Ethiopian Economy

Currently Ethiopian economy is showing a remarkable growth. According to the Ministry of Finance and Economic Development, Ethiopia has showed 10% percent economic growth over the last two years. On February 2013, the Ministry of Finance and Economic Development announced that Ethiopia has registered an average of 10% economic growth during the past two years of the five-year Growth and Transformation Plan (GTP).

According to this report Ethiopia’s economy showed 8.5% growth during the fiscal year of 2011-2012, with 4.9 % growth in the agriculture sector, 13.6 % in industry and 11.1 % in the service sector. Investment is also up by 6.7% from 27.9% to 34.6%. During the year, the country registered a national savings rate of 16%. The State Minister underscored that the nation will continue to register an average double-digit growth in the remaining three-year period of the GTP. He further said that Ethiopia’s average 11% economic growth rate recorded during the past nine years is far better than the Sub-Saharan average of 5% to 6%. According to the report, Ethiopian gross domestic product (GDP) has hit $40.5 billion and the per capita income grew from $387 in 2011 to $513 in 2012.

Promising Investment Areas in Ethiopia

Currently the country has comparative investment advantages in textile and garments, agriculture, agro-processing, and leather and leather products. The areas, with most promising potential for investment in the country today are agriculture, agro-processing, textile and garment, leather and leather products, sugar, cement, chemical and pharmaceutical industry, tourism, mining and hydropower. The ongoing privatization program also offers enormous investment opportunities to private investors, particularly in the agricultural, manufacturing, hotel and tourism sectors. This blog will focus on these main areas of investment in the country having most promising potential at this time.

1.    Agriculture: The agriculture sector in Ethiopia is open for foreign investment.Ethiopia has the soils and climate required for the production of a variety of food crops. The major food crops grown are cereals, pulses and oil seeds. A broad range of fruits and vegetables and cut flowers are fast-growing exports in Ethiopia. Coffee, cotton, tobacco, sugarcane, tea and spices are the main commercial cash crops grown in Ethiopia.

Further, Ethiopia provides excellent opportunity to grow Maize, Wheat and Barley, Rice, Oil Seeds, Horticulture, spices, Rubber and Palm Tree Plantation, Sugarcane Plantation, Livestock Farming, Fishery and Apiculture, Forestry and Related Activities.

2.    Manufacturing: The manufacturing sector in Ethiopia contributes about 13 percent to GDP growth in 2009/10. The major manufacturing activities are in the production of food, beverages, tobacco, textiles and garments, leather goods, paper, metallic and non-metallic mineral products, cement and chemicals. According to the press release of Ethiopian government, under Growth and Transformation Plan (2010/11-2014/15), production of textile and garments, leather products, cement industry, metal and engineering, chemical, pharmaceuticals and agro-processing are priority areas for investment.

3.    Tourism: Ethiopia has a unique historical and cultural heritage, magnify cent scenery, a surprisingly cool climate, rich flora and fauna, important archaeological sites and hospitable people. Ethiopia’s wealth of tourism attractions gives it great potential for cultural and educational tourism, photo safaris, hunting safaris, bird watching, water sports including river rafting, desert trekking, mountain climbing and-ecotourism.

4.    Mining: According to the Ministry of Mines, Ethiopia has a substantial deposit of gold, tantalum, platinum, nickel, potash and soda ash. Among construction and industrial minerals are marble, granite, limestone, clay, gypsum, gemstone, iron ore, coal, copper, silica, diatomite, etc. There are also geothermal energy resource, fossil energy resources, oil and natural gas exploration and development. There is also a great potential in gold and rare metals, petroleum, precious and base metals, industrial minerals and dimension stones (marble and granite). The percentage share of exported minerals from Ethiopia by type is as follows. Tantalite concentrate accounts (98 %), followed by gold (1.7%) and rough gemstones (0.3%).

5.    Hydropower: The potential of Ethiopia’s renewable and nonrenewable energy resources is large, with the economically feasible hydropower potential estimated at 45,000 MW. It has large potential for geothermal energy generation. Nine of its major rivers are suitable for hydroelectric power generation. The private sector can participate in electricity generation from any source and without any capacity limit.

6.    Social Services: Social services are other potential areas for FDI in Ethiopia.

7.    Health Services: Opportunities for investment in the health sector in Ethiopia exist in the areas of General and specialized clinics; General and specialized hospitals; Clinical laboratory; and Diagnostic centers;

8.    Educational Services: Ethiopia invites internationally reputable educational institutions, universities and training centers to invest in the country. Opportunities for investment in the educational service exist in the Kindergarten and nursery; Primary and secondary schools; Science and technology colleges/ universities; Colleges for business and marketing; Schools for medical science; ITC institutions; Vocational training centers; and Training centre for hospitality industry.

9.    Information technology and communication technology: The information and communication technology development (ITC) sector is open for foreign investment in Ethiopia.

10.Construction Services: As a rapidly developing country that undergoes though numerous constructions,Ethiopia provides wide-ranging opportunities in the construction industry, particularly in the construction of roads, residential, commercial and industrial buildings, including low-cost housing. Accordingly, wide ranging investment opportunities exist in the areas of General Contractor Grade One (GC1); Building Contractor Grade One (BC1); Road Contractor Grade One (RC1); Specialized Contractor Grade One (GC1); Water well drilling; and Construction machinery and equipment rental services.

If you have an additional question or comment or need to get a practical legal support in this regard please  Contact us.

“Copyright © 2003-2013 Fikadu Asfaw and Associate Law Office

Related notes

Note: This guide provides vital information on investment in Ethiopia and its practice, especially Foreign Direct Investment in Ethiopia. This note on the investment laws and policies of Ethiopia is not intended to substitute professional advice given with full knowledge of the specific circumstances of each case and proficiency in the law of Ethiopia. Such information about investment in Ethiopia can be available from an Ethiopian Lawyer, Ethiopian Investment Lawyer, Ethiopian Tax Attorney, Ethiopian, Ethiopian Employment Lawyer and Ethiopian Immigration Attorney.