Govt criticised for hampering foreign investment

The UN Economic Commission for Africa (ECA) criticised the Ethiopian government on Thursday for stifling foreign investment in the country. Patrick Asea, the director of economic policy within the ECA, said that by failing to introduce widespread market reforms, the government was hampering development. “At the ECA we have been very concerned about large sections of the economy which are excluded from foreign direct investment," he said at the launch of the World Investment Report 2002 in Addis Ababa. He said it was crucial for the banking and insurance sectors within the Ethiopian economy to be opened up to foreign investment. Only Ethiopians are allowed to invest within the banking and insurance sectors, which are largely owned by the government. But the government’s Ethiopian Investment Authority (EIA) said the two sectors would be unable to compete against foreign firms. Mohammed Seyed, head of policy research and planning, said the EIA wanted to promote Ethiopian investment until companies were ready to face the rigorous competition from abroad. He blamed low foreign investment on Ethiopia’s “lingering negative image” of a drought-stricken country faced with civil strife. Mohammed also said the government had partially revised the current investment code but that restrictions would remain in place. “The banking and insurance sectors will remain reserved for Ethiopians,” he said.