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‘Ethiopia is emerging as manufacturing hub in Africa’

Dec 30, 2020
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Ethiopia, one of the mineral rich countries of East Africa, has been scouting for Indian investment. Besides huge gold reserves, the country has been a significant producer of opal, sapphire, and emerald in recent years. The field is wide open for investors to bring these extraordinary gemstones to the global market. The other resources discovered in different regions of the country include tantalum, phosphorus, iron, salt, potash, soda ash, coal, geothermal and natural gas. Demeke Atnafu Ambulo, Consul General of Ethiopia in Mumbai, shares his views with BusinessLine on opportunities for Indian companies. Edited excerpts:

What is the current trade between India and Ethiopia?

Economic relations between India and Ethiopia can be traced back to over 2,000 years. During the Axumite Kingdom, Indian traders had links with the ancient port of Adulis in the eastern part of Ethiopia and traded silk and spices for gold and ivory. India’s total trade with Ethiopia stood at $1.27 billion in 2017-18, of which India’s exports to Ethiopia were $1.23 billion and imports were $47.45 million. Ethiopia’s exports to India reached $98.7 million in 2019-20. Agricultural crops such as oilseeds, pulses and spices account for 60 per cent of Ethiopia’s exports to India. This apart, we ship out minerals such as gold, tantalum, gem stones and leather products.

What is India’s investment in Ethopia?

Indian companies are among the top three foreign investors in Ethiopia. There are over 620 Indian companies in Ethiopia with an investment of over $5 billion, of which about $3 billion is estimated to be on the ground. Indian companies have invested in agriculture and floriculture, engineering, plastics, manufacturing, cotton and textiles, water management, consultancy and information and communication technology, education, pharma and healthcare.

Also read: Ethiopia opens new business Chamber in Mumbai

What are the concessions offered to India companies?

Ethiopia is fast shaping up as the largest manufacturing hub in Africa due to its competitive edge coming from abundant industrial raw materials and competitive labour, subsidised energy cost and geographic proximity to key markets. The country enjoys duty-free quota-free exports to the US and European Union markets, continental Africa Free Trade, gateway to Africa, cheap electricity at $0.04/kwh, monthly water tariff of $0.08/m3 and competitive labour at $40-$135 a month. Land lease is available for up to 99 years and renewable. Income tax is exempted for six years. Import duty is exempted on all machineries, equipment, construction materials, spare parts and vehicles, and (there is) guarantee for repatriation of funds.

Is the political uncertainty a concern for Indian investors?

In November, the government undertook law enforcement measures in Tigrai region, Northern Ethiopia, to restore peace and stability. This operation lasted for three weeks and was completed on November 29 by restoring peace and stability in the region. Since then the country is more stable and the government’s efforts are geared towards sustaining peace and security, where stable socio-economic governance is prevalent throughout the country. The government led by Prime Minster Dr Abiy Ahmed is committed to both political and economy reforms aimed at deepening democracy and rule of law in Ethiopia.

What is the impact of the Covid-19 pandemic on Ethiopia?

The first Covid-19 case in Ethiopia was reported in March. Unlike many countries, we never went into full lockdown. Economic and social activities continued to operate, while implementing strict measures to halt the spread of the virus. A communication strategy and state of emergency were in place to reduce the prospective risks of Covid-19. The government has strengthened its preparedness and response efforts to combat the pandemic.

Also read: Ethiopia warns Tigray residents that ‘anything can happen’

Has businesses come out of the pandemic?

The government has introduced financial and non-financial incentives to enable productive sectors, especially small and medium sectors, to continue their operation. The main social protection response to Covid-19 in Ethiopia has come through the Productive Safety Net Programme that operates in urban and rural areas. The programme provides monthly cash or food transfers against labour-intensive public works that build community assets. Though Covid-19 impacted the health and socio-economic sectors, Ethiopia is one of the few countries that registered economic growth of 6 per cent last financial year.

Which are the sectors where Ethiopia is seeking Indian investment?

The priority areas for investment include agro-processing, pharma, chemicals, textiles, garments, ceramics, glass products, leather products, metallic minerals products, metal and engineering, computers, electronic and optical products, paper and paper products, machinery equipment, rubber and plastic products. We have expedited the visa procedure, one-stop service under the Ethiopian Investment Council including pre-establishment licensing and registration. Post investment plan approval, we provide care services and customs facilitation through bonded export factory and similar other schemes.

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