SpecialArticles 1

By ABDIRASHID Dulane
Photo: Ethiopian Embassy of Tokyo

Since the turn of the 21st century, Africa has achieved robust economic growth, unlike in the period of economic stagnation that affected much of the continent in the 1980s and early 1990s. Although theglobal economic crisis has had a negative impact on the economies ofAfrica, the continent has proved resilient and it is expected to grow by
4.5% in 2010 and 5.2% in 2011, slowly returning to its pre-crisis
growth pattern, according to the “African Economic Outlook 2010”report jointly published by the African Development Bank (AfDB),
OECD and UN Economic Commission for Africa (UNECA).
It has therefore become increasingly apparent that Africa will be thenext growth pole offering substantial business opportunities. This has
also been clearly indicated by a McKinsey Global Institute report,
which came out in June 2010 highlighting the progress and potentialof African economies. It is because of this fact that the continent isattracting widespread attention from many parts of the world.

Rapid, Sustainable Economic Growth
Ethiopia is one of the fastest growing non-oil economies in Africa.
The country has registered on average 11.5% economic growth forthe last six consecutive years. Although the global economic crisis
has had an effect on its economy in terms of exports, flow of remittances, food and oil price hikes and so on, the country was able towithstand the crisis and maintain strong growth of 9.9% in
2008/2009. The Economist in its world economic forecast for 2010
has listed Ethiopia as the fifth fastest growing economy in the world.
Since the downfall of the Derg dictatorial regime, Ethiopia’s leadership under the Ethiopian People’s Revolutionary Democratic Front(EPRDF) has widely recognized that good governance and democracy
are a sine qua non for sustainable development. Thus the driving force
behind the above-mentioned fast economic growth is a democratic

Ethiopia’s real GDP growth

Source: Ethiopian Ministry of Finance & Economic Development

30 JAPAN SPOTLIGHT • September / October 2010

Hidase (Renaissance) Bridge on the Nile River: “a living monument and a symbolof Ethio-Japanese friendship” as called by Prime Minister Meles Zenawi during itsinauguration in 2008.

developmental government seriously committed to defeating poverty
by ensuring rapid, sustainable economic growth and development.
The fourth national and regional elections, which were successfully conducted on May 23, 2010, in a peaceful, free, fair and credible
manner, clearly attest to that and would undoubtedly give an added
impetus to the vision set by the government for the country to march
towards its ambitious journey of achieving the UN Millennium
Development Goals (MDGs) by 2015 and joining the ranks of middleincome countries by 2020.
Moreover, the Ethiopian government, cognizant of the importanceof the role infrastructure plays in spurring the development andexpansion of the activities of other crucial sectors in an integrated
manner, has undertaken massive investment in building infrastructure to speed up the country’s socioeconomic development. It has
also exerted enormous efforts to expand access to social services
such as education and health as well as other services with a view toimproving the people’s livelihood.
All these measures have resulted in a significant transformation in
the development of the country in the last two decades. Ethiopia’seconomy has significantly expanded and its GDP at current market
prices reached $35.2 billion in 2008/09. In purchasing power parity(PPP) terms, its GDP has reached $70 billion, according to Ernst andYoung, thus becoming the fifth largest economy in sub-SaharanAfrica after South Africa, Nigeria, Angola and Sudan.
It is imperative to also note that Ethiopia is one of the 20 developing countries in the world that are making absolute progress towards
meeting the MDGs as has been revealed in a progress report recently
published by the Overseas Development Institute (ODI) of Britain.
Ethiopia is an attractive venue for business. The country is
endowed with immense natural resources, which undoubtedly offer
huge potential for investment in different sectors including agriculture, manufacturing, mining and energy, tourism and other services.

