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Foreign Direct Investment (FDI) is key to a country’s economic development, especially for countries like Ethiopia that lack strong local investment capacity.
The Ethiopian government has made a commitment to FDI in an effort to fuel economic growth that at present is mainly influenced by local investors and the government itself.
Alongside government efforts, the last few years have seen sustained growth in investment from China, India and Turkey in Ethiopia’s manufacturing sector.
There are interesting parallels with Europe, where countries like Poland have huge potential to expand FDI in different sectors, including manufacturing, IT and agro-processing.
Although most of Europe has been stuck in recession for several years, Poland has experienced some growth. A visit to Poland to learn about some of its companies was a good opportunity for Ethiopian journalists to learn about investment opportunities between the two countries.
Some organisations, like Asseco – the leading IT company in central and Western Europe – have already invested in Ethiopia.
Manufacturing companies are also keen to take advantage of opportunities here. Ursus, a major producer of tractors and agricultural machinery with a huge market in Western Europe, sent a delegation to visit Ethiopia earlier this month to seek out investment prospects.
There are encouraging signs too from many other companies. Ethiopia’s Ambassador to Poland, Fisseha Asgedom, met more than 40 company officials in Warsaw.
During the meeting, the Ambassador spoke at length about Ethiopia and opportunities for investment in the country. Poland’s Ambassador to Ethiopia, Jacek Jankoski, has played a big role in encouraging Polish investors to take a serious look at Ethiopia.
Most companies there are currently only operating in Western Europe, North Africa and the US.
Many, however, have shown a strong interest in expanding into new markets and investing in other parts of Africa, like Ethiopia.
There are already close ties between Chambers of Commerce in Poland and Ethiopia, and in Poland, business leaders say they want to work to strengthen these links.
To achieve this, Polish investors are planning to visit Ethiopia later this year.
Following this visit, several investments and business deals are expected between the two countries.
Currently, business transactions between the two countries are worth only USD13 million (based on data from 2012).
The value of exports from Ethiopia is around USD eight million, the bulk of which comes from agriculture products, particularly coffee.
The remainder comes from Polish exports to Ethiopia, made up mainly of veterinary and other types of equipment.
Ethiopian exports account for the majority of trade between the two countries and coffee is a big part of that.
But, while in Poland, Capital observed that many Polish businesses import coffee beans from Germany for use in cafes.
This suggests that Ethiopian exporters are not meeting the demands of the Polish market and that they will have to work hard to ensure Ethiopian produce is making its way into markets both in Europe and in newly emerging economies.