Sunday, November 18, 2012

Is Ethiopia ready for foreign investment?

(Nov 18, 2012, BBC)--Ethiopia was once a byword for poverty and famine. It is still one of the poorest countries in the world, with an estimated third of the population earning less than $1 (63p) a day, but the country also has one of the world's fastest growing economies.

Opinion is sharply divided, however, as to whether or not it is wise to invest in the country. Since 2004, its economy has been expanding by about 10% a year. The government expects growth to continue in double digits - but a report by the International Monetary Fund (IMF) suggests it will slow to 6.5% in 2013.

Even the IMF predictions are impressive, however, considering the current global financial climate and the fact that unlike many other countries on the continent, Ethiopia does not have much in the way of natural resources.

Coffee is one of the biggest export earners in Ethiopia. In Addis Ababa, the country's capital, coffee exporter Michael Girma says it was a challenge to launch his business. "To start up in the export sector, you need to perform with your own cash. Then after that, you can approach the banks," he says.

Apart from exporting coffee, he now also owns a cafe, a bar, and a pizzeria, employing 140 people altogether. Although the business environment is getting very competitive, he is achieving a profit margin of 20-30% each year and feels confident about the future.

"A lot has changed in the last seven years," Mr Girma says. "You need to be aggressive, but not arrogant." Although foreign investors are encouraged, many sectors are reserved for domestic investors. Read more from BBC »

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