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Investing in Ethiopia

Investing in Ethiopia. Agenda. 1. Setting the context. 2. Sector overview. 3. Key priorities. Role of Ethiopian Diplomatic Missions Abroad. 4. In the past five years FDI flow to Ethiopia has increased by more than four fold from a little over 1 billion USD to more than 4.2 billion.

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Investing in Ethiopia

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  1. Investing in Ethiopia

  2. Agenda 1 Setting the context 2 Sector overview 3 Key priorities Role of Ethiopian Diplomatic Missions Abroad 4

  3. In the past five years FDI flow to Ethiopia has increased by more than four fold from a little over 1 billion USD to more than 4.2 billion Total FDI inflow & share of manufacturing FDI 2006/07 - 2016/17 (in USD million) Source: Ethiopian Investment Commission: National Bank of Ethiopia, USAID - Ethiopia Performance Monitoring and Evaluation Service (EPMES) 2017

  4. Targeted investor recruitment strategy and other investor-friendly reforms contributed to these achievements • Targeted and high-quality investments • Infrastructural development • Investment policy reforms through Ethiopian Investment Board

  5. Industrial Parks: Key instrument and catalyst to drive Ethiopia’s industrialization agenda More than 10 public industrial Parks Additional 6 parks by private developers • Key principles • Specialized parks • Export oriented • Vertically integrated • Sustainability • Skills development

  6. Industrial parks played a key role in attracting globally leading investors and steadily increasing employment opportunities and exports • Attracted globally leading investors • Incorporated state-of-the-art technologies meeting global standards in the industry • Export: USD 13.8 million per month. (Figure for December 2018) • Employment: total of 61,392 employees (Figure for December 2018) Ethiopia's export under AGOA has jumped by 62 percent between October 2017 and September 2018

  7. Agenda 1 Setting the context 2 Sector overview 3 Key next steps Role of Ethiopian Diplomatic Missions Abroad 4

  8. Agribusiness:- FDI had played major role in filling the domestic investment gap and enhancing linkages with global markets • Export increased from zero to about 300million USD per year. • 2nd in floriculture exports in Africa and among top 4 exporters in the world. • Created over 180 thousand jobs, • Ample rooms for attracting additional investment: • EIB reforms in the agri-business sector

  9. Service Sector:- Second most important destination for FDI – accounting about 10% in average • Key sectors for investment promotion • hospitality; • healthcare; • ICT; • education; • renewable energy • logistics.

  10. Tourism:- FDI played major role in enhancing Ethiopia’s tourism sector ETHIOPIA’S TOURISM SECTOR POTENTIAL • Tourism is expected to play a significant role for Ethiopia in terms of contribution to GDP and employment. • 8 international chain hotels operational 12 in the pipeline • Large and untapped potential • Natural, historical, and cultural attractions • Excellent network of national parks • UNESCO World Heritage Sites • Sectors performance is much bellow its potential • Investment attractions: • star-rated hotels, lodges, restaurants and • grade 1 tour operators 94 154 22 11 ABSOLUTE LONG-TERM GROWTH 2017 forecast Size in 2016

  11. Agenda 1 Setting the context 2 Sector overview 3 Key Priorities Role of Ethiopian Diplomatic Missions Abroad 4

  12. Objective is to maximize Ethiopia’s investment attraction, retention and expansion potential FDI Africa US$ 54 billion Losses due to unattractive business climate and competitiveness issues 2 Reduced FDI inflows due to limited marketing efforts 1 Limited visibility Ethiopia´s FDI attraction potential* FDI Ethiopia Marketing Valve Losses due to limited investor assistance and aftercare 3 6-8 % OF REGION US$ 3-4 billion

  13. What are the key next steps to enhance FDI promotion and linkages? (1/4) Solidify investment promotion and attraction strategies • Focus investment promotion and attraction on a select set of sectors • Export oriented, • Labor intensive, • Enhancing agricultural productivity, and • Next generation of strategic industries • Target policy efforts on investment retention and expansion, not only on investment attraction

  14. What are the key next steps to enhance FDI promotion and linkages? (2/4) Capitalize on existing political and economic reforms in Ethiopia and the region • Broad based reforms in the political domain • Economic reforms • Plan to attract additional investments in telecom, transport and logistics, energy etc. • Positive political landscape in the region sends positive signal to foreign investors • Normalization of relations between Ethiopia and Eritrea • Eritrea and Somalia • Ongoing discussions between Eritrea and Djibouti

  15. What are the key next steps to enhance FDI promotion and linkages? (3/4) Resolve general investment climate constraints • Ethiopia ranks low in terms global benchmarking reports e.g. DB • These constraints impact perception of investors toward Ethiopia • Renewed government commitment

  16. What are the key next steps to enhance FDI promotion and linkages? (4/4) Create synergy between trade, industry and investment policy reforms WTO • Review the investment law regime to allow more private sector participation • Enhance regional and multilateral integration Investment promotion AfCFTA

  17. Agenda 1 Setting the context 2 Sector overview 3 Key next steps Role of Ethiopian Diplomatic Missions Abroad 4

  18. Diplomatic missions play a key role in promoting Ethiopia as a competitive investment destination What are the gains to be had from Diplomatic missions? • Locational and diplomatic advantages • Ability to create strong relationships with potential investors • Play a key role in policy advocacy ( champion best practices ) Key Role: Increase Ethiopia’s visibility in collaboration with EIC and other agencies

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