Ethiopia: A New Effort to Expand Investors’ Participation Beyond Agriculture

Following Ethiopia’s attention to the investment sector, the government has been constantly creating favorable conditions for the private sector to engage in the investment sector. It has worked by showing the potential of the country to those who want to engage in the investment sector, enacting laws that will increase the sector’s performance and so on.

It has gone through resolving the obstacles in the investment sector, which have hampered the sector’s progress as desired. Among the efforts it has made to solve the bottlenecks is solving the problem related to land supply and infrastructure in the sector. For this, it has built huge industrial parks in selected areas across the country. The construction of the parks has made a significant contribution, especially by attracting foreign direct investment. Until now, 13 industrial parks have been built and put into operation.

This has created a situation where the investors can bring their products and plant sheds in the industrial parks without facing the problems of land, infrastructure and service sectors and move directly to production and export. This favorable situation has made it possible to attract investors from internationally known industries.

The investors were able to create job opportunities for many citizens. The country is also earning foreign exchange while offering products to the foreign market. Local investors have also started working in the industrial parks.

The investment activity is underway widely in the regions as well. Extensive works are being done in the field of investment in various cities of the regions. Investors are engaged in agriculture, manufacturing and other sectors, and they are producing for the foreign market on a large scale. This participation has been strengthened from time to time.

One of the regions where this investment activity is prominent is the Southwest Ethiopian People’s Region. Although the region has recently been established, extensive works are being done in the sector.

Data indicates that the region has many resources that can be used for the investment sector. According to the studies conducted to identify the region’s resources, it has vast and fertile land for annual crops, coffee and spices and horticulture. It can be an investment destination and option in service and industry sectors as well.

According to the data of the Minerals and Energy Development Agency of the region, it is rich in various minerals including gold. In addition to gold ore, coal used for industrial input is widely available in Dauro and Konta areas, and there is a situation where the mine is developing.

In the region, 15 small-scale producers and three high-level producers, a total of 18 producers have taken license and started to produce coal. It was planned to produce 748,024 tons of coal from the region in the 2022/23 fiscal year. It was possible to produce 209,398 tons. In terms of income, it was planned to earn 30 million Birr and 29.3 million Birr was achieved.

Iron ore for industries is another resource available in the region. At present, it has become one of the areas of the country that supply a large amount of minerals to the central market. There are many unexplored resources in the region. Opal and other minerals are also believed to be found in the region.

Many investors have shown interest in engaging in various investment sectors in the Southwest Ethiopian People’s Region. Although the region has a short life, there has been extensive research and discussion that shows the current situation of the investment. In order to encourage investors to enter the region and engage in investment activities, a campaign and promotion work involving the head of government and cabinet members of the region have been carried out on a large scale.

Since the establishment of the region, the investment promotion activities have contributed to increase the flow of investment in the region. There are 380 investment projects in the region that are at different levels of work and have created employment opportunities for 112,983 citizens (7,983 permanent and 105,000 temporary).

According to data from the Trade and Investment Bureau of the Region, it recorded encouraging investment performance in the 2022/23 fiscal year and is working to increase this performance in the 2023/24 fiscal year. In the past fiscal year, investment licenses were granted to 141 investors who registered a capital of more than 2.2 billion Birr. Among the projects that received investment licenses, 48 in agriculture, 50 in manufacturing and six in the service sector have been put into operation.

Kebede Tesfaye, Deputy Head of the Regional Trade and Investment Bureau and Head of the Investment Sector, said that the South West Ethiopian People’s Region has made plans and preparations to sustain the successes achieved in the past fiscal year.

According to him, in the fiscal year, 84 projects in agriculture, 64 in services and 58 in industry, total of 206, are planned to be put into operation. It is expected that these projects will generate capital of more than 11.1 billion Birr and create job opportunities for more than 109, 000 citizens.

He mentioned that many investors in the region are engaged in the agricultural sector, and added that it is one of the plans for the current fiscal year to engage many investors in the manufacturing and service sectors in addition to the agricultural sector.

According to Kebede, since the beginning of the current fiscal year, following the reduction of the heavy rainfall in the region, land auditing is being done with great attention along with the preparation for investment activities. In the last fiscal year, 6,628 hectares of land was transferred to the land bank through the land auditing work.

“If such measures are not taken, investment projects may not be completed within the target time frame. The Investment Decree (1180/2010) clearly sets out the conditions under which lands given to investors can be expropriated. Investors’ work activities will be evaluated according to these requirements and if the conditions are not met, the land will be confiscated,” he said. Apart from this, investment licenses are being issued for new investment projects. License has been granted for five industrial sector projects, and 28 agricultural sector projects have undergone necessary verification and evaluation.

He mentioned that it is planned to study 12,650 hectares of land in the current fiscal year in terms of studying potential land for investment, and stated that the Ministry of Agriculture will provide the necessary support for the study based on the request for support and project plan from the region.

In terms of infrastructure development, Kebede stated that there are no favorable conditions for building new roads, but for maintaining the existing ones and finishing the ones that have been started. According to him, the main problem that can hinder investment activity in the region is lack of budget. The budget allocated to the zones of the region is that they used to have when they were under the jurisdiction of Southern Nations, Nationalities and Peoples Region. The current situation of the country does not allow more budget.

“In terms of investment activities, the question of ‘what is the service provided to the community when an investor comes to an area?”‘ Kebede said this is part of the region’s investment sector issues.

“Investors should create job opportunities when they are engaged in the field of investment. They are expected to make technology transfer a reality,” he said. If they don’t contribute to technology transfer, society’s life cannot change and improve and this makes investment activities less profitable.

Therefore, efforts will be made to get investors to pay attention to technology transfer, and according to this, 7,949 farmers are planned to benefit from technology transfer in the fiscal year. On the other hand, although it is not denied that investors who are engaged in investment activities dream of working and using them (to make a profit), they provide various kinds of support to the society as much as they can, Kebede said.

As to him, more than 88 kilometers of access roads were built with the cooperation of investors and the community last year. It is expected that 96 kilometers of road will be built in this fiscal year.

“We have learned from past events that if the investor is not on the side of the society and vice versa, things cannot go smoothly. When investors support the society, the society protects and takes care of the investors’ property. Investors who do not get the support of the society will suffer a lot of damages and losses. With this in mind, the region is working closely with investors and explained the great significance of cooperation between society and investors,” he underlined.



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