Seeking to Bolster Investment, Trade Ties

Ethiopia is a great place to invest and do business. It is apparent that Ethiopia is pursuing pragmatic and conducive policies that have set out efforts towards right path for economic and social development. The country is now attracting the attention of investors from around the globe.

Recently an Ethio-South Africa Business Forum was held in Addis Ababa. Opening the Forum which aimed at bringing the business community and other pertinent stakeholders from the two brotherly countries together to deliberate on common issues of trade and investment Foreign Affairs State Minster, Dr. Yinager Dessie noted that the two-way trade between Ethiopia and south Africa has reached to about 145 million USD. Major export items Ethiopia exports to South Africa include coffee, food crops and cut flowers while in return it imports fertilizer, automotive, machinery, textile products, chemicals, pharmaceutical and medical items. “South African investors are eyeing various opportunities to be part of developments here. So far FDI from South Africa is projected at over 150 million USD,” he added.

Dr. Yinager further said that Africa is on the rise with an impressive average growth rate of five per cent consecutively unlike other parts of the world which are still struggling to overcome the global economic crisis. It is determined to do away with all forms of malaise such as poverty, backwardness, illiteracy and disease. ” Africa is making an impressive stride in attracting FDI and diversification of its trade,” the State Minister said. African countries are trading with each other more than ever before and people to people contact is increasing tremendously with the growth of infrastructure schemes across the continent, he added.

Ethiopia has made tremendous headway in the past 23 years in registering impressive economic growth, creating a relatively stable region and being a catalyst for regional cooperation. The country has also been praised as the fastest growing non-oil producing economy.

“In our bid to foster this growth utmost priority is placed at promoting foreign direct investment and external trade with our neighbours. We offer a wide assortment of generous investment incentives,” he said.

The State Minister also explained that the government is massively driving to develop industrial zones as one of the key strategies to facilitate and support foreign and domestic private-sector partners and particularly to enhance exports. Industrial zones are designed to help companies engaged in different sectors such as agro-processing, leather products, pharmaceuticals and garment and in export of value-added goods.

As part of the government’s firm bid to lower business costs, to drive competitiveness, and to move the economy forward, massive increase in productivity is being driven by heavy investments in human and physical infrastructure, he said.

“I can surely tell you that there is almost a captive market to take advantage,” the State Minister said. Ethiopia offers a strong internal market with second largest population in Sub-Saharan Africa. The spectacular potential will be boosted up with the various regional interconnection projects currently being undertaken. It also presents ample opportunities for situating manufacturing businesses in Ethiopia, he said.

Ethiopia is always committed to foster and nurture the existing cordial relations with South Africa. The prevailing conducive atmosphere and the exemplary relations between the two countries will help them explore new avenues of cooperation.

The State Minister further said that the people of Ethiopia and South Africa have had a long and historic relations with an impressive track record of fighting colonialism and apartheid. In their more recent history they have forged strategic partnership that fosters their dynamic relations. They also have a number of mechanisms that support their economic cooperation such us the Joint Economic Commission established in 2008 along with the agreement they entered on the same year on Bilateral Investment Promotion and Protection agreement as well as and MOU on Industrial and Technical Cooperation.

Ethiopian Chamber of Commerce and Sectoral Associations President, Solomon Aferwork said on the occasion that Ethiopia is making rapid strides to emerge as one of the leading commercial centres in East Africa. “We are aware that a number of bilateral agreement have been signed between governments of Ethiopia and South Africa . One of these indeed is aimed at enhancing the bilateral relations between the two countries in various sectors including education, agriculture , culture tourism and human resource development.”

According to Solomon, Ethiopia has also been a believer of the cardinal role that infrastructure growth plays in advancing regional integration. One aspect of this is the road construction that increased the network with all of its neighbours. Ethiopia has also launched a 2,400km long railway project that is envisaged to link up producers and consumers of the East African region and indeed beyond. “We have also begun a striking drive to produce hydropower for our own as will as our neighbors.

Ethiopia and South Africa have long standing bilateral relationships. These ties have been historically cemented with the fact that the renowned freedom fighter, Nelson Mandela received military training in Ethiopia . During the long struggle of South Africa against apartheid , Ethiopia ha been rendering its utmost support in every way possible way. These relationships are now bearing fruit in the areas of economic , political and diplomatic arenas, Solomon added.

Today along with Brazil, Russia, India and China, South Africa is one of the BRICS countries having a highly developing market-oriented economy. Its economy is also known as one of the most competitive and business- friendly and hence , the country is regarded as the economic giant of Africa.

The trade and investment ties particularly in the import – export trade between the two countries has been growing in value in the last few years. Total trade turnover increased from 42 million USD in 2004 to 145 million USD in 2013. Ethiopia’s exports to South Africa increased from around two million USD in 2004 to 71 million USD in 2010 , while declining in the subsequent years . Ethiopia’s import from South Africa has also been increasing significantly, though fluctuating in recent years with the highest import amounting 134 million USD in 2013. Solomon said that further strengthening of the two countries trade relations will definitely provide a frame for both countries to benefit from their comparative advantages and allow for the establishment of solid and substantial trade and economic cooperation.

South African investors have received licenses for 22 projects between 1992 and 2012 with an outlay of around 86 million birr and it is expected that these investment projects will create 309 permanent and 299 temporary employments.

“As all know Ethiopia is a country endowed with untapped immense investment opportunities in the area of agriculture , livestock , agro-processing manufacturing, industry , construction, real state and tourism among others,” the President said. The country has registered a double digit growth for almost a decade which makes it one of the highest in Africa and the world at large. This phenomenal success is the result of among others , the presence of feasible economic policy that favors trade and investment Solomon explained.

Various trade and investment incentives such as duty and quota-free privileges for importing machineries, spare parts and inputs; exemptions from taxes, tax holiday grants and much more benefits that Ethiopia provides ensures high returns of trade and investment activities. Ethiopia is also a member of multilateral investment protections and guarantee in Ethiopia.

Export Promotion Director with the South African Department of Trade and Industry Dr. Julius Nyalunga indicated that South Africa exports various kinds of goods to different pars of the world. “The key for the growth of the South African economy is Africa. It is important to work together with African countries. Ethiopia is one of those countries that we identified as priority in-terms of doing business not only for bilateral issues but also in the area of investment,” Nyalunga said. He added that untapped huge trade and investment alternatives and opportunities have attracted them to Ethiopia.

The cooperation of the countries will not only boost trade ties but also helps them tackle the challenge jointly. “South Africa has focused, transparent and cost effective means to access the tremendous growth opportunities on the continent of Africa,” he said.