Investment Climate in Ethiopia
Investment Climate in Ethiopia
Investment Climate in Ethiopia
ETHIOPIA
August 16, 2022
USAID CATALYZE Ethiopia:MS4G
For any nation's economic growth, the ease of formation and
mobilization of capital across all types of business financing life
cycles is critical.
ECONOMIC BRIEF
Favorable
• One of the top destinations for foreign direct
destination for
investment (FDI) in Africa → Largest in East Africa
FDI
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INVESTMENT TO %GDP
INVESTMENT TO %GDP
Source: MoPD
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FDI INFLOW
FDI INFLOW
5.0
1. The largest recipient of FDI in
4.5 4.3
East Africa $4.3b (79% increase) 4.1
4.0
4.0
2. The highest FDI flow in last 5 3.5 3.3
years 3.0
2.5
3. Improving investment 2.5 2.4
environment 2.0
1.5
1.0
2016 2017 2018 2019 2020 2021
Source: EIC
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CREDIT DISBURSEMENT
CREDIT DISBURSEMENT
Types of banks Year Disbursement in billions
Public
Banks Private Banks 2020/ 21 208.1
2020/ 21
37% Public Banks 2020/ 21 121.3
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FUNDING RAISED FUNDING RAISED
121.3
208.1
Source: https://thebigdeal.gumroad.com/
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PROMINENT CHALLENGES
1 Foreign Currency
3 Policy
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FOREIGN CURRENCY
FOREIGN CURRENCY
NBE Forex Reserves (USD Billions)
3…
• Business continuity 2.9 3
Source: NBE
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SECURITY / INSTABILITY
SECURITY / INSTABILITY
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POLICY CONSTRAINTS
POLICY CONSTRAINTS
• Market restrictions
• Lack of consultation / private sector
negative perception
• Burdensome financial industry
regulations
• Corruption, transparency, capacity
• Land allocation
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OPPORTUNITIES
OPPORTUNITIES
• Drafted Startup proclamation- National Council of Startup
Businesses and Innovation Funds established by this
proclamation.
• Startup loan initiative by DBE
• Capital Market establishment for long term funding (Develop
SME segment is part of the Capital Market Strategy)
• MSME development strategy (draft and under discussion by
the CoM)
• IP policy (Draft)
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PAGE TITLE
RECOMMENDATIONS
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PRAGMA CONSULTING PLC
Aster Plaza – 3rd Floor
Gabon Street
Addis Ababa
Ethiopia
+251 929-09-21-61
+251-118-54-0031
+251 920-72-22-81
[email protected]
pragma-advisory.com
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Pragma Investment Advisory is a boutique business and financial advisory firm with a primary focus on
developing strategic entry and growth planning for individuals and companies demonstrating investment
interest in Ethiopia. Our firm is run by principal advisors who have established strategic alliances with
highly-qualified consultants whose professional backgrounds range from working for some of the big 6
financial advisory firms to Emerging Market-focused private equity companies.
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