Ethiopia becoming an attractive investment destination with immense potential
By Tariku Belay
Tigrai Onlne - June 28, 2014
“Everyone is attesting to Ethiopia’s renaissance… the country’s development is even confirmed by the institutions know for their criticism of state-owned economies”
- FDRE Prime Minister Hailemariam Desalegn
This comment is taken from FDRE Prime Minister Hailemariam Desalegn recent interview he gave to “The African Report” magazine. I think it’s obvious that the Premier said those words standing from the country current realities on the ground. This is because according to recent information that are coming from foreign-based medias, many foreign investors, who understood the facts by looking closely into our country’s development, have shown huge desire to get involved in the investment sector of our country. In addition to this, they are making Ethiopia their destination for business and investment.
Of course it has been more than ten years since our country started to be mentioned as a benchmark for its rapid development rather than for famine, destitution and for war, which used to be the case for the international media. As a result, we the citizens of the country have started to walk tall. Currently, as a consequence of our government and people huge effort, our country has been able to stand with countries that are recording rapid economic growth.
Currently, Ethiopia with its fifth biggest largest economy in Sub-Saharan Africa and the biggest from non-energy based economies is currently attracting many investors’ attention and eyes. And I think this achievement has to do not only with the sound policies and strategies formulated by the FDRE government, but also its success when executed.
Of course its obvious that the change our country is going through and the reason why foreign investors are attracted to our country has to do with the existence of a developmental and democratic government (in our country) which follows a clear and precise path; have leadership that responsive to pragmatic and latest issues; and a government that adheres to a path that involves popular participation. Thus, the international community and their investors are attesting to the fact that the FDRE government is able to garner positive results by executing its own brand of developmental and democratic path, it formulated to elevate its people from poverty and backwardness. And on top of attesting to our positive growth trend, they are coming ‘in droves’ to our country to get involved into the investment sector.
And this is what the recent reports that are coming out implying – that Ethiopia is fast becoming the preferred destination from East Africa. We are clearly seeing all investment roads leading to Ethiopia. In order to back this with support, past instances aside, I think we can point out to many recent facts.
As ‘the African Report’ stated, Bole International Airport is now busy hosting investors who came from every corner of the globe. It added that even recently large multinational corporations like ‘Unilever’, ‘Ikea’, ‘Tesco’ and ‘H&M’ have entered in to Ethiopia and are currently investing in the country. Not only this. The well known Heineken beer brewery company is building 127 million dollars worth of factory at the outskirts of the capital city. Brooks Washington, the American principal at business development fund Roha Ventures, has said that Ethiopia’s growing number of middle-class society (which is beneficiary of the country’s development), its rapid urban development and attractive investment opportunities is catching the eye of his company. He said that as the country is one of the fast developing East African countries, his company is setting up a glass bottle manufacturing plant in Ethiopia aimed at satisfying the country’s growing demand for glass bottles.
Not only this. According to the newspaper “the reporter”, ‘Africa Hotel Investment Forum (AHIF)’, a premier hotel investment conference in Africa, has moved the event from Nairobi to Addis Ababa by citing the forum’s organizer ‘bench Events’, an outfit based at London. It’s believed that this will play its own role in encouraging Ethiopia’s tourism activity. It’s hoped that this opportunity will help elevate the country’s tourism to a higher ceiling than it is currently at.
Of course this also shows how much our country has stable peace and security from East Africa countries. Our country’s bilateral relation with Turkey is another instance that shows its rise in attracting foreign investment. The European country Turkey has signed many business partnerships with Ethiopia. With it, the trade relation of Ethiopia and Turkey reached 550 Million US Dollars in 2013 from just 110 Million US Dollars in 2004. This business and investment relation of both countries shows our country’s suitable investment environment.
And I think the recent Ethio-South Africa investment forum which took place in our country shows that our country’s in demand from the region. The fact that 30 companies that were present in Addis Ababa to participate in this form stated their desire to invest in Ethiopia by giving attention to the agricultural sector goes out to show this reality. Also, in this same forum, organized by Ethiopia business sector association and ‘The New Partnership for Africa's Development (NEPAD)’, the fact that huge multinational companies like the lights of Barclays Africa Group (the company’s Africa liaison), ‘Standard Bank’, ‘Trade Capital Holdings’, ‘Karibu International’ etc … were present at the forum further illustrates the institutions and their home countries attraction to Ethiopia.
And if we are to raise the question, “How come all these countries and financial institutions are attracted to our country?”, we will get the African Development Bank recent report which came to substantiate the comment made by the premier of the country about the country’s economic development, cited at the introduction of this article. The Bank at its website has recently stated that the Ethiopian economy by recording 11.3% annual average GDP growth from 2004 up to 2011, it has showed a healthy trend of economic development.
