By Staff Reporter
August 22, 2018 – Ethiopia attracted more than $ 4 billion foreign direct investment (FD) during the last Ethiopian fiscal year that ended on July 8, 2018.
In a presser on Wednesday, Meles Alem, spokesperson for the country's State Department, said the country had succeeded in attracting 156 large companies during the year with a combined capital of more than $ 4.1 billion.
Despite ongoing turmoil and poor business figures in Ethiopia, including heavy red tape, the inflow of foreign direct investment into the country has accelerated in recent years, making Ethiopia one of the best performing African countries in FDI in 2016. influx. last year and reached $ 3.1 billion, according to the World Investment Report of UNCTAD 2017. Part of the reason is the huge population and growth story that it has recorded in recent years.
Ethiopia ranks 161 (out of 190 economies) in the Doing Business ranking of the World Bank in 2018, two times less than in the previous year. This is a very poor performance for a country like Ethiopia that strives to be the next China in Africa. Part of the reason for this poor ranking is the burdensome state bureaucracy and archaic rules for starting and executing cases in Ethiopia. So far, the Ethiopian state has affected economic growth in Ethiopia more than the accelerant that many people think is the case.
According to UNCTAD, there are a number of restrictions on foreign direct investment in Ethiopia, namely the high state interference in the economy, poor infrastructure conditions, problems related to land acquisition, strict control of foreign exchange, very high transaction costs and weakness of institutions.
The total stock of BDI was estimated at 18.9% of GDP in 2017. According to data released by the Ethiopia Investment Commission (EIC), FD's inflow into the country showed a five-fold increase in a decade, from $ 814.6 million in the fiscal year 2007/2008 to $ 4.17 billion in the fiscal year 2016/17 that ended in July.
"In the past decade, China has significantly increased its investment in the country, particularly in the construction, textile, power generation and telecommunication sectors, with agriculture (especially horticulture) and leather goods being the sectors that attract the most foreign direct investment," said the spokesperson. .
The spokesman attributed the increase of foreign direct investment to successful economic diplomacy carried out by embassies and consulates around the world.
According to the spokesman, efforts have been made to attract more investment in the country this fiscal year by taking advantage of the prevailing peaceful situation in the country.