INTERVIEW By Daniel Beyene. Director General of Business Diplomacy for Ethiopian Ministry of Foreign Affairs Hirut Zemene
In order to create opportunities that support the intended development of the nation, Ethiopia has been cultivating its diplomacy in the last twenty five years. Recently, The Ethiopian Herald conducted an interview with Director General of Business Diplomacy for Ethiopian Ministry of Foreign Affairs Hirut Zemene on the overall activities of the nation’s economic diplomacy, its challenges and prospective. Excerpts:
Herald: How do you describe the current business diplomacy activities of Ethiopia? What must be done in terms of increasing the effectiveness of Ethiopia’s business diplomacy?
Economic diplomacy is one of the main pillars of our foreign policy. It is considered as very important instrument to create opportunities for supporting economic development in line with the plan we have in the country. For example, we concluded successfully the GTP-I in the past five years. Now, we are already in GTP-II that lasts till 2020.
So basically, economic diplomacy focuses on creating an enabling environment to attract important instruments to support our development. For instance, we are looking for more finance to support our project and market for our products. We require a lot of technology transfer to build local capacity and strengthen the private sector as well. We want to increase our revenues from tourism ventures so we have a foreign policy.
Hence, we try to align our plan with the objective of the five year Growth and Transformation Plan. Now we have a state minister that leads the sector and in addition to what we do here at home to promote investment and attract many more tourists, our main actors are specially our missions abroad. We have fifty missions abroad. We have more than twenty five investment destinations and more than thirty trade sources. So, we collaborate with our missions to attract foreign investment.
When we attract foreign investment, we mainly focus on the bigger ones. This is because we have envisioned to register the fast economic growth in the coming five and more years. We need to get important and influential companies. So our investment attraction is focusing on two areas; biggest ones that could create bigger impacts on the economy, we call them anchor investors. And also we focus on small and medium enterprises. So accordingly, the number of anchor of investors we anticipate to get are less in number because they are big and their impact is huge, but more number from small and medium enterprises are expected.
Our main focus is attracting foreign investment in light manufacturing especially in textile, leather, pharmaceutical and food processing businesses. We look for the same type of cooperation but that include other services like mining so this is what we are doing align with our activities with national plan and we try to attract investor in two directions.
Moreover, we try to get market for our main export items. Our missions do market analysis that can be an input for our Ministry of Trade and Chamber of Commerce. We also promote our products with samples and catalogues so they can get market. We so often participate in major exhibitions as well. The other point, we engage in, is agreement. We try to forge bilateral agreement or regional agreement that facilitates the investment flow, market access, the tourism flow and technology transfer.
What could you tell us about the roles of Ethiopia’s overseas representatives in achieving the set goals of business diplomacy at all? Could you give us one or two success stories in sustaining and establishing an extraordinary business diplomacy with foreign government representatives or countries?
The tread is very encouraging because we have tried to promote Ethiopia with all possible means. But, I think what we have been doing so far would tell us the results gained without much efforts. Independent media people, economic analysts and the World Bank have been following and telling the world our development achievements.
We are getting more investment and I would say that in democratic front, we are aggressively working on attracting investment and getting access to market. We can exchange visits between high level officials of different countries and exchange of visits between private sectors. So I can say that in terms of attracting of FDI, I would say we have achieved a great deal because nowadays we are not only receiving small and medium enterprises from abroad. We are receiving anchor investors that have already finalized their preparations to start business in the industrial parks that are built in the country. Anchor investors are good at creating job opportunities and they are now giving us more attention.
So we have attracted more investments and anchor investors that are good at transferring knowledge and technology. For example we have investors from all parts of the world. From Asia we have internationally known Chinese textile and leather companies and also Toyota is now coming as a joint venture and Mitsubishi is as well. We can also mention from Europe, there is Unilever from UK. We have H&M from Sweden. There are a number of big influential companies and Bayer’s Crop Science the one that engages in agriculture business. These companies are already getting into work. But we have also received more companies with kind of standard; since they made series of visits to Ethiopia and are expected to invest here soon.
What are the main challenges that have been creating hindrances in business diplomacy of the nation?
The main challenges were the images that used to be associated with us. We are situated in the Horn of Africa. The Horn of Africa is a conflict-ridden region. So there is an intention that Ethiopia is in a very volatile region and it is impossible to invest here. But we have disproved that. As you know the interest of many countries is towards here. In the past twenty five years, we have given confidence to partners, we can be good partners for investment.
The other challenge is that delivery capacity that we have locally. For example, in receiving investment flows and making them reality. So the converting rate is another challenge. This is due to lack of the basic infrastructure and skills. For example, the well prepared land for investment with basic infrastructures such as enough electric power, roads as well as telecommunications.
Sometime we have to be very clear how investor should go about in investing. So I can say that we can put them into two boxes; the first one is that the infrastructural hurdles and the other one the administrative hurdles. Investors are not getting as fast as service they expect from you. Most of these investors are coming from the world where there is a lot of efficiency in doing things. Speaking about our comparative advantages, we have less corrupt country comparing to other African countries.
In fact, others say that corruption is zero in this country. We do not want to say that there is corruption in this country, but it could be managed. For example, there are many values that investors take us a balance. We have the cheapest electricity cost 0.3 USD per kilowatt. Plus we do have affordable and trainable workforce in this country.
The resource based we have in light manufacturing. Moreover, we have very committed government to development so investors are taking balance and the fact that we are the second biggest market in the continent. So company comes and sees that. They may not run as fast as they can, but they know that it is a stable government that have converted a number of projects into reality .So these encourage them. In fact focusing on social overhead capital such as infrastructure, education and health and this has given a good vision for investor.