Ethiopia's foreign direct investment inflow would increase in the upcoming year higher than the previous periods on the heels of the recently introduced reform, which is significant to build investors' confidence, economists reflected.
In a recent webinar discussion organized by Invest Africa, Fairfax Africa Fund, Global Chairman and Invest Africa advisory board member Zemedeneh Negatu said that the policy reforms taken by the government would give impetus to rise in foreign direct investment (FDI).
Recalling Ethiopia's third rapidly growing economy next to China and Indiain the last 25 years, Zemedeneh stated that the productivity today is also getting better environment as many sectors are being opened up for investors.
The telecom, the banking, transport and logistics sectors were closed in the past are now opened up so that new investors will come to Ethiopia to tap the potentials, he noted.
To him, there will be a transition period. "Of course, the economy is transitioning and it could face some box. If we look at the last five years, the foreign direct investment in Ethiopia has been on the top, gaining three billion plus every single year," he said.
The country requires addressing the needs of both domestic and foreign investors, Zemedeneh said, adding that Ethiopia has been receiving significant number of FDI during the past four years, which is admittedly challenging with the internal conflict.
Ethiopia will continue to be even more attractive to FDI as forecasted by the IMF though, there will be challenges absolutely like anywhere else, he indicated.
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IMF and the World Bank, are looking at Ethiopia's GDP to grow by seven percent. "It could be eight to ten percent of the next five years. So we need to look at separating legacy issues which have been resolved through reforms." Investors devote their money because they look at the long-term trends, he remarked.
Financial Risk analyst, Patricia Rodrigues, who presented her insight during the webinar discussion, on her pert cautioned the possibilities of potential risks despite opportunities.
Though Ethiopia is now hunting foreign currencies to resolve problems caused by the import and export deficit outcomes, she suggested that the country should learn from nations' experience of implementing new reforms in such issues.
Kenya for example, according to Rodrigues, is facing protests because of reforms on tax, which could be a good lesson to Ethiopia.
She also emphasized internal and geopolitical affairs would have their own impacts on FDI flows that Ethiopia is demanding and bidding with incentives.
BY YESUF ENDRIS
THE ETHIOPIAN HERALD FRIDAY 23 AUGUST 2024
