10 August 2018

Ethiopia: Reform in Ethiopia Inspires Multinational Companies - EIC

Photo: Addis Fortune
Addis Ababa (file photo).

The recent decision of the government to open state-owned companies has inspired the multinational companies to invest in Ethiopia, according to the Ethiopian Investment Commission (EIC).

Dr. Belachew Mekuria, Commissioner of EIC told ENA that a number of multinational companies have shown their interest to invest in areas that the government promised to open for investors.

It was at the beginning of June that the government of Ethiopia announced that it will open state-owned enterprises to private and foreign investors.

Ethiopian Airlines - the national flag carrier, and ethio telecom - the sole telecom service provider are among the enterprises to be opened for investors.

Railway service, power, sugar plants, industrial parks, hotels, shipping and logistic services will also open for investors.

The decision of opening state-owned enterprises and the lifting of the state of emergency have also raised the interest of multinational companies.

As a result, all industrial parks that are operational have almost being occupied by investors over the past three months.

"During the past three months, every industrial park is being fully occupied. The industrial park like Kombolcha is almost packed and the Mekele industrial park is receiving various investments, while Adama is on the verge of its completion apart from energy conne ction; some investors are even started to train experts abroad. Some investors also requested us to engage them in Dire Dawa industrial park as well," he stated.

Building strong economy and strengthening investment could only be a reality when a country ensures its peace and stability domestically as well as establishes peaceful ties with neighboring countries, he affirmed.

The country's efforts in consolidating ties with neighboring and other countries as well as normalizing the relationship with Eritrea have a positive impact on the country, he underlined.

"Peace and stability is the prior element of a country's investment and would play a crucial role. In this regard, Ethiopia has enjoyed relative peace and stability compared to other African countries. So the recent peace deal between Ethiopia and Eritrea, which ended the no war-no peace situation between the two countries, would play its own role on attracting investment," Belachew assured.

Since the ability to transport goods quickly, economically and reliably is vital for an investment to flourish and companies to compete in global market, Ethiopia's logistic system has been the major constraint for investors.

Ethiopian logistics system is characterized by poor logistics management system and lack of coordination of goods transport, and inadequate fleets of freight vehicles.

Belachew believes that the recent decision by the government to privatize the logistic sector will resolve the challenge in this regard and inspire global companies.

"Any investment relays on the trust on the given environment. So trust and confidence is critical for investors to come to the country._The base for trust and confidence is stability and security._Will my resource be secured? That is trust and confidence based investment which begins from security of a person. From this perspective, the results gained in a short period of time are a good foundation for the investment in flow," he said.

According to Belachew, the results gained during the past three months are crucial in attracting more FDI.

Since the announcement of the opening of state-owned companies to private and foreign companies, many multinational companies are receiving briefings and closely following the process, the Commissioner said.

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