Ethiopia: Investment in Debre Berhan amid Covid-19

10/16/2020 Ethiopia, World



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Without a doubt, the COVID-19 pandemic has affected the inflow of investments to Ethiopia like many other nations of the world.

And the 2020 World Investment Report, entitled ‘International Production Beyond the Pandemic’, projects that global foreign direct investment (FDI) will decline by as much as 40 percent in 2020, bringing FDI below $ 1 trillion for the first time since 2005. FDI is expected to decline 5-10 percent in 2021 and begin to recover in 2022, led by global value chains, equity replacement, global economy recovery, and restructuring for resilience, according to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2020, the COVID-19 pandemic has caused a sharp drop in the impact of investment flows and has affected more to developing countries. The report finds that the lockdown measures have slowed existing investment prospects and prompted multinational companies to re-evaluate new projects.

In Africa, investment flows are projected to decline by 25-45% in 2020, as a result of the COVID-19 pandemic and low commodity prices, especially oil. The region’s manufacturing and service industries, including aviation, hospitality, leisure and tourism have also been “hit hard”, a trend that is expected to persist into the future.

The report identifies two factors that “offer hope” for the recovery of investment flows in Asia: the main world economies are recognizing the links with the continent and promoting investment in infrastructure and industrial development; and trade under the African Continental Free Trade Area (AfCFTA) is deepening regional integration.

On the other hand, Ethiopia has managed to overcome the impact of COVID-19 in the investment sector and has witnessed numerous new multinational investors joining the investment in different parts of the country. The city of Debre Berhan is among the top cities where investment activities are expanding rapidly and attracting more investors in Ethiopia.

And Zara Yaqob founded the current 600-year-old Debre Berhan in 1456. And it is an ancient Ethiopian city with incredible experiences, natural and man-made tourist destinations, religious holy sites, friendly people and culture, among others. The ancient and historical achievements of the city that take place during its founder, Emperor Zara Yakob, will drive the discovery of then Ethiopia and help researchers to correctly conduct their research on medieval Ethiopia.

And the municipal administration recently announced that it has issued 74 investment licenses in just two months. Investors involved in the city have registered a total capital of more than 31 billion Birr.

In addition, the City Administration indicated that it plans to issue investment licenses to more than 300 projects for this budget year. Last year, more than 245 licenses were issued to 112 investors with a registered capital of 3 billion Birr. These licenses are awarded to investors who registered around 17 billion Birr during the fiscal year.

Debre Berhan City Administration Bureau of Investment and Industry Chief Berhan Gebrehiwot said 90 percent of new investors are in the manufacturing industry sector. The other 10 percent is involved in agriculture, clothing and textiles, wood and metal, and chemical productions.

Taking into account the ever-increasing investment activities in the city, the administration has planned to issue more than 300 investment licenses in this budget year. In the last two months, licenses have been granted to 74 different projects in the town.

The establishment of sustainable peace and security in and around the city, the availability of a wide range of investment options and reliable inputs, the community’s sense of ownership of investments, and the speed of management’s response to investors are They have identified as key factors in the success of the plan.

On the other hand, Berhan said that a robust assessment has been conducted to fill in the gaps in the Ethiopian budget year 2019/20. In particular, the lack of electricity, road infrastructure and access to drinking water are major problems. The issues are expected to be resolved by the city administration and will be fixed soon.

The availability of insufficient investment land is another problem. Due to the shortage of investment land in the city, it is being confiscated and given to other active investors. An example of this is the cancellation of 80 investors who did not start construction under their lease licenses last year and turned it over to fast-growing investors.

In the same way, Debre Berhan needs to promote its tourism potentials in parallel with road facilitation in the manufacturing industry sector.

However, there are 506 investments in the city with a registered capital of more than 31 billion Birr. When fully operational, the projects are expected to create more than 63,000 jobs. Approximately 300 of the investors operating in the city are in the industry.

Currently, 29 industries have started to produce and 14,000 jobs have been created for youth and women in the city. But, the investor share in the service sector is even lower compared to the manufacturing sector.

Having suitable climatic conditions, sustainable peace, abundant industrial inputs, prompt services related to investment land allocation and proper policy by the government, as well as other related issues, are playing an important role in attracting numerous investors to Debre Berhan .

Also, right now, giant investors are making massive investments in the city of Debre Berhan following the right preconditions to attract investment. Dashen and Habesha breweries and other manufacturing industries are among the city’s top giant investors.