Opportunities and conditions, March 2004

Just over 30 years ago, Ethiopia was most commonly described as ´feudal´. Since then it has changed very considerably. It was described as the second most improved business environment in the world by the Heritage Foundation in its 2004 Economic Freedom Index. The liberalizing direction taken by the Government over the past 10 years, beginning with the economic reform programme launched in 1992, has resulted in improvements in the areas of trade policy, foreign investment and government intervention. Even those who complain that progress has been slow and uneven concede willingly that the recent trend is very positive. Today, Ethiopia offers a stable, secure and, exceptionally for a developing country, mostly corruption-free operating environment.

The country has many assets, beginning with one of the largest domestic markets in Africa, with 70 million consumers. Its mostly temperate climate also offers an excellent environment for various agricultural activities and for tourism. Investment in agriculture and related activities is strongly encouraged by the substantial incentives offered by the Government and the very reasonable rates at which land can be acquired. Opportunities are also to be found in light manufacturing, and, while skills and qualifications remain low, the honest and low-cost workforce is generally a strong plus in the eyes of investors.

Although Ethiopia suffers from poor infrastructure, the Government has made serious efforts to improve roads and airports. No doubt a lot remains to be done, especially in telecommunications and power supply, and privatization needs to start moving again, but the strengths and opportunities easily outweigh the difficulties, in particular given the recent speeding up of reforms.

DISCLAIMER: While every reasonable effort has been made to ensure that the information provided in this publication is accurate, no business or other decision should be made by the reader on the basis of this information alone, without a further independent check.  Neither UNCTAD nor ICC accepts any responsibility for any such decision or its consequences.
29 Feb 2004