Cablegate: Ethiopia: Diaspora Business Conference

VZCZCXRO6720
RR RUEHROV
DE RUEHDS #2981/01 2771415
ZNR UUUUU ZZH
R 041415Z OCT 07
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 8057
INFO RUCNIAD/IGAD COLLECTIVE
RUEHGV/USMISSION GENEVA 4034
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 ADDIS ABABA 002981

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EINV EAGR ET
SUBJECT: ETHIOPIA: DIASPORA BUSINESS CONFERENCE

1. SUMMARY: The World Bank, USAID, and Netherlands Embassy sponsored
the first Diaspora Business Conference on September 19, 2007. The
conference aimed to illustrate how the Diaspora community can
benefit from investment opportunities in Ethiopia. Participants
heard remarks from the GOE, the World Bank and successful Diaspora
investors regarding current economic conditions as well as current
and future business opportunities. Over 250 participants including
representatives of the Diaspora (mainly came from the US, Germany
and Australia), government offices, the private sector,
associations, embassies and chambers of commerce participated.
Although some questions were not answered, participants were
generally enthusiastic. END COMMENT.

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BACKGROUND
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2. The State Minister for Trade and Industry Tadesse Haile opened
the conference by highlighting lucrative business opportunities for
investors. The Minister noted the national development strategy's
recognition of the private sector as the engine of growth for
Ethiopia's economy and a sustainable tool for addressing the problem
of poverty. He argued that the GOE has taken various measures to
improve the investment climate, update the trade policy, reduce
regulatory burdens on business, and improve access to
infrastructure. Minister Tadesse further noted the GoE's
comprehensive program of reform over the past five years aimed at
reducing the cost of doing business, promoting the competitiveness
of local industries, and making Ethiopia attractive for foreign
direct investment. Tadesse pointed out massive public investments
in physical and social infrastructure including telecommunications,
roads, power, education and training, and emphasized that the GOE is
committed to dialogue with the private sector in order to continue
improving the business climate in Ethiopia.

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DIASPORA INVESTMENT IN ETHIOPIA
--DEMYSTIFYING THE PROCESS
--------------------------------

3. Participants at the conference were briefed by several Diaspora
members on their investment experiences in Ethiopia. Presenters
included prominent members of the horticulture, textile and apparel,
real estate, information technology and food and beverage
industries. Additionally, a representative of the World Bank
presented findings of its 2006 investment climate survey. The
Diaspora presenters indicated that the investment climate in
Ethiopia is attractive in terms of low competitive environment, duty
free imports for capital goods and inputs for investment, tax
holidays, and reduced cost of doing business, abundant labor force
and climatic diversities. (Note: The World Bank's just released
Doing Business report, which increased Ethiopia's rating to ninth in
Sub-Saharan Africa in terms of ease of doing business, confirms the
effectiveness of some of the GoE's reforms.)
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INVESTMENT OPPORTUNITIES AND INCENTIVES
FOR THE DIASPORA
---------------------------------------

4. H.E. Abi W/Meskel, Director General of the Ethiopian Investment
Agency, presented investment opportunities and conditions in
Ethiopia. He highlighted opportunities in agriculture and related
sectors, textiles, tannery and leather products, food and beverage,
construction and tourism. He also indicated certain areas not open
to Diaspora investment. Areas limited to GOE ownership include the
transmission of electric energy, postal services, and air transport
over 20 passengers. Banking, insurance, and freight forwarding are
limited to investment by Ethiopian nationals only. Finally, he
underscored Ethiopia's relative political, social and macroeconomic
stabilities, comparative advantages and packages of investment
incentives. A representative from Privatization and Public
Enterprises Supervisory Agency gave an update on privatizations,
stating that 242 companies have been transferred to private equity
owners, 21 restituted to their previous owners and 9 leased. He
also said 47 companies have been privatized in the last two years
only and the Agency is planning to privatize 42 others in 2007/08
fiscal year.

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UNANSWERED QUESTIONS
--------------------

5. Following the presentations, participants raised questions
regarding access to capital, reasons for restrictions on investment
in aviation and banking and insurance, availability of land for
cotton and other large-scale crops, and Diaspora rights in addition
to investment. The Panelists responded to some of the questions,
but referred most of them to the subsequent forum organized by the
Ministry of foreign Affairs for the next day at the Millennium Hall
at which senior government officials were expected to be present.

ADDIS ABAB 00002981 002 OF 002

6. COMMENT: While the conference achieved its goals of creating
awareness about investment opportunities in Ethiopia, many
participants remained skeptical about how conducive the investment
environment, and supporting sectors, actually are. The government's
outreach to diaspora communities is certainly a positive step in the
right direction, but the Government's, regulatory authorities', and
the judiciary's actions in support of the rule of law, contract
sanctity, and in establishing a level playing field will provide the
more convincing evidence to potential investors of the GoE's
receptivity to, and support for, private sector led growth. END
COMMENT.

YAMAMOTO

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