Better Relationships

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Abebe Abebayehu is the recently assigned as Commissioner of the Ethiopian Investment Commission (EIC) replacing Fitsum Arega, who was assigned as head diplomat for the US. Abebe is one of the youngest nonpartisan leaders under the Premier Abiy Ahmed (PhD). A week ago Abebe was a panelist at a public private sector forum organized by the International Finance Corporation (IFC), the World Bank’s private arm, and partners.
The forum was held under the theme: “enhancing private sector engagement at times of reform: lessons learnt so far and the way forward.” The commissioner, a few years ago who led Public Private Dialogue Forum formed to narrow the gap between the government and private sector, reflected his own and the government’s view about the required expansion of the private sector and tackling challenges to work with the private sector. On the occasion Capital had a chance to interview the new commissioner of EIC about the current investment condition in Ethiopia and other relevant issues.

 

Capital: How will your organization benefit from this summit?
Abebe Abebayehu: This summit held by the IFC aims to build the culture of dialogue between the public and the private sectors. As you know a similar sit-down named the Public Private Dialogue was established following memorandums of understanding between the Ethiopian Chamber of Commerce and the government. Regular dialogues are useful to increase participation of the private sector. It is also great to solve problems of policy, regulations and administration based on research and appropriate measures. It is a priority for the government as it is impossible to replace the role of the private sector to create job opportunities for the youth. The issue of youth employment is one of the crucial points for the government to sustain an ongoing reform. Besides institutionalizing the political reform so that it becomes sustainable it is fundamental to reform the economy. Otherwise economic problems will end up being political problems. The government took measures aiming to reform the economy both by opening doors to liberalizing public enterprises and allowing foreign investors to participate in certain areas which they were forbidden before. So for the economy to continue growing such dialogues are critical between the private and the public to improve the challenges.

Capital: You were leading the public and private dialogue before your promotion to the Ethiopian Investment Commission (EIC). What were the challenges before and now? What are the changes?
Abebe: The engagement between the public and the private sectors was very limited. The engagement of the government with the people in general has improved. There has been a big change because the government was previously suspicious of the private sector. Now the government is trying to open the opportunity for the people to discuss issues. The change has brought the culture to open talks and providing solutions for our problems together. Creating an environment which is free from corruption, empowered with the rule of law and transparency is very crucial for the development to the private sector. The private sector couldn’t exist in a vacuum rather it needs an environment that I have mentioned earlier. The government needs to create a democratic and fairer system so that the private sector can play its role.

Capital: IFC has paid special attention to Ethiopia currently. The recent visit of its CEO and the signing of two huge deals can back that narrative. What difference has come to the Ethiopian economy? As you know IFC has financed a very limited number of projects. Do you think there has been dramatic shifts in the economy that can change the mind of international institutions like the IFC.
Abebe: The change that we are witnessing now is not limited only to the IFC, as IFC was operating in the previous investment atmosphere with all the limitations. Various international companies and institutions like the European Investment Bank are showing an interest in working with Ethiopia. Same works for the IFC, who was limited by the previous investment condition to operate with its full capacity. We call IFC “the private arm of the World Bank” which invests in billions in various countries. IFC is not investing on the currently opened sectors rather but in general. The government knows that economic development which excludes the private sector couldn’t sustain. The economic growth we were witnessing was dominated by the huge infrastructure expenditures. If we need this development to sustain, grow rapidly and most importantly to be inclusive we have to support and encourage the private sector.

Capital: The ease of doing business was fundamental for the private sector. There were initiatives before, and any activities now?
Abebe: One of the reforms areas which is championed by the Prime Minister is ease of doing business. There is a steering committee established to look over to make Ethiopia better for trade and investment. Ethiopia was ranked 159 out of 190 countries last year in the ease of doing business ranking published by the World Bank. This is too low for a great nation like Ethiopia and comparing to the status it has obtained. So the prime minister gave direction to the technical committee that he established. There are 10 indicators traced by members from the Addis Ababa City Administration, National Bank, Ethiopia Investment Commission, Ministry revenue, Customs commission and others. The output of this task force within the past one month will be analyzed soon. If we look into countries who have developed in the area, Rwanda and Kenya, the initiative of easing doing business is led by the type of government. Especially easing doing business for the startups and middle business persons removing costly and hectic service is crucial so that more youth can enter to the trade system. This will also contribute to the revenue of the government with bringing the illegal business to the legal channel. We hope a very visible change will be achieved within the coming two years.

Capital: Many financial institutions like the IFC are showing an interest in supporting Public Private Partnership schemes. As you are heading the EIC, how is the response to the area and is there any companies which look like they want to invest.
Abebe: Various prominent international companies are showing interest to invest on the areas which the government announced to be open to the international investment and to the private investors. But the government wants it to be done in a very critical and strategic way. That is why it is taking time to finalize the measures. But with regards to interest there are many well-known global companies which eyes Ethiopia in various sectors like the Telcom, aviation, logistics and energy. This shows that there is a huge investment potential on the areas which the government is trying to make changes. As you see recently in other areas of investment companies like Volkswagen want to invest here. So, the political change in our country is also encouraging the investment to some extent.

Capital: Now that foreign companies are allowed to invest up to 49 percent in the logistics sector has anyone expressed interest?
Abebe: Fundamentally for anyone who tries to see the political change in this country We are changing from almost an authoritarian government to a fully-fledged democratic system and this will be a challenging. Problems which we are seeing in some places are a result of this change because people who lived in a authoritarian government exercising their rights in a democracy. The government is trying to control damages which will affect the rule of law. Even though there are problems in some place the condition of Ethiopia is strong. There are new foreign investments and global leaders arriving. Prominent companies believe that the economy and peace is stable, and they are investing a fortune. The US embassy is trying to discharge its constitutional duty and as they are overly cautious. This is the aim of the travel advisory from the point of view we are standing. We believe Ethiopia is twice safe place in comparison with a year ago. The hope in the heart of our people is way better than the past 27 years. The poor have expressed satisfaction with the reform in Ethiopia. In terms of the logistics the details are being drafters, how it Is going to be executed. Huge companies like MERs are showing interest. Ethiopia is a 110 million people country with a huge economy which is attracting various companies in the world. The companies believe in the commitment of the government and its visions. The fact that Ethiopia has signed the African continental free trade is also one of the main reason for the investors which is going to raise the potential market population to 1.2 billion. So, it is not surprising that the companies are considering to invest in the nation with a rapid economic growth with an opening atmosphere is natural.

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