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Investment Policy I
Investment Procedures
| Investment Opportunities
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Privatization Program top
The Ethiopian Government launched a program for the privatization of state
owned enterprises in early 1995. Accordingly, the Ethiopian Privatization
Agency (EPA) was established to implement the privatization program in the
same year.
The Government has laid the
ground to privatize most of the state owned enterprises to the private
sector. Accordingly, EPA has received a stock of 113 state owned enterprises
from the government for privatization in the years ahead. As indicated in
EPA’s work schedule, out of these enterprises, a total of 43 state owned
enterprises are in the pipeline for privatization in the near future. Most
of these enterprises fall under manufacturing, construction, agriculture and
agro-industry, hotels, transport, trade, and mining sectors.
There is a strong
commitment from the Government side to fully privatize state enterprises in
the coming in few years.
Detailed information on the
process of privatization can be obtained from the Ethiopian Privatization
Agency.
Agriculture top
Agriculture is the main stay of Ethiopia’s economy providing employment to
85 per cent of the population. The sector contributes about 45 per cent of
the GDP and 62 per cent of total exports with coffee alone accounting 39. 4
per cent of total exports in 2001/2002. Furthermore, agriculture plays a
crucial role in providing raw material inputs for the local industry.
Endowed with wide
ranging agro-ecological zones and diversified resources, Ethiopia grows all
types of cereals, fiber crops, oil seeds, coffee, tea, flowers, fruits and
vegetables. The potentially irrigable land is estimated at 10 million
hectares. Ethiopia has the largest livestock population in Africa. Fishery
and forestry resources are also significant.
Considerable
opportunities exist for new private investment in the production and
processing of the above agricultural crops and resources. The following
areas in particular, have been identified to offer plenty of opportunities
to private investors.
Food Crops
The food crops grown include teff, wheat, maize, beans, peas, lentils,
soyabeans, chickpeas etc. In 1992/2000,Ethiopia produced 11.4 million tons
of these food crops on about 8.9 million hectares of land. This is far short
of the country’s demand for these crops. Great opportunities, therefore,
exist for commercial production and processing of these food crops. Some
pulses can also be produced or processed for the export market.
Oil
crops such as rapeseed, linseed, groundnuts, sunflower, ginger seed and
cottonseed serve as raw material inputs for the edible oil industry. Some
oilseeds, including sesame, are important export crops. Favorable agro-
climatic conditions also exist in the south-western parts of the country for
introducing coconut for the production and processing of palm oil and ghee.
Besides, Ethiopia has a
huge potential for producing and processing of maize. It is widely grown in
various agro-ecological zones. The total annual average production is 250
thousand metric tones in an area of about 1.4 million hectares. As part of
the government’s initiative to efficiently tap the available potential,
detailed project profiles have already been prepared for the processing of
coffee and corn.
Beverage Crops
Coffee is Ethiopia’s gift to the world. The country is Africa’s leading
producer of Coffee Arabica. Coffee remains the single most important cash
crop. The volume of coffee export was just over 110 thousand tons in
2001/2002. The potential for private production and processing of coffee is
significant.
Tea is also another potential
for production, processing and export. Ethiopia’s tea is of an excellent
quality. The total tea export for the year 2001/02 was 153 tons. The
favourable agro-climatic conditions in the country offer excellent
opportunities for production and processing of tea for both export and
domestic consumption.
Cotton
Cotton provides significant opportunities for export. A portion of existing
textile industry demand of lint cotton is met from domestic production, the
remaining being met through imports. In addition, there are good prospects
for exporting lint. Opportunities for production and processing of cotton in
Ethiopia are significant.
Horticulture
Ethiopia’s diversified agro-climatic conditions makes it suitable for the
production of a broad range of fruits, vegetables and flowers, including
citrus, banana, mango, papaya, avocado, guava, grapes, pineapple, passion
fruit, apples, potatoes, cabbages cauliflower, okra, egg plant, tomato,
celery, cucumber, pepper, onion, asparagus, water melon, sweet melon,
carrots, green beans and cut flowers. Ethiopia is believed to be center of
diversity and center of origin for various flowering plants. Cut flower and
vegetable production are fast growing export businesses; in
2001/02-production year over 29,000 tons of fruits and vegetables and 10
tons of flowers were exported. The agro-processing of fruits and vegetables
can be vertically integrated with production. There are already some
integrated agro-industrial processing plants run by a state enterprise. The
horticulture sub-sector in general holds great potential for private
investment.
