Potential for investment despite widespread poverty

Ethiopia is one of the poorest nations on earth, but it has the potential to be a land of opportunity for investors and businesses, analysts say. In a newly launched Investment Guide to Ethiopia, the United Nations and the International Chamber of Commence (ICC) spell out three reasons why financiers should look to setting up shop in the country. "There are a number of reasons why potential investors would find it well worth their while to consider Ethiopia as a location for investment," says the guide. It points to a corrupt-free environment, an enormous and largely untapped domestic market of 70 million people, and what it describes as a near-perfect climate. Most of the population, however, live in poverty, while many rely on food aid. The 84-four-page guide also cites newly established macroeconomic and policy reforms by the government, which, it adds, has put the country on the road to success. It said foreign direct investment, while small at US $75 million in 2002, was creeping up, and the country was on the brink of membership of the World Trade Organisation. The UN’s Conference on Trade and Development and the ICC said infrastructure was being improved and restrictions lifted. And, according to the US-based Heritage Foundation’s 2004 Economic Freedom Index, Ethiopia now ranked as the "second-most improved business environment in the world". The Ethiopian economy is tiny, its GDP just $6.7 billion, but it is growing at around 5 percent, while inflation is at a low of 1.5 percent. Most of the production is in the agricultural sector, but the service and manufacturing sectors are also growing. At the launch of the new investment guide earlier this month, Trade Minister Girma Biru said "radical steps" had been taken to ensure progress. "Investment promotion is a dynamic process," he said. Prime Minister Meles Zenawi has also emphasised the growing role investment could play, describing it as "an engine of development". In an interview on state television, he said the government was wary of "parasitic investors", but welcomed genuine investors to the country. "Therefore, supporting and encouraging genuine investors also involves discouraging illicit practices," he said.