• Embassy of Ethiopia

Ethiopia’s industrial parks attracting FDIs

The industrial parks being built in Ethiopia have moved the east African nation into third position in Africa in attracting highest foreign direct investments (FDIs) in small and medium-sized manufacturing sector.

According to Mckinsey global institute, availability of affordable labor force in Ethiopia is the determinant for foreign direct investments inflows to Ethiopia to increase in the textile, appeal and leather sectors.

The labor cost to produce a T-shirt in Ethiopia is 0.14 US dollars, which is less than half of the cost needed to produce it in countries which have good reputations in the sector, such as Vietnam and China.

The quantity of products which Ethiopia exports to the global markets have shown a significant growth compared to the past ten years. However, given the country’s potential, the progress is insufficient, said Prof Fisehatsion Mengistu, who has worked in the finance sector for the past 45 years.

According to data obtained from the Ethiopian Investment Commission (EIC), 130 investors with a combined capital of 20.2 billion birr capital were licensed during the past few months and 101 of them are foreign companies. According to Prof Fisehatsion, precaution should be taken ahead in attracting foreign direct investments.

He said a mechanism should be put in place to boost the benefit of the country from the sector and follow up the full realization of the pledges made by investors in transferring knowledge and new technologies to Ethiopians.

Dr Admasu Nebebe, State Minister of Finance and Economic Cooperation, for his part said the quality of the FDIs which Ethiopia has attracted could be measured by their contribution in achieving the second Growth and Transformation Plan (GTP-II) and creating employment opportunities.

He said the industrial parks built in the country have created favorable conditions to attract quality and labor-intensify FDIs.

Vice President of the European Investment Bank (EIB), Pim van Ballekom, during his visit to Ethiopia last month stated the quality of FDI is measured by its contribution in addressing unemployment in a country.