stated reason, according to Getahun.

In addition, he said that decision has already been made to attract high quality investments with minimum investment capital. To filter in quality, FDI the commission is planning to raise the minimum initial capital to USD 200,000.

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