Ethiopia further opens up sectors to diaspora and foreign nationals | ZeHesha

Ethiopia further opens up sectors to diaspora and foreign nationals

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By Samuel Getachew
October  07, 2020

Members of the Ethiopian diaspora, the largest outside of Ethiopia, cheer as they respond to remarks by Ethiopia’s Prime Minister Abiy Ahmed, calling on them to return, invest and support their native land in Washington, U.S., July 28, 2018. REUTERS/Mike Theiler

As part of Ethiopia’s plan to liberalise its economy and boost investment, it is set to open up sectors that were once reserved for domestic investors. The new regulation is an extension of the country’s new investment proclamation, which came into effect earlier this year that gives equal playing field to Ethiopian-born foreign nationals and foreign investors.

“[There are] more opportunities for us as the economy opens up to invest our resources in our birth country, says Addis Alemayehu, an Ethiopian-born Canadian investor engaged in IT and one of the leading Communications firms in the country.

While Ethiopia had encouraged the diaspora to invest in the nation, its relationship quickly soured following questions of human rights and democracy from activists based in western nations.

“We were even banned to sell our own shares in commercial banks when the government abruptly cancelled our rights to do so and we are now back to having been granted rights to own and sell and buy shares in banks” says Bethlehem Seifu, an owner of a digital company engaged in e-commerce.

Diaspora contribution

In the last two years since Abiy Ahmed became Prime Minister, the contribution via the diaspora in Ethiopia’s economy has shown a significant growth. Two commercial banks with an aggregate capital of $400m are under formation by Ethiopian-born foreign nationals living abroad.

Annual remittance inflow also averaged $5.5bn over the last years; a significant growth from the $4bn average registered over five years before 2018.

“The diaspora will invest significantly in the coming years in the financial services sector since they have the legal security of ownership, unlike the past. We already see new financial services companies like mortgage banks and Fintechs under formation which now include diasporas as shareholders, says Zemedeneh Nigatu, a renowned Investment Advisor in Ethiopia.

The investment regulation also listed sectors authorised for local investors (which includes Diasporas based on its new definition) and foreigners. The cement sector, for instance, is among sectors opened up to new foreign entrants.

Cement sector

“Dangote cement is the last company that was authorised to invest in the cement sector. Making expansions and giving licenses to new entrants was not allowed for the last five years, eventually resulting in a supply gap,” says Simegn Degu, Cement and Related Industry Research Development Technology Director at Chemical and Construction Inputs Development Institute.

Degu believes the new investment regulation will encourage new entrants to invest in the cement sector.

“This will also help the country give a long-term sustainable solution to the cement shortage it has been facing in recent years,” he adds.

Logistics sector

The logistics sector is also partially liberalised under the new regulation. While it opened up the sector to foreign investors, they are also required to make a joint venture with local companies and are not allowed to have more than 51% stake.

“Logistics is a major challenge for Ethiopia. It is a main reason for our failure to compete globally. Full liberalisation would have been even better. Foreign capital and know-how is vital to improve our capabilities there,” says Henok Assefa, an Investment Consultant with Precise Consult.

According to Doing Business 2020, it takes 194 hours just for documentary compliance to export and 72 hours for border compliance to trade across borders. Cost to export for documentary compliance is $750; three times higher than that of Rwanda.

Logistic hurdles have even discouraged exporters and made Ethiopia’s export commodities just as expensive as logistics’ expenses – sometimes three times higher than the original price of the exported goods.

On 1 October, the first transport policy and logistics policy was discussed with stakeholders. Mekonnen Abera, the Director General of the Ethiopian Maritime Affairs Authority, said a regulation to further open up the multimodal sector for private actors was sent to the Council of Ministers.

Speaking to Capital, Mekonnen noted: “The [logistics] sector has received attention from the government,” adding there are about 100 intervention areas that are awaiting a response from Addis Ababa.

Power and transport sector

The regulation fully liberalised the power sector, except for exports of electricity in which foreign investors are required to partner with the state. The new regulation also allows foreign investors to engage in generation and distribution of electricity. This had been was under the monopoly of the government before the introduction of the country’s public private partnership law in 2016.

