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Ethiopia: A land of unlimited opportunities

Ethiopia: A land of unlimited opportunities

 

Gemechu Tussa 12-26-17

 

Ethiopia, one of the fastest growing economies in the world, has been attracting the attention of global investors. There are now a large number of investors flowing to Ethiopia, since the past fifteen years. Unlike some three decades ago, there are foreign investors in Ethiopia from almost all countries in the world, particularly China, India, Turkey, Japan, Saudi Arabia, United States of America, United Kingdom, France, Germany and other. The rising of the number of investors coming to Ethiopia has not come out of the blue. There are certain grounds for the ever increasing number of potential foreign investors.

Many economic analysts argue that, the influx of world investors to Ethiopia is emanated from the various investment opportunities in the country. Ethiopia has ample diversified investment potential in which investors could be successful. The Ethiopian government has designed various incentives that helped the country to attract as many investors from around the world.

The other factors for the rising of the number of investors flowing to Ethiopia could be the thriving of peace in the country post 1991. The pre 1991 Ethiopia had no well designed policy for investment and there was no peace and security in the country. Besides, investment with more than 500 thousand EB was prohibited. As the same time, no foreign investment was allowed.

However, the socioeconomic change in the country in the 1991 has brought a lot of opportunities to the country. One of these is the free market policy where all investors at home and abroad are invited to participate in Ethiopia’s economic development. As there thrived peace and security in the country, the number of foreign investors investing in Ethiopia has been raising from time to time.

It is obvious that investors need guarantee from the government for security to invest his/her wealth. They need to ensure whether there exist sound peace and security in a country before they invest on different sectors. The present Ethiopia has managed to ensure its internal peace in the past twenty six years. Besides, the huge market has its own contribution for the ever increasing number of investors in Ethiopia. The country is one of the populous countries in Africa.

Due to the reasons mentioned above, a large number of investors from almost all developed countries have invested in Ethiopia and the flow has continued. Available documents indicated that India has the second largest investment in Ethiopia.

According to the reports, the trade volume between the two countries reached 1.37 billion USD. The Indian investors who have invested with more than 10 billion USD  in textile and garment, agro-processing, leather and leather products, pharmaceutical and health, engineering, ICT and floriculture have created more than 50 thousand jobs to Ethiopians.

A delegation of Business persons from India Bengal had visited Ethiopia recently. The major aim of the visit was to see the possible investment and trade opportunities in Ethiopia and to have business-to-business discussions.  

The business groups have discussed the possible challenges and opportunities in Ethiopian market.  The dynamic relation between Ethiopia and India has maximized the business between the two countries. The delegation also learnt that, there are different investment incentives in Ethiopia. The country allows exemption of income tax for about 10 years,

The group has expressed their interests to invest in infrastructure, power, textile, manufacturing, agro-processing, small and medium enterprises and financial services. In this regard, India is the second largest investment partner of Ethiopia.  

 

The bilateral diplomatic relations between Ethiopia and India has a long time history. According to historical documents, the bilateral relations between the two countries began in 948. Then, they developed their relations to ambassadorial level in 1952.

 

According to available documents, there are government to government as well as people to people relationships that have existed between India and Ethiopia for many years. At the earliest ages, there were silk, spices, gold and ivory trades with Ethiopia.

 

Ethiopia is now home to a large number of Indians. Since the time of Emperor Haile Selassie, there were a large number of Indian teachers who have been participating in the enlightenment of Ethiopian.

Both India and Ethiopia have emerged as the two fastest growing developing countries in the world. In recent years, bilateral trade between the two countries increased significantly, since the Bilateral Investment Promotion and Protection Agreement was signed in 2007.

 

The export from India to Ethiopia increased by 19 times between 2000 and 2013. There is a large scope for enhancing trade between the two countries. The export basket of Ethiopia indicates that Ethiopia mainly exports primary goods such as food and live animals, vegetables, leather, crude materials, and coffee, and imports mainly manufacturing products from India.


Ethiopia and India have signed many important agreements. India also provides Duty-Free Trade Preference scheme to Ethiopia to increase Ethiopian exports to India.
India is the second largest foreign investor with nearly 600 companies operating in Ethiopia in sectors like pharmaceutical and manufacturing.


 

It is known that Ethiopia has been creating a conducive atmosphere that there is  an attractive package of incentives including exemption of income tax, import duty, export tax incentives and a one-stop shop service at the Investment Commission.

 

Ethiopia offers inexpensive and trainable labor force and the lowest energy cost in the world. The country is potentially one of the largest domestic markets in Africa with 100 million consumers whose purchasing power is growing.


In conclusion, the trade and investment between Ethiopia and India has been growing from time to time just like Ethiopia’s trade and investment cooperation with many other countries. These growth have emanated from the sound policy of the country that created a conducive  investment environment, the availability of cheap labor, the presence of cheap raw materials mainly agriculture, the thrive of peace and security in the country are major factors for the ever rising number of foreign investors in Ethiopia. The rising of the Indian investment in the country and the strengthening of their relations has also something to do with this fact. Ethiopia has ample investment and unlimited opportunities that if well managed could even attract more investors and play a significant role in the country’s economic transformation.

 




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