Photo: Ethiopian Embassy of Tokyo

Photos: Ethiopian Embassy of Tokyo

Gold mining at Lega Dembi, Ethiopia

Large-scale commercial farm

Agricultural Potential
Agriculture is the sector contributing most to the livelihood of the
predominant majority of Ethiopia’s people. In this connection, theEthiopian government has put a lot of emphasis in transforming
smallholder agricultural production through the provision of appropriate technologies, which has shown remarkable progress in recentyears. In addition, to supplement the efforts of smallholder farmers in
the lowlands where vast arable land and plentiful water resources areavailable, the government has been encouraging private investors toparticipate in large-scale development and commercialization of agriculture by using their capital and technology. Coffee, cereals, oilcrops such as sesame, horticultural crops, rice and other food commodities, crops for biofuel production, and cotton production for use
in the textile and garment industries, among others, are enticing
investment areas for production and value addition (agro-processing)in the sector. Ethiopia, being home to one of the largest livestock populations in the world, also enjoys a comparative advantage in the sector, especially in large-scale animal breeding and meat and meat processing. The government’s prioritization of the aforementioned gives
an added advantage to investors who venture in these sectors.

Manufacturing
The industrial sector in Ethiopia is still in its infancy, but it is a sector
whose growth is assured by the vast resource base available in thecountry. With one of the largest livestock concentrations in the world,
Ethiopia is fast becoming an attractive hub for the leather and leatherproduct industries. Finished leather products such as shoes, garments
and bags are manufactured by factories while tanneries process finished and semi-processed leather for the domestic and export markets.
Ethiopia’s Bati and Sellalie types of famed sheepskin are highly sought
products in the international market for their high quality. Vast land
Photos: Ethiopian Embassy of Tokyo

Tekeze hydroelectric dam, inaugurated
in 2009, is one of Ethiopia’s severalhydropower projects completed recently.

suitable for cotton production and the large trainable and cheap labor
force make the garment and textile industries a priority area of investment. Steel/metals, cement, food/beverages and chemicals/chemicalproducts, among others, are important industries for investment.

Mining & Energy Resources
Ethiopia is rich in mining and energy resources. In mining, geological studies indicate proven deposits of industrial and precious minerals such as tantalum, platinum, gold, quartz, silica sand and ironore among others and construction materials, including limestone,granite and marble. Among the above, for instance, gold production
has been progressing well over the years with a proven reserve estimated at more than 500 tons. Oil and gas exploration has been goingon for sometime and natural gas from the fields of Calub in eastern
Ethiopia, which have a large proven reserve of natural gas, will hit
the market by 2015, according to the Ministry of Mines and Energyof Ethiopia. Enormous opportunities greatly abound for foreign companies to engage in oil, gas and mineral exploration and production
activities either individually or in joint ventures.
According to Ethiopian Electric Power Corporation (EEPCo), thecountry has enormous potential for hydroelectric, geothermal, windand solar power and has the capacity to generate more than 45,000
MW, 5,000 MW and 10,000 MW of renewable energy from thesesources, respectively. With the current installed capacity of 2,000
MW, the country’s judicious investment in the various power sources
mentioned above will enable it to meet its growing domestic requirement besides satisfying the surging demand of its neighboring countries for power by quintupling the current capacity to 10,000 MW in
the next five to 10 years. In this regard, numerous power projects
worth billions of dollars are being implemented. Ethiopia has alreadysigned bilateral agreements with Djibouti, Kenya and Sudan to supply
electricity to this effect and transmission lines between these countries and Ethiopia are progressing well. Ethiopia’s investment policy
allows independent power producers to invest in the sector and sellbulk generation to EEPCo. With the country’s rich energy resource
potential from diverse sources, it is an area worth investing in.

Tourism

Corrugated iron sheet-manufacturing plant

Ethiopian processed leather goods

With its historic civilization, eight UNESCO-recognized World
Heritage sites, robust archeological locations and awe-inspiring natural beauty with wide varieties of flora and fauna as well as rich anddiverse culture, Ethiopia is uniquely placed as an important travel
destination in Africa. In addition, its distinct honor and privilege inJAPAN SPOTLIGHT • September / October 201031SpecialArticles 1
Photos: Ethiopian Embassy of Tokyo

