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Attracting foreign investors

Saturday, 19 July 2008

Ethiopia has been witnessing recently a surge in foreign direct investment (FDI). In particular, Middle Eastern investors hailing from United Arab Emirates and Saudi Arabia have promised to invest billions of birr in the construction of railways and oil pipelines. Such an investment needs to be encouraged and sustained. The government must take the lead in attracting an ever increasing FDI to Ethiopia. The huge amount of FDI flowing into South Korea, Japan, Malaysia, Singapore, and others is the result of a concerted public-private-partnership effort aimed at attracting such investment. Attracting FDI to Ethiopia is a multi-faceted task which requires a host of specific measures to be taken. For instance, have we set up a comprehensive information database which is easily accessible to foreign investors or are they provided piecemeal oral information through different individuals? Is the oral information they are given by different individuals consistent? Do service delivery institutions possess the information that enables them to satisfactorily answer the questions that might be raised by foreign investors? How much land has been earmarked for agricultural or industrial activities? Where is it located? How far is it from the main road, airports and seaports? How much is its lease price? Is there adequate power and water supply? What about telephone services? What does the country's banking and tax policies look like. Foreign investors must be able to have these information at their fingertips. No foreign investment will be forthcoming just because we vow that we encourage it. Do we have in place the necessary and encouraging laws and directives? This is another issue which should be looked into. Let's revisit them so that they can be amended or wholly replaced for the better. How about our bureaucracy? Is it inefficient and enigmatic to investors which scares them away? We need to understand that investors value time very much and will invest their money in other countries which are more competitive than us in terms of service delivery. In view of this, it is imperative that our bureaucracy is competent and effective if Ethiopia is to become a preferred investment destination. What about our officials and workforce? Are they competent and proactive? Do they believe in the important role of FDI? Are they willing to listen and efficient in discharging their duties. All this needs to be looked into and bring about the needed improvements. Long gone are the days when investors came knocking on our door without any effort on our part. We are now living in an age when we have to market ourselves, to brand ourselves. If we manage to do this, we will have a far better chance of attracting investment. The Middle East, in particular, can be an important source of FDI given its proximity to us, the closeness of our culture with that of the countries of the region and their desire to invest in Ethiopia. The investors hailing from this region can contribute a great deal to bolstering the needed investment sectors. The understanding reached with a Dubai-based investor on its railway and oil pipeline project is an encouraging development. Both are vital infrastructures for the country. We must, however, strive to encourage investors to participate in other investment areas as well. Despite the positive developments, there are bound to be factors detrimental to the inflow of FDI. We must identify what these are and immediately address them before they get out of hand. In addition, we must undertake monitoring and aftercare activities. We should follow up how foreign investors are faring and whether they are on track implementing their plans. And if they encounter problems, we must provide them with the necessary support. Inasmuch as genuine investors should be encouraged, those who are not need to be told to comport themselves with seriousness. If they are not willing to do so, the appropriate action must be taken against them. The kind of investors we should endeavour to attract are those who add value in terms of knowledge and technology transfer as well as human resource development and to take precaution that the foreign investors we attract are not the type who are unscrupulous, rent-seekers and intent on preventing the rise of rival investors. Investing is an undertaking which must be demonstrated in deed, not just in words. Both the government and investors must deliver what they promised. Famine and hunger can be eased for the short term through grants and loans. The long-term solution, however, is to achieve sustainable economic growth. And the engine for growth is investment which is underpinned by sound policies, a fair  system, the right organization and an efficient workforce. Therefore, it is high time that we made an all-out effort to attract foreign investors.

 

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