(Ecofin Agency) – Ethiopia becomes the 3e country to have captured the most FDI in Africa in 2023, according to UNCTAD
In 2023, Ethiopia attracted a total of $3.9 billion in foreign direct investment (FDI), marking a 14% increase from the previous year. The information comes from a communiqué of the National Investment Commission (IEC), on Friday October 11.
According to the IEC, the growth in FDI is attributed to several factors, including the country’s strategic position, the availability of a young and skilled workforce, as well as ongoing economic reforms. The country now ranks third in Africa in terms of FDI flows in 2023, according to the United Nations Conference on Trade and Development (UNCTAD).
Since 2020, Ethiopia has engaged in a vast program of economic reformsspanning a decade (2020/21 to 2029/30), aimed at fostering the transition to an economy more oriented towards the private sector. This plan is supposed to catalyze growth by strengthening the role of private investors in key sectors such as agriculture, industry and infrastructure.
China, Ethiopia’s main economic partner, remains the largest investor with more than 3,300 projects and a total investment amount exceeding $8.5 billion. These investments have created more than 325,000 jobs on Ethiopian territory, strengthening economic ties between the two nations.
This economic performance occurs in a difficult macroeconomic context. Ethiopia faces soaring inflation and a persistent shortage of foreign currency, a situation made worse by a default on its external debt in December 2023, a case similar to that of Zambia and Ghana. Nevertheless, FDI flows are seen as a crucial lever to help the country overcome these economic challenges.
The IEC aims to attract even more investors, in particular by optimizing post-investment services and improving infrastructure for foreign companies. Already, in the first quarter of the Ethiopian fiscal year 2017 (corresponding to 2024 in the Gregorian calendar), a 12% increase in FDI was recorded compared to the same period of the previous year, the commission said.
Charlene N’dimon