Although the main base of the development is agriculture, the bank report states that slow by slow the share of minerals, service and manufacturing sector is rising. The report also added the country is showing considerable improvement on basic service delivery indicators. The bank’s report also states that decentralized basic service delivery coupled with rapid growth has led to a decline in the population living below the poverty line from 38.7% in 2004 to 29.6% in 2010. And also according to the report, the Ethiopian government remains committed to improving social indicators with a particular emphasis on increasing access to and quality of basic services.
I think it’s the 11.3% average development of the country, which is put in the Growth and Transformation Plan and on the recent report put out by African Development Bank, that’s attracting many countries and their institutions. This economic growth of our country, which is spurred with the sound policies and strategies of our developmental and democratic government, is being attested by the international community along with their financial institutions, and continental organization like the lights of African Development Bank.
World renowned private business syndicates are entering into Ethiopia. One of the renowned private organizations by the name of ‘KKR’, which is based out of New York, is working to buy an Ethiopian company by the name of ‘Afriflora’ by investing 200 million dollars into it. It’s believed that the agreement reached by the company to invest on ‘Afriflora’, a company that cultivates, produces and sells sustainably grown roses to the international market, will help it on its plan of expansion. The fact that world renowned international companies like ‘KKR’ are investing huge amounts of capital in the country goes out to show the suitable investment environment in which the local-based companies are operating.
Although the financial, telecommunication and wholesale sectors of the country are closed to foreign investors, the foreign investors’ involvement in cement, coffee, wine and biscuit production sectors goes out to show that our country is following an encouraging path for foreign investors to come invest in the country. And with regards to our country’s adhered politico-economic system, this confirms that there’s an encouragement for the investors to get involved in investment opportunities that arise in our country, except for some state-owned sectors.
Of course following its stability and peace, our country’s is becoming the main competitor in the flower sector in recent years. For instance, some datas shows that while our neighbor Kenya’s (who has a vast experience in the sector) flower industry is facing challenges as a consequence of the political instability created in the aftermath of the country’s 2008 general election, Ethiopia on the other hand is benefitting from its stable conditions, cheap labor, better tax subsidy and its renowned airlines enabling it reach international market easily. So, I think it’s obvious the reason behind internationally renowned companies like ‘KKR’ deciding to invest in our country has to do with this fact. However, some members of the opposition camp and their foreign colleagues make the fact that the FDRE government is not opening the banking, telecommunication and electric sectors appear as if it’s hopeless, instead of highlighting the raising investment sector of the country.
Of course, my dear readers are well aware of the forces who in the hopes of imposing their own ideological agenda throw criticism tantrum left and right on Ethiopian government since the day it started to operate to lift the country out of poverty by formulating its own policies and strategies.
As it can be recalled these forces had been putting pressure and trying to forcefully privatize the country’s banks, telecommunication, electricity, Airlines, City water and utilities cheaply. Also they have exerted pressure for land, a natural resource of the people, to be sold and transferred. On top of this, these forces have tried to hinder our progress by clearly hinting at halting our country from getting foreign loan and aid that will help fulfill its developmental aspirations - although it has been to no avail.
In addition to this, they have been for years propagating that Ethiopia will not have an economic growth, if it doesn’t follow these neo liberal politico-economic thinking - although the opposite have been true. Since the Ethiopian government understood this out look’s of ‘everything has to be left to the private sector, and the government should not interfere except to make sure rule of law is upheld’ it took serious measures not to delve into it. It was able to withstand the heavy pressure made by the neo-liberal forces; which intended weaken the role of the government, and instead established a strong developmental government.
It’s a fact that the government by withstanding, these forces’ pressure to sell land and their “prophecy” that agriculture based development strategy leads to failure, doesn’t go with the country’s reality, it has instead put the country in a rapid and sustainable growth by formulating and executing its own developmental directional (path).
As it’s known, we are seeing miraculous progress in our country in these twenty years. With this, it has been able to debunk the neo-liberalism thinking of government should not interfere in the economy. This is why, when these forces under the umbrella of neo- liberalism ideology were hit by economic crisis, our country was able to continue with its own rapid economic growth. What we can understand from this and what other countries of the world has to contemplate is that they can grow outside of the neo- liberalism thinking by formulating policies and strategies that take their own hard realties into account, just like Ethiopia’s developmental path.
Thus, it’s important to understand why these ideology extremists want to impose their hidden agenda by highlighting issues that nadir the country’s real investment situation. As it’s known, the Ethiopian government by spending on the country’s public infrastructure, by encouraging potential investors by facilitating various incentives and by opening its doors, and by presenting the country’s (attractive) realities in various international arenas, it’s attracting many investors into the country. As a consequence, the number of foreign investors that are involved in various investment sectors especially in agriculture, manufacturing and industrial sectors is increasing as time goes by. So, at time when many foreign companies and investors are showing strong interests in investing their capital on the country taking advantage of the conducive investment environment set up by the government, it can’t be acceptable to say ‘listen only to what we tell you’.
