15 January 2018

Ethiopia: Economic Diplomacy Bringing Multifaceted National Benefits

It was 17 years back the Ethiopian foreign policy was chalked out incorporating the issues of other domestic policies to address various socioeconomic hurdles. This move laid the bedrock for achieving economic take off, scaling down poverty, ensuring sustainable peace, and facilitating the process of democratization in the country, according to officials.

In an exclusive interview with The Ethiopian Herald, Dr. Aklilu Hailemichael, a State Minister of the Ministry of Foreign Affairs of the Federal Democratic Republic of Ethiopia, says Ethiopia's economic diplomacy is set compatible with the priorities, goals and principles of other domestic policies.

It obviously focused on addressing various economic, social and political targets such as realizing poverty eradication, ensuring sustainable peace and building democratic system in the country as well as in the neighboring countries.

As it is indicated in the policy, Dr. Aklilu also says, " As one of the threats or risks for our national survival is poverty, the government gives priority for poverty alleviation. The government recognizes that unless we lift up ourselves out of poverty very quickly, our national existence will be questioned."

Thus, our foreign relation has created conducive international environment to make sure that we eradicate poverty promptly and ensure sustainable, equitable and fast economic growth, he says.

According to him, Ethiopia's foreign relation also gives priority for both internal and external peace. As peace and development are inseparable, the country needs to have a stable and peaceful neighborhood. "When we contribute for neighbors' peace, they do not serve as a hotbed for anti-peace forces that can potentially harm the country."

Indeed, Ethiopia is one of the largest contributors for peace keepers in the world. It has been contributing to peace making in Somalia, South Sudan, Rwanda, Burundi and other African countries.

Dr. Aklilu also stressed that the other pillar or foundation on which our foreign policy leans on is our relations with countries and regions that have also contributed for democratization process - building democratic values in terms of resources and experiences, promoting national interests, protecting economic rights and benefits - as our top priority is development.

"Our economic diplomacy in the last 60 years in this regard has made tremendous progress particularly in the area of development. We have been able to attract foreign direct investment, find large and diverse markets for our export products, promote tourism, and strengthen technology transfer as well as development finance."

With these core economic pillars, Ethiopia, as in recent reports, has been the top destinations of foreign direct investment, and attracts international companies and foreign investors to visit and invest in various sectors in the country.

According to Dr. Aklilu, the reason behind the achievement of laudatory economic diplomacy is because Ethiopia has conducive investment climate. First, the peace and stability that Ethiopia has had for decades has been exemplary.

"Located in chaotic and unstable neighborhood, it is incredible that Ethiopia has been the most stable country and has been peaceful internally. Besides ensuring its internal peace and stability, the world knows Ethiopia ranked at the top in its peacemaking efforts in the region and beyond."

Dr. Aklilu believes that peace is also the other most important factor for the attainment of foreign direct investment. With no doubt, Ethiopia has made a lot of progress in infrastructure development unlike the situation it was 20 years back. The country is now well connected in roads, railways, airways and telecommunications.

And many other social infrastructures such as education and health have been expanding, which have encouraging impact in fulfilling labour demand. In fact, labour is another important driving factor that attracts foreign direct investors.

Of the total hundred million people, 54 million are at the working age, and about 25 per cent of our budget is allocated to education, because the sector has massive skilled labour work force.

Similarly, the country is also expanding health care services, which require huge labour force that is currently healthy. Thus, the labour Ethiopia has now makes industries competitive in the international market.

Apart from abundant labour force, the energy sector also becomes an allurement for foreign direct investment, and has been dramatically growing basically in producing renewable energy from hydropower, geothermal resources, solar, wind and biological sources, he highlights.

Moreover, Ethiopia has also very good access to international markets. As it has special initiatives and successful foreign policy, Ethiopia has created sound relations with many countries, and has been offered various market opportunities for its export products.

These market opportunities are not only available for Ethiopians but also for foreign direct investors as they are producing in Ethiopia, Dr. Aklilu stressed.

Among the various market opportunities, the African Growth Opportunity Act (AGOA) has been playing fundamental role for Ethiopia's export trade growth. AGOA insists Ethiopian exporters to export their product to the United States without tariff and tax.

Secondly, Ethiopia has also 'everything but Arms (EBA)' initiative, which allows all imports to the European Union from the Least Developed Countries with duty-free and quota-free, except armaments. The country also has access to the Common Market for Eastern and Southern Africa (COMESA) region, where around 470 million people lives in. All these market opportunities are fruits of our economic diplomacy.

"There are many bilateral agreements through which we can export our products without tax and quota. With our geographical proximity to the very large consuming countries in the middle is also an advantage. Hence, the special market opportunity that we have in different regions or countries in the world is an incentive for foreign direct investors to come here and invest their resources."

This implies that Ethiopia has numerous kinds of incentives that motivate an international company to bring their capital goods without being taxed, which is the result of the implementation of international investment laws, and are signatory of multilateral investments and agreements.

Dr. Aklilu proves that the involvement of international companies will enjoy a safe haven if they decide to invest here. As Ethiopia is one of the best destinations of foreign direct investment in Africa in 2017, more and more foreign investments are coming not only from China, but also from India, Saudi Arabia, Turkey, European countries and American companies.

According to the Global Economic Prospects for 2018, non-resource intensive countries are expected to expand at a solid pace, helped by robust investment growth. Côte d'Ivoire is forecast to expand by 7.2 percent in 2018; Senegal by 6.9 percent; Ethiopia by 8.2 percent; Tanzania by 6.8 percent; and Kenya by 5.5 percent as inflation eases.

Though, given demographic and investment trends across the region over the longer term, structural reforms would be needed to boost potential growth over the next decade, the report stressed out.

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