The transport sector is also liberalised under the new regulation, which allows foreigners to invest in transport services, including air, railway, ground cable car transport, cold-chain transport and marine and freight transport.

Furthermore, foreign investors can invest in sectors such as advertisement and promotion services, audiovisual services, motion picture and video recording, production and distribution and accounting and auditing services, but they cannot have more than 49% stake if they wish to invest in these areas.

Financial sector

Meanwhile, the financial sector remains closed to foreign investors in a bid to protect local banks, which are less capitalised compared to international companies.

Nigatu suggests strengthening the local banks and preparing them for international competition before opening up the sector. He recommends consolidation (mergers) of the relatively small 16 private commercial banks into 4 or 5 very large ones. “Banking is a scale business, you need a strong balance sheet to compete,” he says.

“Ultimately, the financial services sector will open up to international banks, it’s a question of timing,” adds Nigatu. “One thing to keep in mind, the international banks that will be keen to invest in the Ethiopian banking sectors are primarily from Africa including Kenya, South Africa and Nigeria.”

Western banks from the US and Europe are not in the expansion mode in Africa and in fact in many countries they have curtailed their retail banking business and focus mostly on corporate banking or in some cases, like Barclays, pulled out of Africa completely.

8 Comments

  1. That is the right thing to do. There is substantial capital that has been accumulated over the years in the hands of the Diaspora. Lets go!!!!

  2. It should be noted that calling Falashas “Budda” is made a hate speech crime in Ethiopia since the word “Budda” is nothing but a myth created to demoralize the Falashas. There is no such race or identity called Buda in Ethiopia or in Israel. There is no such group of people that got special power causing pain on others by only using their eyes to stare at their victims who they harm. There is no such people who got “Budda eyes” as legend in Ethiopia says “there are people who eat other people by just using their eyes”. This legend was done to stop Oromuma from immersing Falashas.

    No scientific proof exists supporting that the majority of the Ethiopian Jews are Buddas as Emperor Yohannes created this uncolabarated myth to scare off Oromos and other kushitic people in Ethiopia from being within a sight of the Ethiopian jews . No proof is documented yet in Israel about these “Budda” people the Tigray/Amara emperors kept talking about in a demeaning way . There are no Falasha Ethiopian jews people on earth be it in Israel or be it in Ethiopia who got special mental abilities which they use to cause sickness and death on others by just staring at their victims.

    Let’s tell our children the truth about the reasons why the Amara Tigray emperrors alienated those Israel jews living in Ethiopia from the Ethiopian society by calling them Buddas who engage in attacking people causing sickness and death by just staring at their victims.
    Some of the major reasons are:
    1. it is so the past emperors enslave the Jews as their personal machete makers.
    2. It is so muslim Ethiopians don’t preach religion to immers the Falasha Jews in person.
    3. It is so Oromos get scared of people who migrated from northern part of Ethiopia towards the Oromo’s lands.
    4. It is to exert the Orthodox hegemony over Ethiopians.

  3. ለሻለቃ አስቻለው ቤተሰብ ትብብር እንድታደርጉ ተጠይቃችኋል!
    ስለአማራ ብሎም ስለኢትዮጵያ ሲል ውድ ህይወቱን የከፈለው የሻለቃ አስቻለው ደሴ መታሰቢያ መስከረም 27 ቀን 2013 ዓ.ም

  4. It is ridiculous to say that the people of the Tigray region have denied the recognition of the government formed by the people, and that I am meeting with the woreda and kebele. Like it or not, the TPLF has been elected by more than 98% of the people of Tigray. For that matter, when the TPLF is called the Hyena of the Day; At a time when the TPLF was called a thug group, and when the TPLF was said to have plundered the country and hid in Mekelle, the people of Tigray came out in droves and the TPLF was shocked. Now, insulting the TPLF means insulting the people of Tigray, and insulting the people of Tigray means I know you. That is why we say that the Abyssinian government is a dependent system that seeks to restore a dictatorship that claims to know you.

    People of Tigray: My government is not a government that does not respect my choice. He says the force that I have chosen is unconstitutional and anti-“right to self-determination” and that there is no need to fight like the Derg.

