INVESTING IN ETHIOPIA Agenda 1 Setting the context

INVESTING IN ETHIOPIA

Agenda 1 Setting the context 2 Sector overview 3 Key priorities 4 Role of Ethiopian Diplomatic Missions Abroad

In the past five years FDI flow to Ethiopia has increased by more than four fold from a little over 1 billion USD to more than 4. 2 billion Total FDI inflow & share of manufacturing FDI 2006/07 - 2016/17 (in USD million) 4500 4000 3500 3000 2500 2000 1500 1000 500 0 2007/08 2008/09 2009/10 2010/11 2011/12 Total FDI 2012/13 2013/14 2014/15 2015/16 2016/17 Manufacturing FDI Source: Ethiopian Investment Commission: National Bank of Ethiopia, USAID - Ethiopia Performance Monitoring and Evaluation Service (EPMES) 2017 3

Targeted investor recruitment strategy and other investor-friendly reforms contributed to these achievements üTargeted and high-quality investments üInfrastructural development üInvestment policy reforms through Ethiopian Investment Board 4

Industrial Parks: Key instrument and catalyst to drive Ethiopia’s industrialization agenda More than 10 public industrial Parks Additional 6 parks by private developers Key principles ü Specialized parks ü Export oriented ü Vertically integrated ü Sustainability ü Skills development 5

Industrial parks played a key role in attracting globally leading investors and steadily increasing employment opportunities and exports üAttracted globally leading investors üIncorporated state-of-the-art technologies meeting global standards in the industry üExport: USD 13. 8 million per month. (Figure for December 2018) üEmployment: total of 61, 392 employees (Figure for December 2018) Ethiopia's export under AGOA has jumped by 62 percent between October 2017 and September 2018 6

Agenda 1 Setting the context 2 Sector overview 3 Key next steps 4 Role of Ethiopian Diplomatic Missions Abroad

Agribusiness: - FDI had played major role in filling the domestic investment gap and enhancing linkages with global markets • Export increased from zero to about 300 million USD per year. • 2 nd in floriculture exports in Africa and among top 4 exporters in the world. • Created over 180 thousand jobs, • Ample rooms for attracting additional investment: • EIB reforms in the agri-business sector 8

Service Sector: - Second most important destination for FDI – accounting about 10% in average • Key sectors for investment promotion – hospitality; – healthcare; – ICT; – education; – renewable energy – logistics. 9

Tourism: - FDI played major role in enhancing Ethiopia’s tourism sector ETHIOPIA’S TOURISM SECTOR POTENTIAL • Tourism is expected to play a significant role for Ethiopia in terms of contribution to GDP and employment. • 8 international chain hotels operational 12 in the pipeline • Large and untapped potential • Natural, historical, and cultural attractions • Excellent network of national parks • UNESCO World Heritage Sites • Sectors performance is much bellow its potential • Investment attractions: ABSOLUTE LONG-TERM • star-rated hotels, lodges, restaurants and GROWTH • grade 1 tour operators 94 154 22 11 2017 forecast Size in 2016 10

Agenda 1 Setting the context 2 Sector overview 3 Key Priorities 4 Role of Ethiopian Diplomatic Missions Abroad

Objective is to maximize Ethiopia’s investment attraction, retention and expansion potential FDI Africa Reduced FDI inflows due to limited marketing efforts US$ 54 billion Marketing Valve 1 2 Limited visibility Ethiopia´s FDI attraction potential* 3 Losses due to unattractive business climate and competitiveness issues Losses due to limited investor assistance and aftercare FDI Ethiopia 6 -8 % OF REGION US$ 3 -4 billion 12

What are the key next steps to enhance FDI promotion and linkages? (1/4) Solidify investment promotion and attraction strategies ▪ Focus investment promotion and attraction on a select set of sectors – Export oriented, – Labor intensive, – Enhancing agricultural productivity, and – Next generation of strategic industries ▪ Target policy efforts on investment retention and expansion, not only on investment attraction 13

What are the key next steps to enhance FDI promotion and linkages? (2/4) Capitalize on existing political and economic reforms in Ethiopia and the region ▪ Broad based reforms in the political domain ▪ Economic reforms – Plan to attract additional investments in telecom, transport and logistics, energy etc. ▪ Positive political landscape in the region sends positive signal to foreign investors – Normalization of relations between Ethiopia and Eritrea – Eritrea and Somalia – Ongoing discussions between Eritrea and Djibouti 14

What are the key next steps to enhance FDI promotion and linkages? (3/4) Resolve general investment climate constraints • Ethiopia ranks low in terms global benchmarking reports e. g. DB • These constraints impact perception of investors toward Ethiopia • Renewed government commitment 15

What are the key next steps to enhance FDI promotion and linkages? (4/4) Create synergy between trade, industry and investment policy reforms W n me TO est Inv oti rom tp • Review the investment law regime to allow more private sector participation on • Enhance regional and multilateral integration Af. CFTA 16

Agenda 1 Setting the context 2 Sector overview 3 Key next steps 4 Role of Ethiopian Diplomatic Missions Abroad

Diplomatic missions play a key role in promoting Ethiopia as a competitive investment destination What are the gains to be had from Diplomatic missions? • Locational and diplomatic advantages • Ability to create strong relationships with potential investors • Play a key role in policy advocacy ( champion best practices ) Key Role: Increase Ethiopia’s visibility in collaboration with EIC and other agencies CAMPAIGN PLANNING LEAD GENERATION / QUALIFICATION CAMPAIGN EXECUTION FOLLOW-UP 18

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