The Anglo-Ethiopian Society

Business and Development in Ethiopia

Author - Gail Warden


When representatives of the Anglo-Ethiopian Society met the new Ethiopian Ambassador in 2006 he indicated that the main theme of his term in London would be to promote business development in Ethiopia. The Society invited the Ambassador to give either a talk to members or to provide an article for News File on this topic. The following article has been supplied.

As many in the Anglo-Ethiopian Society will be aware, Ethiopia’s true potential has yet to be fully exploited. Lying at the crossroads between Africa, the Middle East and Asia and with a wide range of climate zones, it offers business people a vast range of opportunities. In addition to Addis Ababa, major towns, linked by new roads, airports and telecommunications networks mean that investors can choose between a range of regions, all of which offer tax incentives to foreign investors.

Ethiopia offers political and economic stability with low inflation and growth at 9% pa and set to increase into double digits in the coming years. A keen workforce and low wages means that foreign companies have relatively small outlays but can make good profits. Corruption is negligible and Ethiopia’s crime rate is very low so security is assured. A one-stop-shop process offers speedy access to land and other facilities for potential investors.

The country’s enormous untapped resources along with its investment friendly environment have played a prominent role in attracting foreign direct investment which has significantly increased over the last decade, particularly from 2003.

Opportunities exist particularly in the following — coffee processing, oil seeds, hides and tanning (raw skins can no longer be exported), gold, pulses, fruit and vegetables, meat and meat products and cereals.

One of the many new factories in Ethiopia.
Photo - © Gail Warden

Cut flower production has been the fastest growing export business in Ethiopia and as a result of the support given by the Ethiopian Government to this sector, a substantial number of investors have started operating in the country. The investment code was revised and improved in May 2002, indicating the strong backing the floricultural sector receives. Incentives like five-year tax holidays, duty-free imports of machinery and easy access to bank loans and land have all made cut flowers a major export commodity. Ethiopian products destined for export are also exempted from paying any export tax and other taxes levied on exports.

About the many Dutch floriculture and horticulture company investors in Ethiopia, the Dutch Ambassador to Ethiopia Alphons Hennekens recently said “No investor regrets his decision to come here [Ethiopia]”. The Head of Ethiopia’s Horticultural Exporters and Producers Association, Tsegaye Abebe, believes that in five years Ethiopia will become a leading grower.

In the services sector hotels are much needed for the fast-growing tourism sector. Top quality hotels are under construction, such as twin four-star hotels in Meskel Square in Addis, but more are needed, even outside the various and increasing conference periods.

Ethiopia has achieved macro-economic stability, which is in part due to the Government’s commitment to developing the private sector. The globally competitive advantages for quality produce, cost of freight, cost of production, and proximity to the European markets add to the advantages of trading with Ethiopia. Additionally, the cost of labour is lower than many African countries so Ethiopia has competitive advantages. Many who have not visited for some years would be surprised at the progress made in many fields especially education and health which are vital for a trained and healthy workforce. No investor, in whatever field, would regret their decision to relocate to Ethiopia.

Readers who wish to know more about business opportunities in Ethiopia should contact the Ethiopian Embassy:
Mesfin Gebremariam,
First Secretary for Trade & Investment
17 Princes Gate,
London SW7 1PZ
Tel: 020 7838 3870
Email: info@ethioembassy.org.uk

 

First Published in News File Summer 2007

Opinions expressed in the articles are those of the authors and not necessarily the views of the Society.
Information is offered in good faith but the Society does not warrant the status or reliability of the information contained.

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