Saturday, July 13, 2024

Ethiopia struggles to attract sustainable investment amid global challenges

By our staff reporter


The 2024 World Investment Report paints a concerning picture for Ethiopia’s efforts to attract foreign direct investment (FDI) and financing for sustainable development projects.

According to the report published by the United Nations Conference on Trade and Development (UNCTAD), global FDI flows remained stagnant at $1.3 trillion in 2023, with developing countries like Ethiopia seeing a 7% decline. This downturn was driven by a combination of global crises, trade tensions, and tightening financing conditions.

Notably, the report found that investment in new industrial and infrastructure projects in developing countries declined, while investment in sectors relevant to the Sustainable Development Goals (SDGs) fell by more than 10% globally. This is particularly troubling for Ethiopia, which has made the SDGs a central pillar of its development strategy.

“Stagnant SDG investment and insufficient funding is severely hindering implementation of the 2030 Agenda and the SDGs, particularly in least developed countries,” said UN Secretary-General António Guterres in the report’s preface. “We need urgent action to remove obstacles and provide a transparent, streamlined investment climate for sustainable development.”

The report highlights that investment facilitation and digital government solutions have become more prominent features of national policies and international agreements, but these efforts have yet to translate into a significant increase in financial flows to developing countries.

“Despite these efforts, finance is not flowing at sufficient scale, due to high interest rates and geopolitical conditions,” Guterres said. “That means we must redouble our efforts.”

For Ethiopia, the challenges are multifaceted. The country has made strides in improving its investment climate, including through the establishment of a one-stop shop for investors and the introduction of digital government services. However, the report suggests that more needs to be done to ensure that these reforms effectively channel investment towards sustainable development projects.

“The SDG Stimulus we have proposed is a practical and achievable means of delivering this,” Guterres said, referring to UNCTAD’s call for a coordinated global effort to mobilize sustainable finance at scale.

As Ethiopia continues to navigate the complex global investment landscape, policymakers will need to prioritize strengthening investment governance and aligning financial flows with the country’s sustainable development agenda. The 2024 World Investment Report serves as a stark reminder that the road to achieving the SDGs remains long and arduous, but with concerted action, Ethiopia and other developing countries can overcome these challenges.

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