The Hindu : Business : Ethiopia invites investments from India

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Sunday, Jun 06, 2004

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Ethiopia invites investments from India

By Our Special Correspondent

CHENNAI, JUNE 5. Ethiopia in Northern Africa, which has since 1991 transformed itself into a stable, multi-party democracy, seeks investments from India, especially in areas such as leather, pharmaceuticals and textiles, besides expansion of cooperation in education and training.

Land-locked Ethiopia, with access to the sea from Eritrea and other neighbouring countries, has adopted a long-term Agriculture-led Industrialisation strategy to encourage value addition to its agricultural resources, besides minerals, for supply of finished products to the U.S., European and African markets on the one hand and to the expanding domestic market on the other.

"Many African countries, particularly South Africa and Botswana, have taken advantage of the African Growth and Opportunity Act (AGOA) of the U.S. to generate exports of a few billions of dollars, while we (Ethiopia) have managed just a few million dollars because of lack of domestic industrial capacity and value-adding capability," said Teketel Forssido, Ambassador of Ethiopia.

Addressing a meeting organised by the Consultative Committee of City Chambers of Commerce (CCCCC), Forssido, a former research scientist in agriculture and former minister, said India's technology in many fields would be appropriate for Ethiopia (population 71 million) at its present stage of development. Investors in his country can also take advantage of preferential access to COMESA (Common Market of Eastern and Southern Africa) and duty-free and quota-free entry into the European Union (EU).

According to a presentation made by the Ambassador, Ethiopia, holding the first rank in Africa in terms of cattle wealth and ninth in the world, has a small tannery industry. The government's industrial policy has reserved tanning of hides and skins up to the crust level for domestic investors. Thus foreign investment would be welcome for substantial value addition in terms of finished leather and leather products. Export of raw coffee, chat, oil seeds, pulses and hides and skins bought from the market is reserved for domestic investors but foreign investors are allowed to cultivate their own agricultural raw material or rear livestock and export the materials and hides/skins, respectively.

Indian investment, both wholly owned and in joint ventures, is already present in Ethiopia in road/railway construction/consultancy (RITES), telecommunication, power, sugar plant, mango plantation and water resources management. Besides leather and textiles, Indian companies can look for opportunities in infrastructure, education and technical training, pharmaceuticals and development of small enterprises.

Tax incentives offered by Ethiopia include duty-free import of equipment and capital goods for approved projects and for leasing of capital goods, and spares to the extent of 15 per cent of the value of the capital goods, exemption from import duty for raw material for export production, income tax holiday for up to five years/two years, respectively, for new projects/expansions, with the facility of carry-forward, up to five years, of losses incurred during the tax holiday period.

The minimum capital required for foreign investment is $100,000 per project and $50,000 in the case of engineering, architectural, accounting and audit services or in other consultancy services and publishing. In the case of a joint venture with Ethiopian investors, the minimum foreign investment needed is $60,000 per project and $25,000 for consultancy and publishing. Power generation (largely hydel), with scope for non-conventional energy, is open to foreign investment, while transmission and distribution are reserved for the government.

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Ethiopia invites investments from India