    As you know, the term of the Ethiopian House of Representatives and the House of Federation expires on September 25, 2013. They are the former councils. These councils are currently in the process of handing over their powers to the arbitral tribunal, but they cannot pass any law affecting the regions, the people, or the citizens, nor can they use government funds or property. Therefore, the current houses of the Federation and the House of Representatives are illegal.

    Today’s so-called House of Federation decision, September 25, 2013. If he decides to do so, The decision was considered a declaration of war in the Tigray region. The reason is that there is no budget that prevents the federal government from giving if it wants to. The budget of the federal government is collected from the states, borrowed and provided in the name of the Ethiopian people, not the wealth created by the government. According to the constitution, the government’s domestic revenue is divided into three parts: federal revenue, state revenue, and joint (federal and state) revenue. State revenue is collected by the state itself and used for its own benefit; Federal revenue and common revenue are collected and shared equally by the federal government. Federal revenue is collected by the federal government itself and used for federal government projects and state subsidies. This is clearly stated in our collective treaty or in our constitution. This Agreement is not intended to be amended or violated. No body can decide on a constitutional decision without the participation of a state.

    በዚህ መሰረት አንድን ክልል ራሱ የሚሰበስበው ገንዘብ እና ከፌደራል የሚበጀትለት ድጎማ አንድላይ አድርጎ ክልሉ ባቀደው መሰረት ወጪ ያደርጋል ይተገብራል፡፡ ይህም የክልል ምክርቤት ይቆጣጠረዋል፣ የክልሉ ጠቅላላ ኦዲተር ኦዲት አድርጎ ለምክርቤት ያቀርባል፡፡ ምክርቤቱም በሪፖርቱ መሰረት ተወያይቶ ውሳኔዎች ያሳልፋል፡፡

    ፌደራል መንግስትም ያቀደው ፕሮጀክት፣ የፌደራል የሚባል ልዩ ግዛት የለም እና በክልሎች ራሱ ወርዶ ወይም በትብብር ይፈፅማል ወይም ተግባራዊ ያደርጋል፡፡ይህም የፌደራል ተወካዮች ምክርቤት ይቆጣጠረዋል፡፡የፌደራል ጠቅላላ ኦዲተር ይመረምረዋል ሪፖርትም ለፌደራል ተወካዮች ምክርቤት ያቀርባል፡፡የተወካዮች ምክርቤቱም በሪፖርቱ መሰረት ተወያይቶ ውሳኔዎች ያሳልፋል፡፡

    ከዚህ ውጭ የክልል ምክርቤት በፌደራል ፕሮጀክትና ባጀት ገብቶ ሊፈተፍት አይችልም፤ የፌደራል ተወካዮች ምክርቤትም የፌደሬሽን ምክርቤትም በክልል ባጀት ወይም ድርሻ ገብቶ ሊፈተፍት፣ ሊቆጣጠር፣ ሊከለክል ፈፅሞ አይችልም፡፡

    በህገመንግስቱ መሰረት አንድን ክልል እንደ ክልል የድጎማ ባጀት ሊከለከል አይችልም፡፡ አንድ ክልል የሰበሰበው ገንዘብ ይሁን፣ ፌደሬሽኑ ባወጣው የባጀት ቀመር መሰረት በድጎማ የተሰጠው ባጀት፤ የክልሉ ምክርቤት ባፀደቀው ዕቅድና ባጀት መሰረት ያውላል፣ ከክልሉ ምክርቤት ውጭ ማንም የፌደራል አካል መጥቶ ለምን እዚህ ታውላለህ ብሎ ሊጠይቅ ወይም ሊከለክል የሚችልበት ህጋዊ መሰረት የለም፡፡ ክልሉ ገንዘቡን አውጥቶ ቢያቃጥል እንኳን የሚጠይቀው የክልሉ ምክርቤት ነው፡፡