Livestock
Ethiopia is one of the top ranking countries in Africa and among the first
ten in the world in terms of livestock resource. The livestock resources of
the country include 35 million cattle, 11.4 million sheep and 9.6 million
goats. Traditional methods of animal husbandry render current output per
unit of domestic breed of livestock too low. Therefore, investment
opportunities are potentially attractive for modern commercial livestock
breeding, production and processing of meat, milk and eggs. Investment
opportunities of significance potential are also available in ostrich, civet
cat and crocodile farming.
Fishery
Opportunities exist for fresh water fish production and processing using
artificial ponds. In addition, the country’s fresh water bodies have an
estimated annual fish production capacity of 30,000-40,000 tons, of which
less than ten per cent is presently being exploited.
Forestry and Apiculture
An estimated 2.5 million hectares of natural forest presently remains in 58
designated National Forest Priority Areas (NFPA). Of these, 13 are managed
under integrated forest management systems, with about 80,000 hectares of
industrial forest having been established for limited sustainable
exploitation. Investors are welcome to invest in integrated commercial
production of structural timber, pulp-wood, match wood or even fuel wood.
Production of rubber and natural gum also offers exciting opportunities for
private investment.
With some 3.3 million beehives,
Ethiopia is the leading honey and bees wax producing and exporting nation in
Africa. This offers excellent prospects for private investment in
apiculture.
Agricultural Services
Investment in the provision of agricultural support services such as pest
and disease control, technical consultancy, agricultural machinery, cold
storage, transport and marketing services offer considerable scope.
Manufacturing top
Manufacturing is now at an early stage of development, and currently
accounts for about 7 per cent of GDP and 5.3% of employment. It covers about
145 state owned and 643 private manufacturing industries of all sizes. These
industries are mainly engaged in the production of food products and
beverages, tobacco products, textiles, wearing apparel, tanning and dressing
of leather, footwear, luggage and handbags, manufacturing of wood and its
products, manufacturing of rubber and plastic products, manufacturing of
chemicals and chemical products, manufacturing of other non-metallic mineral
products, manufacturing of basic iron and steel, manufacturing of fabricated
metal products, assembling of motor vehicles, trailers and semi trailers .
As part of the
government effort to re invigorates and revitalize the manufacturing sector,
a new Industrialization Development Strategy has recently been adopted. The
Strategy clearly identifies the priority areas of the manufacturing
sub-sectors and put in place strategies that insure the development of
vibrant industries in the country.
Major manufacturing
opportunities offering attractive potential benefits to prospective
investors exist in the textile and garment, food and beverage, leather and
electronic, building materials and non-metallic mineral and metallic
industrial sub-sectors. These investment opportunities include:
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Food and Beverages:
processing and preserving of meat products; integrated production,
processing and preserving of fish and fish products; processing and
preserving of fruits and vegetables; integrated production and processing
of dairy products; manufacture of sugar; brewery, winery, soft drinks,
processing and bottling of mineral water, etc.
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Tannery, Leather Goods and
Articles: tanning
up to finishing; manufacture of luggage items, handbags, saddlery and
harness items, foot-wear, garment and integrated tanning and leather
goods.
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Textile:
spinning, weaving and finishing of textile fabrics and production of
garments.
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Glass and Ceramics:
tableware and
sanitary ware, sheet glass and manufacturing of containers.
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Chemicals, and Chemical
Products:
manufacture of
basic chemicals based on local raw materials, including PVC granules from
ethyl alcohol, formal-dehyde from methanol, manufacture of caustic soda
and chlorine-based chemicals, carbon black; activated carbon; precipitated
calcium carbonate and ball-point ink.
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Drugs and Pharmaceuticals:
manufacturing of
pharmaceutical, medicinal, chemical and botanical products in the form of
tablets, capsules, syrups and injectables.
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Paper and Paper Products:
pulp from indigenous raw materials, paper and paper products.
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Building Materials:
manufacture of
cement, lime, gypsum, marble, granite, limestone, ceramics, roofing tiles,
corrugated sheets, tubes, pipes and fittings.
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Electrical and Electronic
products:
manufacture of
office, accounting and computing machinery; manufacture of electric
motors, generators, transformers, capacitors, resistors, switch gears ,
electrical fittings and integrated circuit boards; manufacture of radio,
television, VCRs, printers, floppy disc drives, communication and other
equipment and apparatus for the domestic and export market.
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Metallurgy:
manufacture of basic iron and steel, operation of blast furnaces, steel
converters, rolling and finishing mills. Recycling of metal waste and
scrap. Manufacture of basic precious and non-ferrous metal; mechanical
working, heat treatment, pleating of ferrous and non-ferrous metals.
