Three Good Reasons to Invest in Ethiopia

Market Potential

The size of a country's population matters to most investors. Other things being equal, the larger population the larger the potential market for their products. Nor is this all, for a larger population also increases the pool from which investors draw their employees, whether these are semi-skilled workers or highly qualified professionals. This then is one good reason for considering Ethiopia as a location for investment: its population of nearly 70 million.

Among its East African neighbors, this is twice as large as the next largest, the 35 million in Tanzania. Admittedly, this is a population with a limited purchasing power, but Ethiopia has had GDP growth rates of around 5% for a number of years and growth may be expected to pick up as investor-friendly reforms gather speed. The private sector in the country agrees that reforms have gathered speed, especially over the past year or two. The Economic Freedom Index 2004, published by the Heritage Foundation in the United States, ranks Ethiopia's economic environment second in its list of those most improved.

Climate

Ethiopia is a large country with great geographical diversity. It has 18 ecological zones and five climate zones, ranging from the alpine to the desert. Well over half the country consists of highlands, where the temperatures mostly range from 10oc to 20oc. This climate is, of course, an asset for tourism and also an asset for a variety of agricultural activities, from coffee to roses. It is ideal for roses, according Ethiopia's largest exporter of roses, which chose Ethiopia over its competitors primarily because of its climate. Over 140 kinds of crops are currently grown in Ethiopia. Since agriculture and agro-based industries are the top Government priority for attracting FDI, a variety of incentives are available to foreign investors.

Soft Assets

Ethiopia has the distraction of offering one of the cleanest business climates in the developing world. Among LDCs, it may well be the country with the lowest levels of corruption. According to both foreign and domestic investors, what might be called routine bureaucratic corruption (the confident expectation of bribes by tax or licensing officials) is very nearly unknown in Ethiopia. To make assurance doubly sure, the Government has set up an anti-corruption body that has been active for several years. This feature goes with some others equally appealing. Employers in Ethiopia rarely have cause to distrust the honesty and integrity of their workforce. Crime is uncommon in the country and the level of security of person and property is high. The two main religions in Ethiopia, Christianity and Islam, have co-existed peacefully for a long time and continue to do so today. Safe peaceful, stable and very nearly free of corruption how many business environments in Africa or Asia can be so described?

Source "An Investment Guide to Ethiopia: Opportunities and Conditions" ICC, United Nations, New York
and Geneva, March 2004. website: (unctad.org/investmentguides)