Foreign Investment in Ethiopia Slumps After Business Attacks

Foreign Investment in Ethiopia Slumps After Business Attacks

  • FDI dropped 20% to $1.2 billion in six months through December
  • Foreign companies receive financial compensation for damages

Foreign(Bloomberg) — Foreign direct investment in Ethiopia dropped by a fifth in the first half of the country’s fiscal year after violent anti-government protests in which foreign-owned businesses were targeted.

The country attracted $1.2 billion in the six months through the end of December, compared with $1.5 billion in the same period a year earlier, Fitsum Arega, commissioner of the Ethiopian Investment Commission, said in a phone interview Monday from the capital, Addis Ababa. He said the government may miss its annual target of $3.5 billion, with $3.2 billion more likely to be attainable.

The government of Ethiopia declared a state of emergency in October to deal with unrest accompanying protests by ethnic Oromo and Amhara communities that began in late 2015 over the alleged dispossession of their land, political marginalization and state repression. Businesses including those owned by Nigerian billionaire Aliko Dangote and Dutch fruit processors were attacked during the unrest. The security forces killed at least 600 demonstrators, according to the Association for Human Rights in Ethiopia.

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Ethiopia, one of Africa’s fastest-growing economies, is expected to expand 7.5 percent this year, compared with an average of 9.1 percent over the past five years, according to the International Monetary Fund. Opponents of the government argue that Ethiopia’s economic gains haven’t been matched by increased political freedoms since the ruling party cracked down on the opposition in 2005, after losses in that year’s elections.

Damage Claims

The government is paying out damages to foreign and domestic companies deemed affected by the unrest, with 100 million birr ($4.4 million) already disbursed and “more in progress,” Fitsum said. Claims were received from at least 20 domestic companies. At least two foreign businesses were successful in making claims from insurance companies, while the government is also providing tax relief to operations that sustained damages during the violence, he said.

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While no foreign investors canceled planned projects, they have taken a “wait-and-see attitude” to the country, Fitsum said.

“We already have big investors in the pipeline,” Fitsum said. “There are also big textile-manufacturing companies we can expect to have in the coming six months,” he said, referring to Ethiopia’s Hawasa Industrial Park that opened in July and which the government says is the largest in Africa.

Companies investing in Hawasa Industrial Park are from countries including China, India, Belgium, Spain, France, Hong Kong, Sri Lanka and Indonesia, Fitsum said.

Total foreign direct investment in Ethiopia in the 2015-16 fiscal year was $2.2 billion, according to an EIC statement published on the website of FANA, the ruling-party affiliated broadcaster.

Yields on Ethiopia’s $1 billion of Eurobonds due 2024 hit a record 9.66 percent at the peak of the unrest in January last year, and have since recovered to 7.35 percent, according to data compiled by Bloomberg. The notes have returned 5 percent this year, compared with an average 2.5 percent for the Bloomberg USD Emerging Market Sovereign Bond Index.

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One Response to Foreign Investment in Ethiopia Slumps After Business Attacks

  1. Red Meat February 16, 2017 at 10:05 pm #

    It is high time for all citizens of Ethiopia to admit Ethiopia is in an all out war against terror..The reason why the demonstrators burn down these business infrastructures is because the Neftegna chauvinist extremist AMARA leaders tell lies to the Oromo demonstrators about Tigrayans saying “Tigrayans are currently controling 90% of the Ethiopian economy while other Ethiopians only eat left over of Tigrayans , controlling only 10% of the total Ethiopian economy.”

    The reality is 99% of Tigrayans live pay check to pay check with regular Ethiopian scale salaries, but people like the above commentator “Kubee Generation” go around spreading the false propoganda about Tigrayans controlling 90% of the total Ethiopian economy with not a single official evidence ever produced from anyone till this date about Tigrayans dominating Ethiopia’s economy.

    If anything we Tigrayans got so many evidence how much money cash (TEGERA GENZEB) Amaras burry under their homes while Tigrayans live pay check to pay check leading an honest low income life in Ethiopia. If Amaras bring out the money they got burried it is estimated it will amount more than the moneythe amount that is currently in banks in Ethiopia.

    Neftegna chauvinist extremist .leaders go around encouraging their followers to burn down any posetive economic work place in Ethiopia .Telling the demonstrators that they will be economically secured if they burn down these work places trying to distract these demonstrators from bringing up the real question about the underground economy of Amara which is leaving the economy activity slow..This preaching of extremists opposition groups is somewhat similar to other terrorists of the world saying ” if you burn down /blow up and even die in the process you will go to heaven where numerous virgins are waiting for you.”

    These demonstarators that are burning down investments in Ethiopia are biting the hand that feed them because of terrorists propoganda.
    No other explanation can be concluded ABOUT ACTIONS OF these demonstrators burning down job places where they can work and earn money to better themselves.Semayawi party and Melew Ethiopia are registered to run in the next election because they are not extremists that encourage the burning down of factories like other terrorist groups that preching burning down.
    Please click on the link below to hear who is dominating the economy even burrying money so noone gets to it except maybe their grandchildren.

    https://www.diretube.com/ethiopian-news-police-recovered-stolen-money-at-ato-gebrewahed-house-video_16585f1c0.html

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