Ethiopia's Economic Climate

Foreign Investment

The current foreign investment policy of the government is attracting a considerable number of foreign investments into the manufacturing sector. Between 1992 and 1997, a total of 46 foreign-backed industrial projects with a total investment capital of Birr 1.7 bn have been approved by the Ethiopian Investment Authority.

The implementation of three projects; a tannery, a soap-manufacturing factory and a computer assembly plant has already been completed. A further eight projects involving the Manufacturing of beer and soft drinks, nylon fabrics, chipwood, carbon dioxide, plastic packaging, non-metallic filler, roofing sheets, bulbs and tumblers, are all expected to be operational very soon.

SPECIFIC INVESTMENT OPPORTUNITIES IN MANUFACTURING

Details of a number of specific investment opportunities in the manufacturing sector can be found in a series of separate leaflets.

These opportunities include:

• Pipe fittings and valves manufacturing plant;
• Trailers, semi-trailers and truck bodies manufacturing plant;
• Lead-pencil manufacturing plant;
• Improved farm implements factory;
• Electrical machinery complex;
• Electronic products factory;
• Dry-cell battery factory;
• Matches factory;
• Lime factory;
• Nitrogen fertilizer factory;
• Wet maize processing factory;
• Baby food products factory;
• Baker's yeast plant;
• Soya bean complex;
• Leather gloves factory;
• Bagasse pulp mill and paper factory;
• Leather goods factory;
• Winery; and
• Rubber plantation and processing project

EXPORT PROSPECTS

Ethiopia has the potential to export basic manufactured products such as processed agricultural products, garments and leather products to European and other markets. The country is endowed with abundant natural resources and diverse physical climate favoring the manufacturing sector. Moreover, the geographical location of the country provides it with the advantage of proximity to European and Middle East markets. Ethiopia is a member of the Common Market for Eastern and Southern Africa (COMESA) embracing 23 countries in eastern and southern Africa with a total population of approximately 300 million. Exports and imports between member countries enjoy preferential tariff rates.

Export products from Ethiopia to the European Union market are entitled to duty reductions or exemptions and are free from all quota restrictions under the terms of the Lome Convention. The trade preference accorded Ethiopia includes duty free entry of all industrial manufactured products.

Under the generalized system of preferences (GSP), a wide range of Ethiopia's manufactured products are entitled to preferential duty treatment in the United States, Canada, Switzerland, Norway, Sweden, Finland, Austria, Japan as well as most European Union countries. Besides, no quantitative restrictions are applicable on Ethiopia's exports of any of the 3,000 plus items currently eligible for GSP treatment.

Ethiopia also has a sufficiently skilled and well-trained work force. Its technical and vocational training schools, engineering colleges and universities annually produce trained personnel in business, management, law, engineering, economics, and accounting in fairly large numbers. Furthermore, the market price of Ethiopian skilled personnel is very attractive. The starting salaries of university graduates normally range between US$90-140 per month depending on the field of study.

Ethiopia, with a population of about 61 million, has an abundant, hard-working, cheap and disciplined work force. The minimum wage for unskilled labor is less than US$20 per month. Since 1991 the new government has been committed to improving the general level of professional and technical skills of the workforce. There has been a broad reform of the educational system in order to make it more relevant to vocational training and more directly address both the needs of the country's economy and satisfy the aspiration of Ethiopia's youthful population.

In a series of direct relevance to the manufacturing and service sectors, the government has also encouraged the creation of a series of vocational training centers as part of its drive to boost the skills level of the workforce in certain key sectors. There are currently 32 such colleges and institutes operating throughout the country, including 25 centers devoted to improving skills in the construction industry.

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