Ethiopia: Growing and transforming at speed

Guna Trading is Ethiopia's leading exporter of gum, coffee, sesame and pulses. Photos provided to China Daily

The dynamic East African nation is a hotbed of activity, ripe for investment

Politically and socially stable, globally minded and abundant with natural resources, fast-growing Ethiopia is portraying itself as one of the most exciting African economies in which to invest.

With transparent laws and business procedures, competitive incentives that include tax exemptions for between two and seven years, depending on the sector, and the exemption of import taxes for raw materials, the country is wide open for investment.

Following a visit from Chinese Premier Li Keqiang to Ethiopia last year, when 16 bilateral agreements were signed, the African country is continuing to seek out mutually satisfying partnership arrangements.

Ethiopia holds great opportunities and potential and plans to become a middle-income country by 2025. It has successfully achieved all its growth targets, with the industrial sector growing by 20 percent during the past four years. Construction, mining, energy and manufacturing are all contributing to the building of a sustainable economy.

"Agriculture is our major source of economic growth at the moment, but over the coming years we plan to support industrialization through the development of light manufacturing, shoe production, textiles and agro-processing, in particular," said Ethiopia's prime minister, Hailemariam Desalegn. "We also want to gradually transition into the high-tech and chemical sectors. Our main focus however will remain light manufacturing, so this is where we would like to see more Chinese investment. We have a skilled and plentiful labor force, but we need financing for infrastructure, power generation and tourism."

While telecommunications and financial services remain under state control, there has been a recognizable shift in Ethiopia's focus since the government introduced its growth and transformation plan. China remains a committed ally in terms of development.

"We are very thankful to China for its presence in Ethiopia, and the fact it is fully committed to our development," said Redwan Hussein, minister of government communication affairs. "We would like to see more in the way of technology transfer and capacity building from Chinese companies, which would be in the best interests of both countries.

"If Ethiopia grows faster, the internal market will be profitable for other companies. We could also increase the production of goods that are needed in China," he said.

Former minister of industry, Ahmed Abtew described how government investment in infrastructure has helped attract private investors.

"Foreign investment in Ethiopia is growing very fast," he said. "We have cheap, sustainable energy so we would like to attract energy-intensive industries, such as petrochemicals or pharmaceuticals. Last year, we developed a national framework for Special Economic Zone Development and identified four different zones.

"One has been set up in Addis Ababa and another in Bole Lemi. Built as a pilot scheme, this has about 360 hectares of land with 20 buildings, some of them are 10,000 square meters. All of them are rented, some of them by companies that have already started to export. It was a World Bank-funded project and as a result, we decided to conduct feasibility studies for two other zones. Construction is already starting on one and we began a feasibility study last year at a site 300 kilometers from Djibouti. The consulting company was Chinese and we would like to give the contractors the possibility of designing their own zone," he said.

In the meantime, mines minister Tolesa Shagui is keen to introduce the mining potential of Ethiopia to Chinese financial institutions.

"We know the funding capacity is huge in China and it is time for them to become familiar with our policies. Our relationship with the Chinese government is very important. We need genuine companies and genuine finance," he said.

Canadian-owned East Africa Metals, a mineral exploration company, has already partnered with China's Sinotech and is investing in the Harvest and Adyabo sites in Ethiopia and the Handeni project in Tanzania. "When we came to Ethiopia, we made a discovery at the third hole we dug, which eliminated a lot of the risk intrinsic to mineral exploration," said the company's director Andrew Lee Smith.

InFocus provided the story. For more information, please visit www.gunatrading.com.

(China Daily 07/13/2015 page15)