Investment Opportunities in Ethiopia
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 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.
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.
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 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.
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.
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.
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.
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 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.
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.
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.