Why Invest in Ethiopia?

A land of vast opportunities

• Stable political climate;

• Liberalized free market economy;

• Conducive macro economic policies and stable foreign exchange regime;

• Huge home market of 65 million people;

• Access to 23 African countries through the Common Market for Eastern and Southern Africa;

• Preferential treatment to the European market under the ACP-EU Lome Convention;

• Favorable export market status under the US Generalized System of Preference (GSP);

• Huge domestic raw material base;

• Abundant and inexpensive labor force;

• Strategic location with proximity to the lucrative markets of the Middle East, Europe and Asia;

• Attractive incentive packages;

• Participation in the privatization opportunities;

One-stop-shop service by the Ethiopian Investment Authority to facilitate all pre and post investment requirements.

Investment Opportunities

Agriculture

Agriculture is the main stay of Ethiopia’s economy providing employment to 80 % of the population. Furthermore, agriculture plays a crucial role in providing raw material inputs for the industry.

Endowed with wide ranging agro-ecological zones and diversified resources, Ethiopia grows all types of cereals, fiber crops, oil seeds, coffee, tea, fruits and vegetables. The potentially irrigable land is estimated at 10 million hectares.

Ethiopia has the largest livestock resources in Africa. Fishery and forestry
resources are also significant.

Considerable opportunities exist for new private investment in the production and processing of the above agricultural crops and resources. The following areas in particular have been identified to offer plenty of opportunities to private investors.

Food Crops

The food crops grown include teff, wheat, maize, beans, peas, lentils, soyabeans, chickpeas etc. Great opportunities, therefore, exist for commercial production and processing of these food crops. Some pulses can also be produced or processed for the export market.

Oil crops such as rapeseed, linseed, groundnuts, sunflower, niger seed and cottonseed serve as raw material inputs for the edible oil industry. Some oilseeds, including sesame, are import and export crops. Favorable agro-climatic conditions also exist in the country for introducing coconut for the production and processing of palm oil and ghee. Besides, Ethiopia has a huge potential for producing and processing of maize.

Beverage crops

Coffee is Ethiopia’s gift to the world. The country is Africa’s leading producer of Coffee Arabica. Coffee remains the single most important cash crop.

 Tea is also another potential for production, processing and export. Ethiopia’s tea is of an excellent *uality. The favourable agro-climatic conditions in the country offer excellent opportunities for production and processing of tea for both export and domestic consumption.

Cotton

Cotton provides significant opportunities for export. A portion of the existing textile industry demand of lint cotton is met from domestic production, the remaining being met through imports.

Horticulture

Ethiopia’s agro-climatic conditions make it suitable for the production of a broad range of fruits and vegetables, including citrus, banana, mango, papaya, avocado, guava, grapes, cabbages cauliflower, okra, egg plant, tomato, celery, cucumbers pepper, onion, asparagus, water melon, carrots, green beans and cut flowers. Cut flower and vegetable production are fast growing export business. The horticulture sub-sector in general holds great potential for private investment.

Livestock

The large livestock resources that include 35 million cattle, 11.4 million sheep and 9.6 million goats, as a contributor to the national economy, leave much to be desired. Therefore, investment opportunities are potentially attractive for modern commercial livestock breeding, production and processing of meat, milk and eggs.

Investment opportunities of significant potential are also available in ostrich, civet cat and crocodile farming.

Fishery

Opportunities exist for fresh water fish production and processing using artificial ponds. In addition, the country’s fresh water bodies have a potential of an estimated annual fish production of 30,000-40,000 tons, of which less than ten per cent is presently being exploited.

Forestry and Apiculture

An estimated 2.5 million hectares of natural forest presently remains in 58 designated National Forest Priority Areas (NFPA). Investors are welcome to invest in integrated commercial production of structural timber, pulp-wood, match wood or even fuel wood. Production of rubber and natural gum also offers exciting opportunities for private investment.

With some 3.3 million beehives, Ethiopia is the leading honey and bee wax producing and exporting nation in Africa. This offers excellent prospects for private investment in apiculture.

Manufacturing

Manufacturing, now at an early stage of development, and currently accounting for about seven per cent of GDP and 5.3% of employment, covers about 145 state owned and 643 private manufacturing industries of all sizes. These industries are mainly engaged in the production of food products and beverages, tobacco products, textiles, wearing apparel, tanning and dressing of leather, footwear, luggage and handbags, manufacturing of wood and products of wood, manufacturing of rubber and plastic products, manufacturing of chemicals and chemical products, manufacturing of other non-metallic mineral products, manufacturing of basic iron and steel, manufacturing of fabricated metal products, assembling of motor vehicles, trailers and semi trailers. Major manufacturing opportunities offering attractive potential benefits to prospective investors exist in the food and beverage, leather and electronic, building materials and non-metallic mineral and metallic industrial sub-sectors. These investment opportunities include:

Food and Beverage

Processing and preserving of meat products; integrated production and processing of dairy products; manufacture of sugar, brewery, winery, soft drinks, processing and bottling of mineral water, etc.

Textile:

Spinning, weaving and finishing of textile fabrics and production of garments.

Glass and ceramics:

Tableware and sanitary ware, sheet glass and manufacturing containers.

Tannery, Leather Goods and Articles:

Tanning up to finishing; manufacture of luggage items, handbags, saddlery and harness items, foot-ware, garment and integrated tanning and leather goods.

Chemicals, and Chemical Products:

Manufacture of basic chemicals based on local raw materials, including PVC granules from ethyl alcohol, formal-dehyde from methanol, manufacture of caustic soda and chlorine-based chemicals, carbon black; activated carbon; precipitated calcium carbonate and ball-point ink.

