15 March 2018

Ethiopia: Ethio-France Business Forum - to Lure More FDI

Foreign Direct Investment (FDI) is central to Ethiopia's ambition of achieving economic transformation. FDI inflow to Ethiopia has been growing from time to time and renowned international companies have repeatedly showed interest to invest in Ethiopia.

The 5th Ethio-France Business Forum, which was held here in Addis Ababa recently, is one indicator of this increasing interest. Business delegates from some 40 companies and government officials of the two countries have discussed investment opportunities in Ethiopia.

Speaking on the occasion, Tadese Haile, Special Advisor to Ethiopia's Prime Minister told the French delegates that Ethiopia is committed to expand its infrastructural in order to attract foreign investors. Maximum effort has been exerted to construct roads, railways and industrial parks as well as ensure sustainable supply of power in the past few years.

"We believe infrastructural development is a key factor to industrialization. Our country has increased its power supply tenfold over the past fifteen years. Currently, we are constructing the largest hydro electric power plant in Africa, which is expected to generate more than 6,000 Megawatts," he added.

The country has been able to construct more than ten industrial parks within one term. "Our state-of-the-art industrial parks, for instance Hawassa Industrial Park, have zero discharge of pollution and hence are ecologically sustainable," he underscored.

The government has also been heavily investing on human resource development. There are more than 1200 Technical and Vocational Education Training (TVET) centers all over the country enrolling over half a million trainees every year. The government has also managed to establish more than fifty public universities which graduate about 10,000 students every year. And 70 percent of students in higher learning institutions are enrolled in the fields of science, engineering and technology.

"Therefore, with this competitive work force, the government's strong support and its favorable investment climate, Ethiopia is a remarkable destination for investment," he underlined.

FDI inflow into Ethiopia has jumped up by 46 percent in the year 2016 and it was well evidenced by the United Nation's Trade and Development Organization. The performance has been remarkable especially in the textile and apparel sectors, which made the country the second largest FDI recipient in the world next to Vietnam. The Nation has been able to attract foreign investment worth 4.2 billion USD in 2016.

Such recognition from leading global development organizations is a testimony to the fact that Ethiopia is indeed on the right course to realize its vision of becoming a leading manufacturing hub in Africa, according to him.

Several questions have been raised by the delegates during the discussion. Some of them were related to the government's intention of privatizing state-owned companies and investing in selected sectors such as pharmaceuticals.

It was indicated by the Special Advisor that the government have been doing successful jobs in privatizing most of state-owned companies in the country. There are still rooms for public-private partnership in some companies, like Ethio-telecom, even if they would remain state-owned. Therefore, investors are encouraged to look for possible partnership in such companies. The sugar industry is also open to this kind of initiative.

Stating an increasing number of companies from Europe including France have also been investing in Ethiopia, Deputy Commissioner of Investment Commission, Abebe Abebayehu told the delegates that pharmaceuticals is among Ethiopia's priorities and the government is now finalizing the construction of state-of-the-art pharmaceutical industry park in Addis.

"We have started receiving investment proposals by leading manufacturers of pharmaceutical products. So, if any French company is interested to invest in this specialized pharmaceutical industrial park, we would be very happy to receive any such proposal," he said.

Abebe also tipped the investors that the government already developed a generous policy package for pharmaceutical manufacturers which includes a tax holiday period. The industrial park will comprise all the necessary infrastructure and facilities that would make Ethiopia and the companies investing in the sector a major investment destination and competent in the global market respectively.

Meanwhile, "We are more interested in companies that would supply pharmaceutical products not only for the local market but also for regional and other markets. So, we have a very fertile ground to attract pharmaceutical manufacturers from around the globe," he added.

In terms of Ethiopia's potential in oil and gas production, Abebe said a commercial quantity has been discovered. Thus, the mining sector is as well open for investors.

Thomas Grimm, Area Sales Manager in Africa at a French based company that trades planes and helicopters told The Ethiopian Herald that he represented his company to discuss business cooperation with the government and Metal and Engineering Corporation. "We are discussing how our company could set up maintenance and training center in Ethiopia basically for helicopters."

According to him, there are lots of possible market opportunities for helicopter in Ethiopia. "It could be for military, agriculture, tourism, medical services or it could be for personal purposes. Meanwhile, the civil aviation market also has to be open in Ethiopia," he stressed.

Despite the current situations [the unrest that happened in some parts of the country], Ethiopia is a promising country for investment, said Tomas. The prospect of economic boom is good, he noted.

Zelalem Birihan, Business Diplomacy Director at the Ministry of Foreign Affairs for his part told The Ethiopian Herald that the trade and investment relation between Ethiopia and France is well underway. Currently, 82 French companies are operating in Ethiopia. These companies have registered close to four billion Birr investment capital.

Whenever investment is mentioned, export and airline services are among the major factors to be dealt with. When investors decide to do business in one country, one of their priority concerns is how they could mobilize their cargo shipments and reach the international market timely.

This has also been discussed between the French business delegates and Ethiopian officials in the forum. In this case, Tadese said the nation has the best airline in Africa. Ethiopian is expanding from time to time. The cargo service is also expanding and currently it has the capacity to transport 600,000 tons per and efforts are underway to upgrade this capacity to one million tons.

In terms of logistics, even if there are successful achievements made in the railway and other infrastructural constructions, the sector still needs to be overhauled, said Tadese. "It is one of the components in export value chain that has become expensive and is affecting our competitiveness. There are studies being conducted. It may require some reforms in our logistics sector," he noted.

While dealing with the nation's trade and investment, nation branding is also one of the major issues of concern which the country has given due attention to. It was learnt from the forum that the interest of different companies with international brands to invest in Ethiopia could help to realize this objective.

If the country could construct and open more than ten state-of-the-art industrial parks and become successful in infrastructural development as it has been in the construction of the Ethio-Djibouti railway, there is no way that it could fail to bring tangible changes in its logistics sector. This would further facilitate the inflow of FDI into the country.

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