For more than a couple of decades, Ethiopia has been registering high economic growth. The development of infrastructures such as roads railway and energy is playing crucial role in encouraging investment flow. The enabling environment manifested by the prevalence of peace, smooth business transaction, conducive custom and tax system also attracted local and foreign investors to do business here. This situation created good opportunities for creating jobs for hundred of thousands.
There are many foreign investors who showed interest to invest in the country. The Chinese, Indian and Turkish investors are taking the lion’s share. By now, the investments from these nations are getting momentum. For instance, recently the Turkish business delegation payed a visit and met the FDRE President Dr Mulatu Teshome to strength the business relations between Turkey and Ethiopia. The president said that as the second most populous country in Africa, Ethiopia is ready to provide the necessary facilities like labor, land and infrastructures to Turkish investors.
He also appreciated the significant contribution of the already existing textile and garment industries in creating job opportunities for thousands, technology transfer and experience sharing. He added that provided that Turkish investors show interest to involve in new sectors such as ceramics they could benefit a lot. Since the booming construction industry has initiated high demand of ceramics, currently 60 percent of the supply is carried out by Chines companies. Recognizing the potential of the sector, the government encourages potential investors by providing necessary facilities in the industrial parks. In the parks, the custom and banking services will be provided. In addition, electric and water services and sewerage systems will adequately be available. As to Mulatu, Ethiopia’s foreign investment has been rising from time to time.
The availability of fair air transport, cheap labor and tax holidays provided to investors in their initial stage of the investment made the country preferable for foreign investment. The parks that have been constructed at different parts of states are equipped with sufficient energy, water, sewerage systems and a one stop shot for the provision of bank, tax and custom services.
Turkish Ambassador to Ethiopia Fatih Ulusory on his part said that in addition to the already invested capital,Turkish investors have showed interest to involve in the sectors such as the production of renewable energy, construction materials and others. He further said that currently the trade volume between the two countries rose to 440 million US Dollars; but as compared to the existing potential, it could be said insignificant and efforts are undergoing to rise the volume up to a US billion Dollar. According to the Ambassador, the Turkish companies are becoming the biggest source of employment in Ethiopia; and so far they created job opportunities for 30 thousand people. It has also been planned to raise the amount of the Turkish Foreign Direct Investment up to 2.5 billion US Dollar by the end of this year.
In the second Growth Transformation Plan the government has announced its ambition for the expansion manufacturing sector to achieve structural change and to transform the economy. As it is understood, achieving sustainable development with the economy that heavily relies on rain fed agriculture with subsistence mode is unreliable. Hence, shifting rural labour in to the non-farming sector that is to say manufacturing and service sector must be a priority agenda. The expansion of the manufacturing sector has numerous values. It creates huge job opportunities that can absorb excess labour. It also substitutes imported goods to save hard currency that might be spent for importation.
On the other hand, through exporting manufactured goods, increasing the nation’s currency is possible. Side by side with these, technology and knowledge transfer is possible. But for the fruitfulness of the government’s plan, attracting foreign investment is vital and the ongoing investment activities carried out by foreign companies must get unrestrained support. There are several conducive situations that attract the Foreign Direct Investment flow to the nation. In addition to cheap labour, there are agricultural products that can be utilized as an input in the manufacturing sector.
Cotton is growing by government and private sector extensively; but the production does not satisfy the local demand. As a result, the nation is forced to import cotton from abroad. Recognizing this, both local and foreign investors can put their money to meet this demand. Foreign investors who have interest to engage in food processing such as macaroni can also participate in the production of wheat. These all indicated that how the chances are high for investors to put their money both in the manufacturing and in the agricultural products.
The recent history of the emerging economies tell us that side by side with the local sources, utilizing foreign finances is also essential to boost the economy, particularly to enhance export which is a tool for earning foreign currency. As a developing country, currently Ethiopia exports agricultural products to foreign market. In contrary to this, it imports capital goods for its industrialization process. And from this, we can understand that the nation needs more foreign currency to meet its development ambition and for that mobilizing hard currency from various sources such as from remittance, loan and Foreign Direct Investment is essential. And in this regard, the growing Turkish investment in Ethiopia can play a significant role .
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