However, the World Bank report on Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises, ranks the Eastern Africa country as 125 out of 189 economies when it comes to ease of doing business in Ethiopia.
According to Hailemariam Desalegn, Ethiopia’s Prime Minister, the World Bank is ‘wrong’ on the ease of doing business in the country.
“The practice is showing it and I am telling you the practice, I am not talking about theory. We have 18 five-star hotels in Addis Ababa [Ethiopia’s capital] who want to invest in hotels. You can see around the towns and the cities that a number of new hotels are coming up contrary to what the World Bank is saying,” Desalegn said.
The bank ranks the economies in 11 areas of business regulations from starting a business, resolving bankruptcy, enforcing contracts, getting electricity, registering property and trading across borders.
However, out of 47 economies in sub-Saharan Africa that the bank ranked, Ethiopia was number 11 after Ghana, Seychelles, Zambia and Morocco. The country was second in Eastern Africa after Rwanda, the region’s fastest growing economy, beating Kenya Uganda, Burundi and Tanzania.
According to the report, economies ranking highest on the ease of doing business report are those whose governments have managed to create the mandatory regulatory system. The World Bank says Ethiopia requires a thriving private sector that will create jobs and develop innovative products as this will contribute to a more prosperous society.
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Desalegn believes that Ethiopia will grow to be a desired economy for investors.
“At the early stage of development in every transitioning economy there is a huge market gap where the private sector is not able to feel. Our local companies are competing now, they have started to emerge.”
Already, Ethiopia’s parliament has approved a 178.6 billion birr budget for 2014/2015. The government plans to have its own metro by building 5,000 km of railway lines by 2020. Ethiopia aims to expand its road network to 136,000 km by 2015 from less than 50,000 km in 2010. The government will spend 29 billion birr on road construction.
The IMF has forecasted that its economy will grow to 8.5 per cent in 2014/15 from 8 per cent in 2013/14.