It is quite some time the Ethiopian missions abroad have shifted into economic diplomacy which has been dominated by strengthening relations for political cooperation. The move has come up with the increased Foreign Direct Investment (FDI) flow to the country that makes among the top by continuing in its positive trajectory for a fourth consecutive year.
Recently, Ethiopia's Ambassador to India Asfaw Dingamo, while inaugurating the Honorary Consul of Ethiopia in Kathmandu, Nepal, on June 14, 2017 has made a call for the Nepalese investors to invest in Ethiopia as the country's tremendous investment opportunities is rewarding, according to Kathmandu Post.
He proposed a plan for Nepal's Ministry of Foreign Affairs to strengthen cultural exchanges and tourism promotion between the two countries. He envisaged setting up bilateral consultative committee between the foreign ministries of Ethiopia and Nepal that would strive to strengthen bilateral ties and scale up economic and cultural opportunities.
Ethiopia is an ideal country of investment destination for foreign investors, including Nepalese. It offers for investors to invest in agro-processing, manufacturing, chemical, pharmaceutical, textile and apparels, among others. These sectors are currently booming following the construction of numerous industry parks across the country. Moreover, foreign investors can benefit from the growing market and economy of Ethiopia which is registering commendable double digit growth.
Trade and investment activities are booming and foreign investors can exploit every available opportunity in Ethiopia, which is a hub of international diplomacy and get way of Africa to the rest of the world. Currently, so many foreign investors are investing in agro-processing and manufacturing activities and they are turning out productive as Ethiopia's economic outlook is moving in upward trajectory.
As a spring board to flourish investment, Ethiopia has identified several strategic investment priorities with incentive package. One of the major areas that are currently enjoying a significant amount government incentive is the manufacturing sector. With the objective of substituting the bulk import of manufactured products, which is consuming the scarce resource of the country, the government has been providing tremendous incentives for the private sector interested to be engaged in a range of investment activities.
Currently, nation is beseeching foreign investors to make their way to Ethiopia, invest in profitable sectors and reap bountiful benefit. Cognizant of the availability of numerous packages and investment opportunities, Ethiopia is calling for prospective investors in the areas of agriculture and manufacturing.
To further enhance productivity and provide support selectively, agro-processing, production of textiles, leather and food processing and packaging are identified by the government as strategic sectors that have the potential to generate huge amount of jobs. The government has also been encouraging local production of medicines and chemicals, eyed at saving millions of hard currency being spent on import.
Taking nation's huge opportunities into account, during the Second Growth and Transformation Plan (GTP II: spinning through 2015-2020), Ethiopia envisages raising the contribution of industrial output in the overall economy and eventually changing the style of economy to industry-led, from the current agriculture-led. Currently, many manufacturers from China, Turkey, India, USA, UK and Israel, among others, are attracted by the various investment opportunities and are engaged in the production of textiles and garments, leather goods, paper, mineral products, cement and chemicals.
The reason that allures investors to invest in Ethiopia includes its economy being one of the fastest growing in the world, with annual growth rate of 11 per cent, large amount of irrigable land; enormous quantity of water and mineral deposits; improving infrastructure and logistics; pro investment policy, political stability and security; macro-economic stability; regional and international market opportunities; competitive incentive packages, investment guarantee and protection.
As a result, foreign and domestic investment has been steadily growing in Ethiopia, following the encouragement of the federal and state governments aimed at satisfying the insatiable demand of the country for more investment. Currently, both levels of governments are providing land and incentives such as tax holidays. They have also put in place improved bureaucracy in their investment offices which would help save time and money of investors when starting and undertaking operation.
Seeing the increasing volume of investment, Ethiopia is exerting considerable effort to desirably improve its business and investment climate through the issuance of various legislative measures. In this regard, the 1996 revised Investment Code as well as the Investment Proclamation are providing incentives for development-related investments and have gradually removed most of the sectoral restrictions and red tape on investment.
These measures have levelled the ground for enhancing FDI flows to the country and Ethiopia has ranked the third largest FDI recipient country in Africa since 2013. According to latest World Investment Report, Ethiopia is one of the top performing African countries in attracting foreign direct investment (FDI), registering a 46 per cent increase in 2016.
The report further said: "Some diversified producers of East Africa registered strong FDI in 2016, with Ethiopia attracting more inflows than ever before. Ethiopia stood out to become one of the largest recipients of FDI in the continent posting strong and record growth, up 46 per cent to three billion US dollars."
The report attributed the achievements to investments in infrastructure and manufacturing. can create thousands of jobs, increase quality of export produce and foreign currency earning.
Noting the role and contribution of FDI to the country's economy, the government has responsively set up offices vested with special duties to manage and facilitate matters of investors in custom offices and investment destinations. In addition, the government is and has been organizing various forums and events targeted to exchange views and gain invaluable ideas from investors; to proactively iron out possible hindrances that may encounter the investment sector.
The government believes that encountered problems and legislative issues could be alleviated through regular forums and dialogues. Boldly, it is also implementing measures to further privatize and liberalize the trade regime and, in turn, create a safer and more attractive investment environment to foreign and domestic investors.
Furthermore, the amended Investment Proclamation (2012) has introduced practicable provisions for the establishment of industrial development zones, both state-run and private, with favourable investment, tax and infrastructure incentives. Other measures include the revision of regulations for potential investors, standardization of appropriate accounting practices (to more accurately assess tax and other operating liabilities), increased protection for shareholders, provisions for bankruptcy filings, and the modernization of trade and registration processes. These all tailored improvements are expected to further attract investors and foster their investment activity.
So far wise performances and decisions have enabled to enhance healthy growth of the country and secure safety of financial activities in a desirable manner. The measures even help curb illegal out flow of foreign currency which might otherwise be aggravated by racketeers acting in the name of investment.
Besides, the very glaring fact on the investment and development history of the country, nation has reached the current level of development due to the unreserved effort of the government which selectively invests in public sectors that are not favoured by private investors (and the government will go on carrying out same duty until convenient time to fully taken over by capable investors). Hence, the government has been investing heavily to improve infrastructures. And as a result, the road network has burgeoned dramatically in the last few years enabling the country to be opened up for large volume of trade and investment.
Generally speaking, Ethiopia accepts investment proposals in a non-discriminatory manner, the screening process is not regarded as an impediment to investment, a limit to competition, or a means of protecting domestic interests. Starting from opening its doors to capable investors, Ethiopia will continue to undertaking activities that may whet their interest. Hence, foreign firms are welcome to invest in broadly privatized economy of Ethiopia.
Taking into account the instrumentality of foreign investment in job creation and lifting millions of citizens out of grinding poverty, the Second Growth and Transformation Plan (GTP-II) has given emphasis to attract more FDI into Ethiopia. In this regard, Ethiopia should intensify the auspicious effort in promoting its investment opportunities and attract more foreign investors.
To this end, ensuring peace and stability in the country since it is the perquisite for any development activities, developing and expansion of well furbished industrial parks and provision of incentive packages and effective and series discussions with the investors here and abroad would certainly make the country a hot spot of FDI destinations.