Feature - Trade opportunities on show

Gently flickering, the strip lighting at Ethiopia’s main exhibition hall popped before finally going out. It was an inauspicious start to the Addis Ababa International Trade Fair, more so because this one was billed as the biggest and best. But businessmen from some 260 companies representing 26 countries around the globe who descended on the Ethiopian capital, refused to let it dampen their spirit. Although this is not the first time the country has held a trade fair, business leaders are saying this is by far the most important. Trade Minister Girma Birru, who officially opened the exhibition, echoed that same optimism with government pledges of renewed support and freeing up the market. The head of the chamber of commerce, Hussein Shibeshi, enthused about Ethiopia's business potential. The looming membership of Ethiopia by the World Trade Organisation (WTO) will, he added, further boost economic opportunities. INVESTMENT CLIMATE Businessmen often talk of Ethiopia facing enormous hurdles, massive poverty and even cite government taxes as hampering investment efforts. But here, there was stall after stall of companies – albeit lacking household names – hoping to invest in a country ranked as one of the poorest in the world. The trade fair, hosted by the Addis Ababa Chamber of Commerce, housed an eclectic mix where luxury cars were placed next to companies selling chocolate bars and soft drinks. The Sudanese want to export granulated sugar, regardless of the market being cornered by sugar factories in eastern Ethiopia. A stall holder selling Russian lorries sat opposite a Yemeni businessman who was hoping to export soap powder to Ethiopia. According to the latest 2002 World Investment Report by the UN Conference on Trade and Development, foreign investors are making inroads into the country. Although Ethiopia is ranked near the bottom, at 97th out of 140 countries for foreign investment, it has leapt from 21 places in the last year alone. Economists also say the right investment climate is being created with a stabilised currency and inflation brought under control. Some businessmen at the week-long trade fair said that lack of competition had left them with rich pickings. Cheap labour – less than US $1 a day - was also seen as an incentive. Private investment has now recovered from the bitter war with Eritrea which ended with a peace deal in December 2000. Investment in the country as a whole is nearing US $400 million a year. OBSTACLES REMAIN But there are still numerous obstacles. Growth rates – once in excess of seven percent - are now being revised downwards, and the new value added tax has come under fire for diminishing already small profits. Low productivity and poor foreign investment – just 10 percent of overall investment in the country – are also seen as a brake on flourishing opportunities. A looming war in Iraq and a global economic downturn would have negative impacts in Ethiopia – so reliant on imported oil, businessmen warned. Ethiopian businessman Nigiru Muluamlem argued, like many at the fair, that high duties were stifling the market. Nigiru, the general manager of Hagbes, one of Ethiopia’s top five heavy machinery importers, says his products are far cheaper across the border in Djibouti. Excessive duties – sometimes in excess of 100 percent of the price – are crippling businessmen, he says. His company sells top of the range Korean four-wheel drives in the country for more than Ethiopian Birr 460,000 (approximately US $53,000). Across the border the same car would cost US$18,000 less. “What I don’t understand is that the government is the main customer,” added Nigiru, who said the entire four-wheel drive car market is around 1,500 vehicles a year. LOW TURNOUT BY WESTERN VENTURES The enthusiasm emanating from the trade fair also failed to mask the obvious lack of case examples of successful western ventures. The US, which has agreed to the African Growth and Opportunity Act (AGOA) allowing African firms access to US markets, was conspicuous by its absence. Just a handful of European firms lined up against the mainly Middle Eastern and African companies offering their wares. Paul Blything, of UK-based Atlas Copco Masons, which manufactures industrial machinery, expressed his surprise at the lack of many British or any American firms. “There are obvious difficulties,” said Blything. “But for us the country is going in the right direction.” “Our business has been growing steadily," he added. "The investment climate is getting steadily better. We work in almost every country in the world and Ethiopia has its own benefits.” As he spoke the exhibition lights flickered again and went out – once again plunging the hall into darkness. Like much of the country - reliant on hydroelectricity - even the trade fair succumbed to the increasingly frequent power cuts caused by the severe drought. “It doesn’t help with the image,” Blything said, “but firms need to see past this and look for opportunities. That's what business is about.”