Investment Environment Overview
It is an undeniable fact that Ethiopia has made a considerable progress in economic and social development since 1992 as a result of the implementation of favorable policies and strategies
that are instrumental in improving the national economy. The Rural Development Policy and Strategy, the Industrial Development Strategy, and other sectoral policies and strategies have initiated a new push towards creating frameworks conducive to economic and social development.
The Rural Development Policy and Strategy, which is under implementation in the country, underlines that agriculture-led development will bring about fast economic growth, enable its people become beneficiary of economic growth, and lay solid foundation for industrial development.
The Industrial Development Strategy focuses on export manufacturing with priority given to textile and garments, leather and leather products, agro-processing, and small and micro-enterprises. The Government of Ethiopia, in recognition of the role of the private sector in the economy, has revised the investment law over three times for the last twenty years (1992-2012) to make it more transparent, attractive and competitive. Major positive changes regarding foreign investments have been introduced through Investment Proclamation No.280/2002 and Regulations No.84/2003.
As a result of the implementation of the above mentioned policies and strategies, agricultural and industrial production, investment and export trade are growing steadily from year to year both in terms of variety and volume. Export earnings from gold (187.6 percent), fruits and vegetables (160.3 percent), live animals (72.3 percent), chat (51 percent), pulses (43.4 percent), coffee (40.6 percent), fl ower (30.2 percent), meat (27.8 percent), oil seeds (0.7 percent) and other (23.2 percent) have been increased in 2009/10. The World Bank has also witnessed the double-digit economic growth registered in the last several years.
This achievement is the highest among the non-oil producing economies of Africa. Due to the investment-friendly environment created in the country, the infl ow of foreign direct investment (FDI) has been increasing over the last twenty years. Accordingly, out of the total investment projects licensed between 1992- 2012, FDI’s share is about 15.71 percent.
However, the overall trend of investment in 2009/10 both the total number of projects and capital invested have shown decline. Ethiopia remains an untapped and unexploited market for investors. China, India, Sudan, Germany, Italy, Turkey, Saudi Arabia, Yemen, the United Kingdom, Israel, Canada and the United States are the major sources of FDI.