It is a generally accepted fact that no country can escape from the clutches of poverty without the right kind of investment. Unemployment can be reduced when investment flourishes. Income levels can pick up when business booms and profitability rises. And increased business and profitability cannot be achieved without investment.

Government alone cannot develop a country. Even if it is argued that it can, the development cannot be sustainable because its pace and direction will be continuously affected by a change in government. Although the government's contribution toward development efforts is important, the role of both local and foreign investors is very crucial.  

Therefore, the issue of how investment can be boosted significantly by facilitating the conditions whereby a large number of local and foreign investors who abide by the law is of vital importance which needs to be addressed.

The overarching purpose of this exercise of course is to make Ethiopia a competitive investment destination.

The first thing which needs to be closely examined is the country's investment law and policy. Does our investment law and policy make Ethiopia competitive? Let's stop bragging that investors will flock to Ethiopia because its people are hospitable are well-mannered and instead ask ourselves whether we have a law and a policy which make foreign investors decide that they should invest here rather than in nearby countries like Kenya, Uganda, Tanzania, Sudan, Djibouti etc. Leave  alone investors, even tourists prefer to visit Kenya and Tanzania despite our tourist attractions and hospitality.

The standard question that any investor asks when planning to invest in any country is what the legal framework looks like in terms of land, bank financing, tax, infrastructure development, investment guarantee and the like.

Ethiopia's investment law has been periodically amended. In spite of this, it still has a room for improvement given that it is still unable to make Ethiopia a competitive investment destination. In view of this, the legal framework needs to be promptly and thoroughly reviewed in such a way as to make Ethiopia an investment haven.

Apart from legal and policy issues, procedural and bureaucratic controls also need to be looked into and improved No investor would be willing to pay hotel rent on an open-ended reservation and waste his time until such time that the relevant government official gives a decision on an issue concerning the investor, initials a document, returns from abroad, etc. There is no reason why he tolerates delay and inefficiency. He will shun the country when he encounters frustrating red-tape from top to bottom. The twin problems of inefficiency and demanding for bribe should be decisively dealt with in particular as they have a detrimental impact on development endeavors.

Providing timely information and undertaking promotional works must also be given due consideration. Investors need up-to-date information, but they cannot get it in Ethiopia. They want to and must be availed with data and promotional material to make a cost-benefit analysis so as to decide which area they should invest in. Do government institutions have these or websites designed for this specific purpose? Importance should be attached to these things when thinking of fostering investment.

The other point which too needs to be addressed is the support and protection that the government extends to investment/investors.

Two investment sectors - pharmaceuticals and textile industries - can be mentioned here in this regard. Investors who engage in these sectors must first borrow money from banks, lease land, import machineries and take out insurance; they must start repaying their loans even before they commence production. But the moment they start production after overcoming the numerous start-up challenges, they face stiff competition from traders who sell similar smuggled goods at discounted prices. Eventually, they go bankrupt or are forced to close up shop.

These sectors are profitable and add value to the economy. Sadly, they subject investors who engage in them in the proper and lawful manner to a loss. Given this, should the government afford them protection or tell them to fend for themselves?

Another area which requires government attention and support is enhancing joint investment ventures between Ethiopians and foreigners.
This is one of the mechanisms which enabled Far East countries to become prosperous. In fact, governments encourages citizens by taking on their responsibilities if they are able to team up with foreign investors.

So, what does the situation look like in the Ethiopian context? What incentives does the government provide for Ethiopians and foreign investors to work in a joint venture? What guarantees or protection does it give in this regard?

The things which can and should be done to promote investment in Ethiopia are so many and varied that they can not be exhaustively listed here. But it suffices to say here that investors - whether they invest alone or in joint venture, or are local or foreign - who make valuable contribution to Ethiopia's development should be given special attention. We should not always look toward the World Bank, the IMF and other donor agencies and countries to raise the funds necessary for development efforts. After all, these donors always attach stringent conditions to the assistance they provide and they will withdraw their assistance unless the conditions are met.

Investment is the best guarantee to achieve sustainable development. Therefore, it is high time that we put in place a conducive investment law, policy and procedures with a view to ensure that Ethiopia emerges as a competitive and preferred investment destination.