Ethiopia launches its “Doing Business Initiative”
18 April 2019

The Ethiopian government launched the “Doing Business Initiative” with which it aims to create a more favorable environment to attract foreign companies and increase ease of doing business in the country. The new national initiative is part of a cycle of economic reforms introduced by Prime Minister Abiy Ahmed, who took office exactly one year ago, in April 2018. “The reform measures will be monitored by the government and coordinated by the Ethiopian Investment Commission (EIC),” the prime minister’s cabinet wrote in a statement. The initiative – said Ahmed himself – “will make Ethiopia a competitive place to start and grow businesses.

The focus is on streamlining bureaucracy, which will focus on five points: starting a business, building permits, property registration, access to electricity and access to credit. In a review meeting on the progress of the initiative, launched at the end of December 2018 and being implemented, Ahmed stressed that, as regards start-ups, a measure is being studied to facilitate access to credit. to place movable assets as collateral.

With the aim of attracting foreign companies, Addis Ababa is planning to build fifteen industrial parks throughout the country, of which five have already entered into operation. The last one was inaugurated in early March in Debre Birhan, 130 km north-east of the capital: an area of ​​75 hectares, costing 71 million dollars. On the agenda there are six other projects to be implemented in the short term. Leading the construction of this infrastructure, which is part of the ambitious plan to make Ethiopia the manufacturing center of Africa, is the Ethiopia Industrial Park Development Corporation (PIDC).

The results can already be seen: in 2018 foreign direct investments towards Ethiopia reached the threshold of four billion dollars, thanks above all to the political and economic reforms introduced. This was said by the Head of the Ethiopian Investment Commission (EIC), Abebe Abebyehu, underlining how the level of investment in Ethiopia has grown steadily over the past four years. Among the measures that have helped to improve the perception of international investors and prompt them to actively seek opportunities in Ethiopia are political reforms are the strengthening of diplomatic relations with different countries and efforts for peace in the Horn of Africa, as well as the government’s decision to privatize some large state-owned companies. In 2017, the value of foreign direct investments towards Ethiopia was approximately 3.6 billion dollars.

The purpose of the Doing Business Initiative is not only to increase the presence of foreign companies in Ethiopia but also, as the premier has repeatedly stated, to tackle the problem of unemployment: «Ethiopia needs jobs: successful businesses and entrepreneurs drive employment growth, ”he said, stressing that his government has “an essential role in identifying and reducing the constraints that prevent the private sector from growing”.

Ethiopia, with over 105 million inhabitants, is the second most populous nation in Africa after Nigeria, with 190 million. According to the International Monetary Fund, it will record the continent’s greatest economic growth in 2019, with GDP expected at 8.5% during the current fiscal year which ends on 7 July 2019.

In one year at the helm of the government, Abiy Ahmed revolutionized Ethiopia. From a political point of view, peace with neighboring Eritrea has restored stability in the Horn of Africa, with positive effects on the economy: trade has resumed and can still strengthen thanks to the newfound access to the sea in the Eritrean port of Assab, due to the reopening of borders.