birr (the Ethiopian currency) and a
total 4,918 foreign investment
projects worth 200,545 million
birr were approved by the EIA during the 1992/93-2007/08 period.
Investors in Ethiopia enjoy avariety of opportunities regarding
Axum, the center of 2,000Lalibela, 12th-century rock- Harar, the fourth most holiest Gondar, home to 17th-century
year-old ancient civilization hewn church
site of Islam
Castle of Fasilades
market access for their products.
Being a member of the Common
Market for Eastern and SouthernAfrica (COMESA), a regional economic grouping with a total population of around 430 million andexports to and imports from its
member states receiving preferenMt. Arteale, a breath-taking Lucy, one of our early ancestors making
Tis Issat, the source of the Blue Sof Omar Caves, one of thetial tariff rates, Ethiopia is no doubt
largest cave systems in the world active volcano
Nile
Ethiopia a cradle of humankind
a prime investment destination inserving as the headquarters of the African Union and UNECA, among
Africa. In addition, the country enjoys geographical proximity to theothers, make it an attractive location to establish world-class hotels,
Middle Eastern, Asian and European markets, providing ample opporturestaurants and resorts. In this relation, there are many possibilities
nities for exports. It also benefits from market access opportunities
for foreign investors to engage in this service sector.
given through the African Growth and Opportunity Act (AGOA) by theAccording to the Ethiopian Investment Agency (EIA), the country’sUnited States, the Everything But Arms (EBA) initiative by the European
investment code provides a multitude of attractive incentives for forUnion and a generalized system of preferences (GSP) offered by many
eign investors, including tax holidays, duty exemption for capitalother countries, including Japan, as well as the aforementioned abungoods and construction material for establishing new businesses
dant natural resources and favorable investment environment.
and expanding existing enterprises, and free remittance of funds as
Therefore, it is high time for Japanese businesspeople and entrewell as retention of foreign exchange earnings. Foreign investors arepreneurs, especially small and medium enterprises and large trading
allowed to invest in a broad range of economic activities either in thehouses interested in the above-mentioned sectors, to benefit from theform of 100% equity ownership or teaming up in joint ventures withattractive investment climate and incentives by investing in Ethiopia.
domestic partners. The government has also been exerting huge
The Ethiopian Embassy in Tokyo will be more than happy to respondefforts to improve the business environment in the country. In thisto any queries by prospective Japanese investors. It is also ready andregard, a number of reform measures have been implemented, withwilling to provide further information to them in their areas of interest.
the EIA providing services under a one-stop-shop arrangement andIn conclusion, I would like to express my sincere thanks to theinvestors getting their investment permit in a matter of few hours.
chairman and CEO of the Japan Economic Foundation (JEF), Mr.
The surge of both domestic and foreign investment in the country
Noboru Hatakeyama, and the editor-in-chief of Japan SPOTLIGHT,
clearly indicates the existence of a favorable business environment.
Mr. Naoyuki Haraoka, for giving me the opportunity to introduce
According to data from the National Bank of Ethiopia obtained from theEthiopia and highlight the investment potential in the country to theEIA, a total 29,796 domestic investment projects worth 257,535 million
readers of this esteemed magazine.*

Capital outlay ofapproved investment projects by source

Source: Ethiopian Investment Agency

32 JAPAN SPOTLIGHT • September / October 2010

* It is important to note that the executive director of the Ethiopian International
Institute for Peace and Development (EIIPD), Hon. Ato Sebhat Nega, made a productivevisit on May 23-28, 2010, at the invitation of Mr. Noboru Hatakeyama, JEF chairmanand CEO.
During his visit, Hon. Ato Sebhat held discussions with Mr. Hatakeyama on the possibilities of future cooperation between EIIPD and JEF and they agreed to work together
on joint research programs and training projects and, to this effect, a memorandum ofunderstanding (MOU) was signed by the two principals on May 26, 2010. The signingof the MOU has been indeed a successful outcome of the visit and laid the basis for thetwo institutions to cooperate in areas of their mutual interest.
The implementation of the MOU is crucial for further opening up of opportunities not
only for close exchanges and cooperation between the two think tanks, but also forenhancing the overall relationship between the two sisterly countries. The posting of
today’s article introducing my country’s investment potentials in Japan SPOTLIGHT, abimonthly publication of JEF, serves as a notable example in this noble undertaking.

Abdirashid Dulane is Ethiopian ambassador to Japan, also accredited to theRepublic of Korea, the Philippines and Indonesia.