Ethiopia: Us Companies Exploring Business Opportunities Following the Reform

Addis Ababa.

The US Embassy Commercial Service in Ethiopia has been identifying trade and investment opportunities for U.S. companies in the priority areas such as renewable energy, aviation, health-care, hospitality and tourism, roads and railways, textile, and agricultural business.

Although the banking and telecom sectors had for long been closed for foreign companies, there are many opportunities for joint ventures, and downstream services in these sectors, the US Department of Commercial Services published in its web portal.

However, as it can be recalled, following the coming of the new reformist Prime Minister Dr. Abiy Ahmed, as a surprise move the government of Ethiopia has recently decided to privatize the public enterprises including ethio-telecom, Africa's biggest telecom services provider with over 60 million users, Ethiopian Airlines, the energy sector, and Shipping and Logistics Enterprises which have been monopolized for so long.

Whether it is directly related to the recent decision or not, U.S conglomerates such as IBM, APS, General Electric (GE), Honeywell International Inc. and Sabre Corporation have paid investment visits to Ethiopia.

The United States has consistently advocated greater space for the private businesses and investors to thrive, U.S. Ambassador to Ethiopia Michael Raynor said while opening a panel discussion at Hilton Hotel last Thursday in Addis.

While Ethiopia has made tremendous progress on economic growth in recent years, the challenges ahead will require a greater role for the private sector, Raynor noted.

According to Raynor, Ethiopians ponder the potential impact and opportunity of proposals that would allow increased involvement of private investors, including international investors, in Ethiopia's economy.

Ministry of Foreign Affairs Spokesperson Meles Alem for his part described it as the result gained out of the business and economic diplomacy undertakings between Ethiopia and the US.

Under Secretary of_U.S. Department of Commerce_for International Trade Gilbert Kaplan was in Ethiopia early this week leading a delegation of representatives from 14 member firms of the President's Advisory Council on Doing Business in Africa_(PACDBIA) and 11 U.S. government agencies.

The delegation was visiting Ethiopia to explore opportunities for increased economic trade and cooperation between the two countries, the Undersecretary said, "This visit will help all of us to better understand this dynamic and developing economic market and provide insight on how our great nation can support and participate in the great processes that are happening here."

Furthermore, the Under Secretary of Commerce Gilbert Kaplan met with_Ethiopian Airlines_CEO Tewolde Gebremariam to discuss on the potential ways for U.S. companies to partner with Ethiopian Airlines to achieve even greater growth, including in the construction and operation of new airports, according to US Embassy press release.

"U.S. Trade and Development Agency (USTDA) is partnering with the Sabre Corporation to provide an Airline Solutions Training Program Technical Assistance grant for Ethiopian Airlines Enterprise, which could leverage up to 21.2 million USD in financing to support the procurement of airline information technology solutions, consulting services, and industry best practices."_

During the visit, Ethiopian Airlines for its part announced deals with General Electric (GE) and Honeywell and a training grant from the_USTDA.

According to the Commercial Department Office, the involvement of US companies in the above prioritized areas would bring impact in providing value for money, quality and reliable services in Ethiopia.

Some of our most successful companies are SMEs that use our Single Company Profile service for due diligence, or for branding their company in the market, our Single Company Promotion, and Signature Gold Key services to find local partners, clients, and agents, and obtain appointments with key decision-makers, Kaplan stated.

Kaplan again has discussed with the Minister of Trade, along with state ministers for the Ministry of Agriculture, the Ministry of Public Enterprises, the Ministry of Industry, and the Commissioner of the Ethiopian Investment Commission all participated, providing overviews of the opportunities available for U.S. companies in Ethiopia.

"The delegation also engaged in a discussion about ways that Ethiopia can improve the business climate such as strengthening intellectual property rights protection, supporting the development of capital markets, ensuring access to foreign currency, and maintaining an open and transparent public procurement system."

Abraham Tekeste, Minister of Finance & Economic Cooperation and Under Secretary Gilbert Kaplan have signed a MoU on the development and implementation of programs designed to enhance Ethiopia's economic capacity.

The U.S.-Ethiopia MoU provides a road-map whereby the government of Ethiopia will identify priority projects in key sectors that help Ethiopia achieve its priorities for growth. And the United States will share that information with U.S. companies that could compete to supply solutions, materials, and expertise to fulfill those projects, as well as identify potential U.S. Government resources.

The MoU also establishes a forum for the two governments to address and look for ways of solving business climate issues to encourage greater participation by U.S. companies seeking to invest or do business in Ethiopia.


Meeting the rising housing demand in urban areas

Urban areas are centers of economic development. And in Ethiopian case, the urban population has been increasing from time to time and as a result, the demand for economic and social services has risen.

Taking this into consideration, the incumbent has devised housing development program which have been benefiting some urban dwellers via building low cost housing.

The Ministry of Urban Development and Housing (MUDH) in collaboration with states governments and city administrations has been implementing the Second Growth and Transformation Plan.

Last week, the Ministry has evaluated the 2017/18 budget year housing development and construction performance and presented its 2018/19 plan at the House of People Representatives.

Presenting the annual performance report, Ministry Policy and Program Office Head Mohamedzeyan Kedir said over the past three years, in the 20/80 and 40/60 housing schemes respectively, some 40,538 and 972 houses have been transferred to beneficiaries respectively.

Solely, over the past two and half years of the second Growth and Transformation Plan-II, the government has planned to start the construction of 112,000 houses; however up until now only 61,924 houses are under construction in the capital.

As per housing development strategy, some 108,018, 35,566 and 12,367 have been building by cooperatives, individual citizens and real estate developers respectively.

He stated that the construction of 139,000 condominium houses have been undertaken by the Addis Ababa City Administration.

Pertaining to the 2017/18 budget year performance, Jantrar Abay, Minister of MUDH told MPs that lack of good governance, ineffectiveness of change tools, leadership gaps and citizens' dissatisfaction with the Ministry's services were found to be major shortcomings that are hindering urban transformation.

The major reasons attributed to this are lack of successive training at regional and urban administrations levels, lack of focus on urban agendas or shortage of skilled manpower, allocation of resource and the time it takes for new leaders to adopt to the system.

Due to this reason, urban transformation objective has not been effective, the Minister added.

To change developmental and political economy the above stated problems should be solved through creating integration at regional and federal levels, he added.

Concerning market linkages, Mohamedzeyan said the plan was to create linkage amounting to 10.9 billion and it was managed to achieve 80 percent of the plan.

In the past two and half years, besides creating a market linkage amounting to 42.7 billion birr for small and micro enterprises, it was also managed to create 370, 343 jobs.

The ministry is also set to launch land holding registration in 20 cities, according to the Head.

According to Mohamedzeyad, 1.7 million citizens will get job opportunity in the massive government projects.

"Furthermore, 3000 sheds will be transferred to 32,000 enterprises to support the development of Micro and Small Enterprises in urban areas."

In Addis Ababa City Administration, some 737 houses in the 40/60 scheme are in the verge of completion and the construction of additional 20,503 houses launched in 2015/16 are now 70 percent completed.

Of the 52,693 houses whose constructions were launched in 2014, some 11,484 houses are nearing completion. The construction of 26,213 houses would be completed in the upcoming budget year.

By and large, through curbing various shortcomings, the ministry is set to transfer 100,000 houses to beneficiaries and allocate 3.22 billion birr.

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