By Tewodros Kassa
No doubt that the COVID-19 pandemic has affected the investment inflow to Ethiopia like many other nations of the world. The World Investment Report 2020 titled, ‘International Production Beyond the Pandemic,’ projects that global foreign direct investment (FDI) will decrease up to 40 percent in 2020, bringing FDI below USD one trillion for the first time since 2005. FDI is expected to decrease 5-10 percent in 2021 and to begin to recover in 2022, led by global value chains, replenishment of capital stock, recovery of the global economy, and restructuring for resilience. According to the UN Conference on Trade and Development (UNCTAD) World Investment Report 2020, the COVID-19 pandemic has caused a steep drop in investment flows and has hit developing countries the hardest. The report finds that lockdown measures have slowed existing investment prospects and caused multinational enterprises to reassess new projects.
In Africa, investment flows are predicted to decline 25-45 percent in 2020, as a result of the COVID-19 pandemic and low commodity prices, especially for oil. The region’s manufacturing and service industries, including aviation, hospitality, leisure, and tourism have also been “hit hard,” a trend that is projected to persist into the future.
The report identifies two factors that “offer hope” for the recovery of investment flows in Asia: major global economies are recognizing ties to the continent and promoting investment in infrastructure and industrial development; and trade under the African Continental Free Trade Area (AfCFTA) is deepening Regional integration.
On the other hand, Ethiopia has managed to overcome the COVID-19 impact on the investment sector and witnessed numerous new multinational investors joining investment in different parts of the country. Debre Berhan town is among the leading towns where investment activities are expanding rapidly and attracting more investors in Ethiopia.
Zara Yaqob founded the 600-year-old Debre Berhan in 1456. And it is an ancient city of Ethiopia with incredible experiences, natural and human-made tourist destinations, religious holy places, friendly people and culture, among others. Ancient and historical achievements of the city that takes place during its founder Emperor Zara Yakob will give impetus to discover Ethiopia and help researchers conduct their research about medieval Ethiopia.
The town administration recently announced that it has issued 74 investment licenses in just two months. The investors engaged in the city have registered a total capital of over 31 billion Birr.
Furthermore, the town’s administration indicated that it plans to issue investment licenses to more than 300 projects by the end of this budget year. Last year, more than 245 licenses were issued to 112 investors with a registered capital of 3 billion Birr. These licenses are issued to investors who registered about 17 billion Birr during the fiscal year.
Dashen and Habesha breweries and other manufacturing industries are among the leading giant investors in the town.
Regarding the service sector, various investors are also choosing Debre Birhan town as their priority following its good image built in the past decade. Recently, Haile Hotels and Resorts announced its plan to open a star rated hotel in the town soon.
Debre Birhan is also the home of the Debre Birhan Industrial Park that was built on an area of 1,100 hectares.
The Industrial Park was inaugurated last year by Prime Minister Abiy Ahmed, President Uhuru Kenyatta, and then Amhara Region President Gedu Andargachew. The Park has already created more than 13,000 jobs during the construction phase and expected to foster even beyond following the entrance of local and international investors into the park.
Debre Berhan Town Administration Industry and Investment Bureau Head, Berhan Gebrehiwot, said that 90 percent of new investors are engaged in the manufacturing industry sector. The other 10 percent are involved in the agricultural sector, clothing and textile, wood and metal, and chemical productions.
Considering the ever-increasing investment activities in the town, the administration has planned to issue more than 300 investment licenses in this budget year. In the last two months, licenses have been issued to 74 different projects in the town.
The establishment of sustainable peace and security in the town and its surrounding, availability of wide-ranging investment options and reliable inputs, the community sense of ownership of the investments, and the speed of the administration’s response to investors have been identified as key factors in the success of the plan.
Ato Birhan said that a strong assessment has been made to fill the gaps in the 2019/20 Ethiopian budget year. In particular, the lack of electricity, road infrastructure, and access to clean water are major problems. The problems are expected to be solved by the city administration and will be fixed soon.
The availability of insufficient investment land is another problem. Due to the scarcity of investment land in the town, it is being confiscated from non-active investors and handed over to active investors. An example of this is the cancellation of 80 investment licenses from investors who did not start construction under their lease licenses last year and handed.
By the same token, Debre Berhan needs to promote its tourism potentials parallel with facilitating ways in the manufacturing industry sector.
There are 506 investments in the town with a registered capital of over 31 billion Birr. When fully operational, the projects are expected to create more than 63,000 jobs. About 300 of the investors operating in the town are in the industry.
Currently, 29 industries have started production and 14,000 jobs have been created in the city. The investor participation in the service sector is still lower when compared to the manufacturing sector.
Having a suitable climate, sustainable peace, abundant industrial inputs, efficient services related to investment land allocation and suitable policy by the government as well as other related issues are playing a significant role in attracting numerous investors to Debre Birhan.
Originally published in The Ethiopian Herald
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