    ክልሉ በባጀት አጠቃቀም ችግር ካለበትም፤ ማንም ይመለከተኛል የሚል ወገን አስተያየት እና ቅሬታ የማቅረብ መብት ቢኖሮውም፤ የማስተካከያ እርምጃ የመውሰድ መብት ግን የለውም፡፡ በባጀት አጠቃቀም በእቅድ አፈፃፀም እርምጃ የሚወስደው የክልሉ ምክርቤት እንጂ የፌደሬሽን ምክርቤት ወይም ሌላ ወገን አይደለም፡፡ የፌደሬሽን ምክርቤት፣ እኔ ስላላመንኩበት ብሎ በባጀት ቀመር መሰረት የተደለደለ የባጀት ድጎማ መከልከል ወይም እርምጃ መውሰድ አይችልም፡፡ ይህ ካደረገ በጋራ ስምምነት የፀደቀውን ህገመንግስት ሆን ብሎ አንድን ህዝብ ለመቅጣት ተጣሰ ማለት ነው፡፡ ስለዚህ ህገመንግስት የሚያስከብሩ ተቋማት በዚህ ላይ የራሳቸው አቋም በመውሰድ እንዲያስተካክሉ ዕድል ይሰጣል ካልሆነ ተበደልኩ ያለውን ክልል የራሱን እርምጃ ለመውሰድ ይገደዳል፡፡ ይህ ህጋዊ አሰራርን ተከትሎ ህጋዊ ምክርቤቶችን ባሉበት የሚደረግ ነው፡፡ አሁን ያለው የአገራችን ጉዳይ ግን ከትግራይ ክልል ውጭ ሌላ ማንም ህጋዊ የክልልም የፌደራልም መንግስት የለም፡፡ ስለዚህ አሁን በስልጣን ላይ ያለው መንግስት በፌደራል መንግስት ስም ውሳኔዎች መወሰን፣ ህጎች ማውጣት አይችልም ቢያወጣም በህጋዊው ክልል ተግባራዊ አይሆንም፡፡

    The only option now is for this illegitimate government to step down and hand over power to the caretaker government and for the trustee government to hold free, democratic and credible elections in a short period of time. If not, Once again, the security forces responsible for upholding the constitution should be given the opportunity to overthrow the illegitimate body and form a caretaker government. Otherwise, everyone will take his own action, The Tigray region is in the hands of self-defense and self-determination. If this illegal force is in power, the current peace and stability situation in our country will worsen and Ethiopia may be destined for Somalia. Before this happens, our defense forces, which are responsible for protecting the country and the constitution in accordance with the constitution, will be required to immediately remove this illegal force and save Ethiopia. So, before the hemorrhage is triggered, the rope that he put on his neck, the rope that pulls the rope out of his neck, and if he doesn’t let go of the chair, let him hang himself from the chair and hang himself there.

