Ethiopia has sounded its concern over foreign investors’ failure to actualize their investment projects, a Trade and Industry Ministry report sent to the country’s parliament has revealed.
According to the report, the ministry’s performance over the last five years shows that over 40,000 investors, with a total working capital of 956.76 billion birr, had obtained investment licenses.
Among the 40,000 investors, 7,208 were foreign with a 375.5 billion birr investment capital. This group represents 39 per cent of the total investment capital, according to the report.
The number of investment licenses issued to foreign investors has been growing at an annual rate of 60.6 per cent, and 81.8 per cent for their investment capital. Their actual implementation, however, explains the report, remains a concern.
Only about 20 per cent of the licensed foreign investors have so far begun operations due to the bureaucratic nature of the Ethiopian customs and financial institutions. “We have identified the challenges within these institutions, and we are presently trying to take remedial actions” said the report. It however fails to mention the type of actions they intend to take.
Obtaining loans and opening Letters of Credit for foreign investors have also been enumerated as some of the major issues affecting the country’s infant and rigid financial sector.
Foreign countries interested in the Ethiopian investment potential have been strategically trying to overcome finance problems being faced by their investors by opening representative offices of their banks. Germany and China have established representative offices to facilitate loans to their investors.
Last week, an Egyptian national bank opened its office in Addis Ababa and signed an agreement with six local Ethiopian banks. “The agreement reached with the local banks will allow Egyptian investors to easily access Letters of Credit for the importation of equipment, or anything essential for their investment”, says Tarek Amer, chairman of Egypt National Bank.