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Ethiopia registers $2bn in FDI in the first nine months
Ethiopia registered more than $2 billion in foreign direct investment inflows in the first nine months of 2020/2021, according to the Ethiopian Investment Commission. This is an increase of 6.7 per cent compared to the same period last year. Economic Analyst, Samuel Getachew joins CNBC Africa for more.
Tue, 11 May 2021 10:11:25 GMT
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AI Generated Summary
- Ethiopia's strategic focus on foreign investment has driven economic growth, with the country registering over $2 billion in FDI in the first nine months of the fiscal year.
- The manufacturing sector, particularly textiles, has benefited from Ethiopia's conducive business environment, including access to cheap labor and electricity.
- Challenges in regions like Tigray pose significant obstacles to Ethiopia's economic recovery, requiring government intervention to restore stability and support affected industries.
Ethiopia has made substantial progress in attracting foreign investment, registering more than two billion US dollars in foreign direct investment in the first nine months of the 2020-2021 fiscal year, as reported by the Ethiopian Investment Commission. This marks a 6.7 percent increase compared to the same period the previous year. Samuel Getachew, an economic analyst, discussed the significance of this achievement in an interview with CNBC Africa. Despite facing various challenges such as conflicts, the impact of COVID-19, and issues related to youth unemployment, Ethiopia's ability to draw in this level of investment suggests a potential for economic recovery.
Getachew highlighted Ethiopia's strategic focus on foreign investment as a key driver of economic development. The country, previously dependent on aid, has shifted its approach to actively attract investments. With a rapidly growing economy and a young, educated workforce, Ethiopia has positioned itself as an attractive destination for foreign businesses. The government has implemented incentives such as lower taxes and subsidized transportation to encourage investment inflows.
The manufacturing sector, particularly textiles, has been a primary beneficiary of Ethiopia's industrialization strategy. The availability of cheap labor and affordable electricity has enticed international companies to set up operations in the country. Ethiopia's lack of minimum wage regulations, unlike some other manufacturing hubs, further enhances its appeal to investors. Major textile brands from countries like Bangladesh and India have established a presence in Ethiopia, leveraging its conducive business environment.
Beyond textiles, Ethiopia's diverse industrial landscape includes a flourishing flower industry, with exports to European markets. The government's establishment of industrial parks across the country has supported various sectors, with some parks effectively attracting global brands. However, challenges persist, as seen in regions like Tigray, where political turmoil has disrupted business activities and led to an overall decline in FDI inflows.
While the recent increase in FDI is promising, ongoing crises such as the Tigray conflict and the impact of the COVID-19 pandemic raise concerns about the country's economic outlook. Getachew's observations from his recent visit to Tigray painted a stark picture of the challenges faced by businesses in the region, including looting and high unemployment. The Ethiopian government faces the formidable task of restoring stability and rebuilding affected industries to stimulate economic recovery.
As Ethiopia navigates a complex landscape marred by conflict and economic uncertainties, the resilience of its investment environment will be crucial in shaping its path to recovery. Despite the obstacles, the country's ability to attract significant foreign investment signals optimism for its long-term economic prospects.
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