Investment Opportunities
Privatisation Programme
The Ethiopian Government
launched a programme for the privatisation of
state owned enterprises in early 1995. Accordingly,
the Ethiopian Privatization Agency (EPA) was
established to implement the privatisation programme
in the same year. The Government has laid the
ground to privatise 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 privatisation
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 privatisation 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 privatise state enterprises in
the coming in few years. Detailed information
on the process of privatisation can be obtained
from the Ethiopian Privatization Agency.
Agriculture
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
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:
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.
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.
Textile: spinning, weaving and finishing of
textile fabrics and production of garments.
Glass and Ceramics: tableware and sanitary ware,
sheet glass and manufacturing of containers.
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.
Drugs and Pharmaceuticals: manufacturing of
pharmaceutical, medicinal, chemical and botanical
products in the form of tablets, capsules, syrups
and injectables.
Paper and Paper Products: pulp from indigenous
raw materials, paper and paper products.
Building Materials: manufacture of cement, lime,
gypsum, marble, granite, limestone, ceramics,
roofing tiles, corrugated sheets, tubes, pipes
and fittings.
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.
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.
Structural Products: manufacture of structural
metal products, reservoirs and steam generators.
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
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
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
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
Opportunities exist for
private investment in the following services:
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;
construction ,comprising first grade contracting
and rental of construction machinery as well
as real estate development;
social services, such as health, education and
sports facilities;
Other projects in these
sectors are to be identified by potential investors.
