ADDIS ABABA, September 22, 2009—Ethiopia has made improvements in business registrations, tax administration and competition policy in an effort to improve the ease of doing business.
Despite its efforts, Ethiopia still ranks at 107th out of 183 countries in the World Bank-International Monetary Fund’s Doing Business 2010 report. This leads to the conclusions that there are still obstacles for businesses or private investments that need to be addressed.
The second Productivity and Investment Climate Assessment Survey (ICA) for Ethiopia entitled: “Toward the Competitive Frontier: Strategies for Improving Ethiopia’s Investment Climate” sheds some light on some of the obstacles facing the private sector in Ethiopia.
The findings of the ICA were disseminated on August 20, 2009 at a conference held at the United Nations Conference Center in Addis Ababa. The conference brought together the private sector and high level delegates from the Government of Ethiopia and provided the opportunity for each side to openly discuss the findings of the report, take stock of what has improved since the survey was conducted and propose possible solutions to the challenges identified in the report.
The ICA is based on surveys conducted on 600 firms from manufacturing, service and informal sectors. The report evaluates the state of the private sector in Ethiopia, identifies key constraints to increasing productivity and compares the competitiveness of Ethiopian firms with respect to those in other countries. It also identifies policies that will alleviate obstacles and improve firm productivity and export competitiveness.
According to the report, lack of competition, access to finance, access to land, low productivity, and inefficiencies in resource allocations are among some of the factors that are affecting Ethiopia's competitiveness on the world market.
State Minister for Trade and Industry H. E. Ato Tadesse Haile said access to land was no longer a problem for business investment in Ethiopia as evidenced by the thriving floriculture investments across the country.
Among some of the possible solution proposed in the report that will enable Ethiopia to become more competitive are: creating markets to improve competitiveness, improving financial sector performance, reforms in the urban land policy, building institutions that support markets as well as evidence based industrial policies. It also recommends leveraging Ethiopians in the Diaspora because they enjoy several advantages that specifically address the weaknesses identified in the ICA.
“The Ethiopian government will consider the recommendations made in the report,” said Neway Gebre- Ab, Chief Economic Advisor to Prime Minister Meles Zenawi, in an interview he gave to The Ethiopian Television. "It should however be noted that there has been a lot of progress in the business sector reform, and government has given great attention in terms of access to credit, but we will consider the recommendations despite the report having some disparities.”
RSS