  5. እኛ ዲያስፖራዎች ከኢትዮጵያ ምን እንፈልጋለን?
    1. የኢትዮጵያን ሰላምና የሕግ የበላይነት
    ምሳሌ: እዚህ ለፍተን ያመጣነውን ገንዘብ በእሳት እንዲጋይ አንፈልግም።
    2.ኢትዮጵያ ከዲያፖራው ምን ትፈልጋለች?
    ምሳሌ: የውጭ ገንዘብ ዶላር
    3. ዲያፖራው ከኢትዮጵያ ምን እንፈልጋለን?
    ምሳሌ: ኢንቨስትመንት፣ ቤት፣ ንግድ፣ ኮርፖሬሽን
    4. ኢትዮጵያ በውጭ ገንዘብ እንዴት ትጠቀማለች?
    ምሳሌ: እኛ ዶላሩን በውጭ ሂሳብ ስናስገባ ሐገራችን ይህንን ገንዘብ
    ወስዳ በቀጥታ ዕቃዎች ስታስገባ ለእኛ በምትኩ የምንፈልገውን ነገር
    መግዛት ወይም ንግድ መክፈት እንችላለን። ይህ ቢጠና ብዙ ያዋጣል።
    5. ዳያስፖራውን ተጠቃሚ ማድረግ
    ምሳሌ: 1 ሚሊዮን ዶላር ኢንቨስት ላደረጉ መኪናቸው ካለቀረጥ እንዲገባ።
    6. የዲያስፖራ የሙያ ማሕበር ማቋቋም
    ምሳሌ የሕክምና ባለሞያዎች ማሕበር አሜሪካ ብቻ ከዶክተር
    እስከ ረዳት ነርሶች ሩብ ሚሊዮን እንደርሳለን። ምሳሌ: ዘመናዊ
    ሆስፒታል ኢትዮጵያ በኮርፖሮሽን ብንከፍት
    7.ቀልጣፋ የገንዘብ ዝውውር ማድረግ
    ምሳሌ: ከአሜሪካ 10 ሺ ዶላር ብቻ ነው ይዘን የምንመጣው።
    ለምሳሌ የፊሊፒን ዜጎች ከአሜሪካ ገንዘብ ተሸክመው አይሄዱም።
    ገንዘቡ ሐገራቸው ሲደርሱ ከባንክ ያወጡታል። ጥናት?
    8. የኢትዮጵያ ለጋሾች ከፖለቲካና ከሐይማኖት ገለልተኛ ቢሆኑ
    ምሳሌ: ኮሚቴው በተለይም የኢትዮጵያ ኮሚኒቲን የሚያንቀሳቅሱ
    እውቅና ያላቸው በበጎ ሰዎች ቢዋቀሩ። ነጋዴዎች ቢኖርበት
    9. የቀረጥ ስርዓቱ ቢሻሻል
    ምሳሌ እያንዳንዳችን ስንመጣ እቃ በተመጣጣኝ ቀረጥ ብናስገባ
    10. የዲያስፖራ ገንዘብ ብቻ ሳይሆን ልቡ ሐገር እንዲገባ ማድረግ
    ምሳሌ: ዛሬ የውጭ ሐገር ታላላቅ እውቀት ያላቸው ምሁራን እንደ
    አሸን እየፈሉ ነው። ለእነዚህ ጉምቱ ባለሞያተኞች በውጭ ቆንስላ
    በኩል ወደ ሐገር ቤት እየጋበዙ እውቀታቸውን እንዲያ ክፍል ማድረግ።
    ኢትዮጵያን እግዚአብሔር ይባርካት!
    ዶ/ር ለምታደርገው በሙሉ ከጎንህ ነን።
    አባይን ግድብ ሳትጨርስ ዛፎችህ ሳያድጉ እንቅልፍ አትተኛ።

  6. Dinqu Deyas,

    I don’t usually respond to detractirs but here is one for you. Yes I have and I will. But there is one trip I will never make. A trip to Al-Qahirah. Or even to Riyadh for that matter. How was the halawa there? They make one of the best too. From el-Sisi personally baked? It is even more scrumptious!!! Don’t they? Would you tell el-Sisi this from me? na na na nannahhhhhhhhhhhhhh!!!! I know you gonna tell him about the 2nd filling of the dam coming soon. Two turbines have started running and generating power now and there will 2, 3, 4 or even 5 more turbines generating power to a theater near you. That means more power available for new factories. Let’s go!!! Not you, everyone else! The pie is baked, glazed and ready to slice for every patriot, not for connivers and bigots! Tell el-Sisi I tell him ‘eat your heart out!’.

  7. Ittu

    Why don’t you go to Saudi ? Who is going to save the immigrants detained in Saudi detention centers? The embassy? The Saudis ? Who?

    If you and your honkie investor partners paid these young Ethiopians a fair wage in their country in the first place they wouldn’t have risked their lives through dangerous journeys of exile.
    Ethiopian Human lives are more valuable than your sweatshops you keep dreaming of.
    We Ethiopians need to go to Saudi Arabia and save the young workers who Ittu & alike with their foreign investors partners chased out of their own country by non stop sucking the young workers blood dry in unsafe working conditions, while Ittu & Co. enrich their kkk investors.

    Let’s save the migrants detained in Saudi First then we talk about the “investment” . Let’s all go to Saudi detention centers to save the detained!!! I have tried repeatedly to save them by myself, I can not do it by myself!!

    https://www.ethiopoint.com › ethiopias-gar…
    Ethiopia’s garment workers are world’s lowest paid – ZeHabesha …

    https://qz.com/africa/1614752/ethiopia-garment-workers-for-gap-hm-lowest-paid-in-world/

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