Ethiopia’s Record Year for Foreign Direct Investment

Addis Ababa, 29 April 2015 (WIC) – Ethiopian Investment Agency said that  the Government expects this year to be a record for foreign direct investment, up 25 per cent from last year’s US$1.2 billion to reach a record US 1.5 billion, with successful efforts to attract overseas manufacturing companies.

The head of the agency Fitsum Arega said that the  figures do not include plans by China’s Huajian, the world’s biggest shoemaker, for an additional planned US$2 billion to build its own industrial park and expand its existing Ethiopian workforce to 30,000 in the next few years.

Seven year’s ago FDI was no more than a little over US$100 million but recent years have seen the relocation of factories, attracted by low wages, cheap power and supportive government policies.

Industrial zones have been set up to provide production facilities for textiles, leather and garments. Mr Fitsum said China was providing the largest number of investments, although by value, the biggest investors were Turkey and India.

The country was now also seeing investment from Europe and the US, he added. Ethiopia was continuing to make huge investments in electrical power, railways and industrial parks, providing substantial support for investors including tax breaks.
Power and labor costs are low, security and political stability is good and the state-owned Ethiopian Airlines runs the biggest global network of any African airline.

Accountants Ernst and Young in Addis Ababa forecasts FDI will average $1.5bn each year for the next three years at least and predicts the country will rank among Africa’s top four manufacturing hubs by 2025.

Ernst and Young said there had been a big surge in deals since 2011, from the US and Europe as well as China, Turkey and India. It said “Ethiopia is fast becoming the ‘must-visit’ destination for virtually all private equity funds with an emerging market focus.”

There are now more than half a dozen private equity firms operating in Ethiopia. Recent arrivals include Europe’s Unilever currently building a factory and India’s largest paint-maker, Asian Paints, entered the market through the acquisition of a local manufacturer last month.

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