The development of Ethiopia’s private sector is still at an early stage, following the ravages inflicted by the former communist regime. Gradually foreign direct investment (FDI) is helping to make up the gap which has been created in the economy, while the local private sector strengthens and matures over the age.
The Government of Ethiopia (GoE) has committed tremendous resources to assist this process, for instance by establishing dedicated investment bureaus at the federal and regional levels and offering a variety of services and incentives to investors.
Against this background, Ethiopia is making good progress in terms of attracting FDI, which is now running at about US$1 billion annually. Over the past decade, according to Investment Agency statistics, India has been the biggest contributor, followed by the European Union; then Turkey; then China. Of these, it is the EU that generates the most permanent work places through its investment. In 2012, UK investment alone accounted for a very high percentage of overall FDI.
But in a speech to the British Business Group on 9 January, Dr Tedros Adhanom, Minister of Foreign Affairs of Ethiopia, made clear he would like to see even more British investment in Ethiopia, especially manufacturing in the country. Not all Foreign Ministers view trade and investment as part of their portfolio – but our Foreign Secretary sees promoting prosperity as a key function of foreign affairs, underpinning peace and stability. And so does Dr Tedros.
Our bilateral relations have been developing very positively for the past few years. Ethiopia became our biggest bilateral development partner in the world; a close collaborator on regional security issues; and an ally on global affairs like dangerous climate change. And from a low base, we have seen our trade and investment relationships take off dramatically too. I want to see them grow more in future years as high rates of growth continue and the country opens up further.
There are now UK investments in a range of sectors such as education, leather, mining, oil and gas, food processing etc. and more are in the pipeline. British companies have been active in creating local employment; transferring know-how and management skills; and helping build the economy by enhancing tax take and earning or saving vital foreign exchange.
I like to think that British companies bring value-added not just in investment, skills and experience but in social responsibility and ethical business too. This matches well with the emphasis the Ethiopian government puts on good governance and anti-corruption.
The potential in Ethiopia is huge. Any company with global and long-term vision will want to invest in Ethiopia if it can. There are of course significant challenges as well as opportunities to doing business here, which Ethiopia has to tackle to continue to attract substantial foreign investment to back up its admirable development policies.