Drugs and Pharmaceuticals:

Manufacturing of pharmaceutical, medicinal, chemical and botanical products in the form of tablets, capsules, syrups and injectables.

Paper and Paper Products:

Pulp from indigenous raw materials, paper and paper products.

Building Materials:

Manufacture of cement, lime, gypsum, marble, granite, limestone, ceramics, roofing tiles, corrugated sheets, tubes, pipes and fittings.

Electrical and Electronic products:

Manufacture of office, accounting and computing machinery; manufacture of electric motors, generators, transformers, capacitors, resistors, switch gears, electrical fittings and integrated circuit boards; manufacture of radio, television, VCRs, printers, floppy disc drives, communication and other equipment and apparatus for the domestic export market.

Metallurgy:

Manufacture of basic iron and steel, operation of blast furnaces steel converters, rolling and finishing mills, recycling of metal waste and scrap.
Manufacture of basic precious and non-ferrous metal; mechanical working, heat treatment, pleating of ferrous and non-ferrous metals.

Structural Products:

Manufacture of structural metal products, reservoirs and steam generators.

Machinery and Equipment:

Assembly and manufacture of agricultural machinery and equipment, industrial, transport and mining machinery and parts, construction machinery, machine tools and accessories, miscellaneous light engineering products, components and parts.

Mining

Ethiopia offers excellent opportunities for mineral prospecting and development. According to the Ministry of Mines and Energy, Ethiopia’s green stone belts offer one of the finest areas for gold mineralization anywhere in the world, and already more than 500 metric tons of gold deposits have been identified by Government exploration efforts. Additional gold reserves are expected to be identified in at least seven regions of the country. In addition to gold, Ethiopia is a country blessed with good deposits of tantalum, platinum, nickel, potash and soda ash. Included in the construction and industrial minerals are marble, granite, limestone, clay, gypsum, gemstone, iron ore, coal, copper, silica, diatomite, bentonite, etc. With regard to fossil energy resources, there are significant opportunities for oil and natural gas in the four major sedimentary basins, namely the Ogaden, the Gambella, the Blue Nile and the Southern Rift Valley. For more information click here.

Tourism

Tourists and writers who have been to Ethiopia wonder why Ethiopia’s tourism potential is still so little known. According to December 12, 2002 edition of our world, Those who have discovered Ethiopia would probably like to keep the secret to themselves. In any case, the message is staring to filter through. Tourism in Ethiopia is growing slowly but surely.

The country has a lot to offer to tourists. Visitors will find landscapes comparable to its neighboring countries, Kenya or Tanzania, and awe-inspiring historical sites and monuments similar to its other neighbors, Egypt.

The highlands of Ethiopia have an attractive landscape, scenery and wild life. In the African Rift Valley system, a wide variety of wildlife and numerous bird species, both endemic and common, are found and a substantial volume of traffic is directed to this area. The magnificent Tis Issat Falls on the Blue Nile (Abay) river, the endemic wildlife in Semien Mountains, the Sof Omar Cave in the South East are some of the interesting sites. The rock-hewn churches at Lalibela, the ancient buildings of Yeha and the obelisks at Axum, the medieval palaces at Gondar and the monasteries of Lake Tana, Debre Damo and Debre Libanos are the main tourist

Attractions.

Given its unique cultural heritage, magnificent scenery, pleasant climate, rich flora and fauna, important archaeological sites, friendly and hospitable people and the recent growth in the inflow of tourists, Ethiopia’s potential puts it among the leading tourist destinations in Africa. Tourism infrastructure, which is still inadequate, should be developed in order to cope with the growing traffic. There are, therefore, great opportunities for private investment in hotels, lodges and international restaurants.

Infrastructure

The Ethiopian Government recognizes that the delivery of infrastructure services, transport (road, rail and air), telecommunications and postal services, energy and water have a long way to go before they meet the demand of investors. It is, therefore, making heavy investment in infrastructure development through on-going power, telecommunications and road sector development programs to relieve supply constraints and improve quality of services. Besides, it is widening the opportunities for private sector participation in infrastructure business of service

Delivery.

The Government is planning to assign forty per cent of road maintenance works to the private sector contractors in the short term and increase the level to hundred per cent in 10 years. The power sector program has a plan to increase power generation capacity from 327MW to 863MW by 2008/09. The private sector has a role to play by involving in:

In consideration of the huge investment required to develop telecommunications and the importance of Information Communication Technology (ICT) for economic development, the Government is considering viable options in the short-to medium-term. The short-and medium-term alternatives include finding a strategic partner in the operation and development of telecommunication infrastructure.

 Service

Opportunities exist for private investment in the following services:

* Exporting the country’s various products by way of undertaking market promotion, *quality improvement or packaging;
* construction, comprising first grade contracting and rental of construction
machinery as well as real estate development.
* Social services, such as health, education and sports facilities;
* Other projects in these sectors are to be identified by potential investors.
Privatization progr

The Ethiopian Government launched privatization of state owned enterprises in early 1995. Accordingly, the Ethiopian Privatization Agency (EPA) was established to implement the privatization program in the same year.

The Government has laid ground to privatize most of the state owned enterprises to the private sector. Accordingly, EPA has received a stock of 113 state owned enterprises from the government to be privatized in the years ahead. As indicated in EPA’s work schedule, out of these enterprises, a total of 43 state-owned enterprises are in the pipeline for privatization in 2003. Most of these enterprises fall under manufacturing, construction, agriculture and agro-industry, hotels, transport, trade, and mining sectors.

There is a strong commitment from the Government side to fully privatize state enterprises in the coming few years.

Detailed information on the process of privatization can be obtained from the Ethiopian Privatization Agency.