Ethiopia’s foreign direct investment declines

Posted on Wednesday, 27 July 2011 17:28

Ethiopia’s foreign direct investment (FDI) continued on a downward spiral last year with the Horn of Africa country receiving just US$184 million in investment.

According to the 2011 World Investment report released by the UN Conference on Trade and Development UNCTAD, Ethiopia’s share of FDI inflows to Africa is just two percent.

“Unfortunately, the amount of FDI flow to Ethiopia has continued to decline, from an annual average of US$240 million between 1995 and 2004, to US$184 million in 2010,” reads part of the report.

The reports also shows that Ethiopia’s share of FDI in its gross fixed capital formation has declined by an annual average of 14.8 percent over the 1995-2004 period to a mere 3.2 percent in 2010.

“This is far below the average for Africa, which stood at 15.9 percent in 2010.

“There is strong argument for the Ethiopian government therefore to review its policies and programmes and rekindle its efforts to attract a greater share of both the global and continental flows of FDI,” added the report.

The Ethiopian government estimates that the country’s economy will grow by 11 percent this year.

“There is no question about our economic growth compared to the rest of African countries,” Tesema Mekuria, an independent economist said.

“But, we still need to do a lot in attracting FDI. There are policies, which need to be reviewed by the government.”

He said there were still many sectors of the economy that were closed to foreigners that needed to be opened up.

Ethiopia discourages foreign investment in sectors such as mobile phone networks, banking, insurance, electricity among others.

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