High logistics cost must be balanced to attract foreign investment


High logistic costs affect investment flows in Ethiopia, as highlighted at the Ethiopia-Korea Business forum held on Thursday, December 3, 2015. The Forum was attended by a business delegation of 40 Korean companies in the textile and garment manufacturing sector.
According to Lee Jae-Hoon (Ph.D), Executive Director of the Korean Institute for Development Strategy, the cost of logistics is a major challenge and a great concern of textile manufacturers.
“Textile manufacturers are worried about the cost of logistics. We have an abundance of labor; workers are learning very fast. The problem is that geopolitically we are a land locked country so logistics is very expensive; it eats up our opportunities for investment,” said Jae-Hoon.
He further stated that, if logistics costs cannot be reduced, costs elsewhere must to be reduced so that the country can become an overall competitive investment destination.
“Chinese, Indian and Turkish investors are willing to come and invest but they are contemplating the market at the moment and looking at what we are doing to reduce the logistics cost. If we can reduce our costs elsewhere, then the total cost will be smaller.” Jae-Hoon underlined.
Suggested areas for cost reduction were improvements to service facilitation through a strong partnership between the private sector and the government. The importance of well-structured industry parks in order to attract more investment was also discussed at the Forum while some issues with infrastructure such as power cuts were highlighted as bottlenecks.
“We do have power interruptions, I cannot deny that. I hope that will be resolved after the Renaissance Dam is completed and power transmission systems are renovated. This is not only an Ethiopian problem; this is a challenge all over Africa. We need to solve the problem because power is everything; if there is power interruption then no business can function anywhere,” Jae-Hoon said.