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Structural Products:
manufacture of structural metal products, reservoirs and steam generators.
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Machinery and Equipment:
assembly and manufacture of agricultural machinery and equipment,
industrial, transport and mining machinery and parts, construction
machinery, machine tools and accessories, miscellaneous light engineering
products, components and parts.
Mining top
Ethiopia offers excellent opportunities for mineral prospecting and
development. According to the Ministry of Mines and Energy, “Ethiopia’s
green stone belts offer one of the finest areas for gold mineralization any
where in the world,” and already more than 500 metric tons of gold deposits
have been identified by Government exploration efforts. Additional gold
reserves are expected to be identified in at least seven regions of the
country.
In addition to gold, Ethiopia
is blessed with good deposits of tantalum, platinum, nickel, potash and soda
ash. Included in the construction and industrial minerals are marble,
granite, limestone, clay, gypsum, gemstone, iron ore, coal, copper, silica,
diatomite, bentonite, etc. With regard to fossil energy resources, there are
significant opportunities for oil and natural gas in the four major
sedimentary basins, namely the Ogaden, the Gambella, the Blue Nile and the
Southern Rift Valley. Details of the mineral resources have been published
by the Ministry of Mines in two volume prospectus.
Tourism top
Tourists and writers who have been to Ethiopia wonder why Ethiopia’s tourism
potential is still so little known. According to December 12,2002 edition of
Our World, “Those who have discovered Ethiopia would probably like to
keep the secret to themselves.” In any case, the message is starting to
filter through. Tourism in Ethiopia is growing slowly but surely.
The country has a lot to offer
to tourists. Visitors will find landscapes comparable to its neighbouring
countries, Kenya or Tanzania, and awe-inspiring historical sites and
monuments similar to its other neighbour, Egypt.
The highlands of Ethiopia have
an attractive landscape, scenery and wildlife. In the African Rift Valley
system, a wide variety of wildlife and numerous bird species, both endemic
and common, are found and a substantial volume of traffic is directed to
this area. The magnificent Tis Issat Falls on the Blue Nile (Abay) river the
endemic wildlife in Semien Mountains, the Sof Omar Cave in the south east
are some of the interesting sites. The rock-hewn churches at Lalibela, the
ancient buildings of Yeha and the obelisks at Axum, the medieval palaces at
Gondar and the monasteries of Lake Tana, Debre Damo aand Debre Libanos are
the main tourist attractions.
Given its unique cultural
heritage, magnificent scenery, pleasant climate, rich flora and fauna,
important archaeological sites, friendly and hospitable people and the
recent growth in the inflow of tourists, Ethiopia’s potential puts it among
the leading tourist destinations in Africa. Tourism infrastructure, which is
still inadequate, should be developed in order to cope with the growing
traffic. There are, therefore, great opportunities for private investment in
hotels, lodges and international restaurants.
Infrastructure top
The Ethiopian Government recognizes that the delivery of infrastructural
services, such as transport (road, rail and air), telecommunications and
postal services, energy and water have a long way to go before they meet the
demand of investors. It is, therefore, making heavy investment in
infrastructure development through on-going power, telecommunications and
road sector development programs to relieve supply constraints and improve
quality of services. Besides, it is widening the opportunities for private
sector participation in the development of infrastructural facilities.
The Government is planning to
assign 40 per cent of road maintenance works to the private sector
contractors in the short term and increase the level to 100 per cent in 10
years. The power sector program has a plan to increase power generation
capacity from 327MW to 663MW by 2004/05. The private sector has a role to
play by involving in generation and off-grid transmission and distribution
of electrical energy as well as generation of electricity to supply the
national grid based on power purchase agreement with government.
In recognition of the huge
investment capital required to develop infrastructural facilities that are
crucial for economic development, the Government is considering viable
options in the short-to medium-term. The short-and medium-term alternatives
include finding a strategic partner in the operation and development of
telecommunication infrastructure.
Services top
Opportunities exist for private investment in the following services:
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exporting
the country’s various products except traditional export products like raw
coffee, oil seeds, pulses, etc. by way of undertaking market promotion,
quality improvement or packaging;
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construction ,comprising first grade contracting and rental of
construction machinery as well as real estate development;
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social
services, such as health, education and sports facilities;
Other projects in these sectors
are to be identified by potential investors.
For more details refer to the web site of the
Ethiopian Investment Commission:
www.investinethiopia.org
Investment Policy I
Investment Procedures
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