I believe the neo-liberal extremists’ outlook cannot be anything more than exerting pressure our country to take in their ideology without reservation. And this is not coming from a benevolent intention, but an extremist outlook of ‘’ you only grow through our chosen path’’. I said this because currently there are many large Corporations from China, Turkey, India, Europe, and Arab countries that are investing their capitals by taking advantage of our country’s suitable investment policy; and also large American company that’s going to invest in geothermal hydropower project, Canadian and Australian companies that are involved in minerals investment, along with other increasing number of companies with their own intentions. Thus, the extremist forces effort to paint the government’s decision not to privatize banking, telecommunication and electricity for investment as hopeless, is not acceptable.
The Ethiopian government understood fully accepting neo-liberalism is a recipe for disaster, even before the ideology demagogues were hit by the financial crisis; so it didn’t even contemplate about the ideology let alone accepting it. To reach to this conclusion, the government has gone through many countries experience on how policies that doesn’t’ take the respective countries realities into account forced them into downward spiral. Taking these trends into account, our government decided to formulate a developmental and democratic order that takes the country’s realities into account. With it, the government has been able to record rapid and sustainable growth that would benefit the public step-by step in its struggle against poverty.
As tailored suit, fits the intended subject perfectly, it can be easily seen from our country’s experience that policies and strategies that are in sync with the countries reality is a path to success. These neo-liberal proponents who insists that everyone follow their path, in addition to being hit by an economic crises, they weren’t able to save the African countries they forced into following their model Nevertheless, these forces don’t care about anyone’s problem as long as their interest is not harmed. I say this because their ideology stands to benefit very few and drag many into poverty.
The Ethiopian government understood fully accepting neo-liberalism is a recipe for disaster, even before the ideology demagogues were hit by the financial crisis; so it didn’t even contemplate about the ideology let alone accepting it. To reach to this conclusion, the government has gone through many countries experience on how policies that doesn’t’ take the respective countries realities into account forced them into downward spiral. Taking these trends into account, our government decided to formulate a developmental and democratic order that takes the country’s realities into account. With it, the government has been able to record rapid and sustainable growth that would benefit the public step-by step in its struggle against poverty.
As tailored suit, fits the intended subject perfectly, it can be easily seen from our country’s experience that policies and strategies that are in sync with the countries reality is a path to success. These neo-liberal proponents who insists that everyone follow their path, in addition to being hit by an economic crises, they weren’t able to save the African countries they forced into following their model Nevertheless, these forces don’t care about anyone’s problem as long as their interest is not harmed. I say this because their ideology stands to benefit very few and drag many into poverty.
All in all these neo-liberal extremists should understand that Ethiopia’s chosen democratic and free market system in which the government intervenes in a selective manner, does not allow foreign intervention. They should also understand that the current system and government are not easily controlled and that the government has formulated sound policy and strategy that can lift the country and people out of poverty and backwardness.
The fact that the government intervenes on selected sectors and especially the fact that it closed the door for privatization the electricity and telecommunication sector is not hopeless as they claim it to be. This because there are many sectors that are both suitable opportunities investors can get themselves into and sectors that are in sync with the country’s realities, why only insist only government controlled sectors.
As it’s known, although our country’s economy is growing fast, with private sector playing its own share, there is no denying that our country’s private sector has limitations. With this in mind, in order to sustain the economic growth, government intervention is a must. I don’t think our vision to enter into middle income countries will be successful without this (government intervention). As we all can understand, our country’s public infrastructure should be hugely developed; and the responsibility to lead this infrastructure development lies on the government.
It’s not a rocket science to understand that in a country where there are no sufficient infrastructures in education, health, and road etc ... selling the telecommunication and electricity sector to the private sector will be a hindrance to the ongoing economic progress. And this fact is being seen on countries that took in neo-liberal thinking without reservation.
One of the most important demands of our people for years has been a question of development. It should be also taken in to consideration the role of lasting place in answering this generations old question. This is why our country’s government and people usually insist up on laminating that guaranteeing development is an issue of existence.
What’s baffling though is the fact that it’s not the first time the proponents of neo-liberalism started to criticize the government’s own brand of free market system, as they have condemned every investors and government that are involved in agricultural sector investment narrow-mindedly denying the obvious truth. Nevertheless, our country is still attracting foreign investment like in the past. The aforementioned many foreign investors, who understood our country’s rapid and consecutive development, are evidence to it. It should also be noted that it is the developmental and democratic FDRE government adhered sound economic policies; which is in touch with the country’s realties, that is not only changing the poverty and backwardness image associated with the country, but also responsible for this success in the investment sector.
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