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Federal Democratic Republic of Ethiopia
By Africa Business Association
According to World Bank esƟ mates, from 2000 to 2018, Ethiopia was the third-fastest growing country of 10 million or more people in the world, as measured by GDP per capita. Two of Ethiopia’s main development goals are poverty reducƟ on and eliminaƟ ng dependence on food aid. The country’s poverty rate fell to 31% by 2015 (the latest year Ethiopia’s poverty level was assessed by the World Bank). Life expectancy rose from about 52 in 2000 to 66 in 2017, and infant mortality more than halved over that period. By HE Aiby Ahmed, Prime Minister of Ethiopia displays his Nobel Peace Prize 2050, the United NaƟ ons (UN) projects the country to grow to over 205 million people, from Prime Minister: around 115 million today, making it among the fastest Head of Government growing large countries in terms of populaƟ on, too. Name Prime Minister: Ethiopia is young with 71% of its populaƟ on under 30. Abiy Ahmed
In 2019 Ethiopia’s parliament passed a bill to allow hƩ ps://pmo.gov.et/ members of the Ethiopian diaspora, who have taken Region: up naƟ onaliƟ es in other countries, to invest, buy East Africa shares, and set up lending businesses in theciountry’s EsƟ mated GDP: state-dominated fi nancial sector. By posiƟ oning its 5 US$222 (2019) million strong diaspora community the prospects for EsƟ mated PopulaƟ on: more foreign direct investment is clearly assured. With 114.86 million consistent success Ethiopia is will liŌ tens of millions out of poverty and live up to the country’s burgeoning Value ProposiƟ on status as the next global manufacturing center. Ethiopia has been among Africa’s most impressive growth performers over the past decade, averaging Oĸ cial Name: 10.9% annual growth between 2004 and 2014, despite Federal DemocraƟc Republic of Ethiopia being a non-oil producing country. The government’s Government Format: economic strategy has been premised on sound Federal Parliamentary Republic, whereby the macroeconomic policies, diversifi caƟ on by promoƟ ng
agriculture and industrial development, and creaƟ ng a business environment that is conducive to investment, supported by infrastructure development. Home to the conƟ nent’s second largest populaƟ on of 90 million
people in 2015 and a forecasted almost 100 million in 2020, the country is posiƟ oned as a yet untapped investment opportunity in Eastern Africa. What does your naƟ on oī er that an investor’s value proposal needs?
Ethiopia has seen the highest GDP per capita growth on the conƟ nent, with a CAGR of 10.93% expected between 2000 and 2020. Ethiopia has also maintained one of the lowest levels of income inequality, ranking third lowest in sub-Saharan Africa and 12th globally in terms of the World Bank Gini co-eĸ cient esƟ mates. Development in Ethiopia
Recognizing the decades-long industrializaƟ on experiences of Western and East Asian countries, and the fact that Ethiopia is a late-late starter: it is sƟ ll early days for the country’s most recent industrializaƟ on push. Nonetheless, but it is useful to acknowledge progress and give credit where it is due. As of May 2019, 12 industrial parks have been constructed or are under construcƟ on, 6 of which are fully occupied by investors. Of the parks that are operaƟ onal, all but one are full. By June 2018, total capital invested in industrial parks during the preceding three-year period was approximately $540 million, or $180 million per year—accounƟ ng for roughly 5% of annual FDI infl ows in recent years.2 70,000 jobs had been created across industrial parks by March 2019, with 80 per cent of these posiƟ ons fi lled by women. And by the end of the Ethiopian 2018-19 fi scal year (7 July 2019), exports from industrial parks reached $142 million, up by 50% from the previous year and accounƟ ng for approximately 5% and 50% of total and manufactured goods exports, respecƟ vely.
hƩ ps://insƟ tute.global/advisory/ refl ecƟ ng-how-ethiopiasindustrialisaƟ on-push Doing Business In Ethiopia For investors coming to Ethiopia, the main incenƟ ves have been cheap labor, with Ethiopia being one of the most popular desƟ naƟ ons for low-cost country sourcing, complemented by the-lowest-in-the-world electricity tariī . The East Africa economic block is very progressive and is home to some of the top global countries with highest performance in ease of doing business such as Rwanda and Kenya.
African Union Headquarters Addis Ababa, Ethiopia blogspot.com
What is your promise to investors?
Its poliƟ cal stability, in what is a volaƟ le Horn of Africa region, has cemented its role as a key Western ally. This has been demonstrated by United States (US) President Barack Obama’s visit to Addis Ababa in July 2015, where he reiterated the importance of Ethiopia’s role in regional security. Although companies are taxed at 30%, Ethiopia ranks comparaƟ vely well in 44th posiƟ on globally, for its relaƟ vely low total tax rate as a percentage of profi ts. What services do you provide for your investors?
The Ethiopian government conƟ nues to update and revise its commercial code in order to facilitate private investment and enhance the business operaƟ ng environment. This will include a focus on simplifying regulaƟ ons for potenƟ al investors, standardizing accounƟ ng pracƟ ces to accurately assess operaƟ ng liabiliƟ es such as tax, increasing protecƟ on of shareholders and modernizing trade and registraƟ on procedures and processes.
What sets apart Ethiopia from the rest of the countries in Africa is its high-quality, beauƟ ful handicraŌ s. Ethiopian products, from jewelry and clothing, leather and wickerwork to delicacies and more - all will remind you of the rich culture and tradiƟ ons of Africa. Ethiopia
is a mysterious, beauƟ ful, and mountainous piece of paradise in the Horn of Africa and the birthplace of Early ChrisƟ anity. Lake Tana in Northern Ethiopia promises a pilgrimage of a lifeƟ me, as it is famous for its ancient monasteries and churches. Visit Addis Ababa (the capital of Ethiopia) and see the astonishing Menbere Selassie Church. Indeed, a tour is not complete without buying some unique and famous local craŌ s. Six Sectors of Investment OpportuniƟ es in Ethiopia
Given all the ongoing projects, the government of Ethiopia has idenƟfi ed six major sectors of investment opportuniƟ es. These are: Transport Infrastructure - Many naƟ onal and regional projects are currently being undertaken to improve the transportaƟ on system for land, air or sea travel. Industrial Sector - One main focus of the country now is to increase producƟ on in sugar, texƟ les, leather products and cement. The industrial sector is expected to be a major contributor to the economic output of the country by the year 2025. Agriculture - Despite being the largest contributor to the economic output of Ethiopia, the agricultural sector sƟ ll looks for methods to present opportuniƟ es for beƩ er farming technology. In fact, 8 million acres are now being oī ered to commercial farming investors.
Energy - The country’s aim to be the regional exporter of energy is very evident with all the wind, solar, hydropower and geothermal projects under way. Mining - Due to its rich resources of minerals including gold and tantalum deposits, there’s no doubt that Ethiopia will double its exports in the years to come. ICT - The innovaƟ on of 4G and 3G will increase the demand for advanced technologies such as telemedicine, video conferencing, and distance learning.
With all these developments, prospects and projects
that are ongoing, it’s certain that this country will emerge as one with immense business opportuniƟ es. Natural resources
Ethiopia has rich deposits of coal, tantalum, iron, nickel, manganese, potash and phosphates. Gold and tantalum reserves are found in the South, West and North of the country. The oil and gas sector is sƟ ll at the exploraƟ on phase. While largely untapped, resources are under development to help diversify Ethiopia’s economy away from agriculture.
Ethiopia is where coī ee originated. In the Oromia region we grow some of the best coī ee in the world. Consumers may purchase Ethiopian coī ees and teas under many brand names around the world. Your purchase of any Ethiopian-grown/made products contributes to the viability of the economy and the stability of the naƟ on. Ready to investor in Ethiopia's economy and future growth?
If you plan to venture into business in a country like Ethiopia, uƟ lize our export developers to enable you to be familiar with the kind of market and people you’ll be dealing with. Contact us at africa@ africabusinessassociaƟ on.org.
Also, please review pages 16, 48 and 50 to read arƟcles on business acƟ iƟ es in Ethiopia.
image credits: africa-ontherise.com, Booking.com/Addis-AbabaHotels, blogspot.com, www.tripadvisor.com