Ethiopia Seeks More Chinese Investment: Meles
2011/05/08
 Source: WIC

 

Addis Ababa, May 6 (WIC) - The Ethiopian Prime Minister Meles Zenawi said he foresees continued investment in the country from China, especially in infrastructure and manufacturing, sectors that are vital for the country's economic growth.

 

China is already a major investor in Ethiopia, Zenawi said, but there is still huge room for growth, particularly as the country has launched its second five-year plan, set to end in 2015, which is known as the Growth and Transformation Plan (GTP).

 

At the core of the GTP, Ethiopia plans to give priority to industrialization, by focusing on the development of its manufacturing and infrastructure sectors. Ethiopia has a population of 82 million and the government is committed to reducing poverty.

 

"We are closely working with Chinese companies in two areas; one is infrastructure and the other is manufacturing. Chinese companies can play a vital role in implementing infrastructure projects," said Zenawi.

 

The country's economy has largely been driven by agriculture and agro-related industries. Under the GTP framework, Ethiopia will promote more infrastructure projects, including roads, wind power and renewable energy.

 

Ethiopia has an extensive road network, running to a total length of 42,400 kilometers (km), but only one railway, which connects Addis Ababa with the Northeast African Republic of Djibouti. Ethiopia plans to construct 2,600 kms of railway under its new five-year plan.

 

China is constructing an industrial zone in Ethiopia, one of several similar zones it's building on the African continent. The zone aims to attract more Chinese investment in textiles, garments, leather and chemicals.

 

"Improving infrastructure, the establishment of industrial zones, the training of skilled manpower for the manufacturing sector - all of these are part of our plan to attract Chinese investment to Ethiopia," he said.

 

Zenawi said there are specific policies for foreign investment. "We have tax incentives, including rebates; they vary from place to place, and the duration of the rebates varies from two to 10 years".

 

China is the third-largest foreign nation investing in Ethiopia, by volume of direct investment, which, to date, has totaled $364 million. The funds are distributed across the automobile, textile, hotel, and machinery equipment sectors, and in the manufacture of products for daily necessities.

 

The China-Africa Development Fund, a subsidiary of China Development Bank which facilitates Chinese investment in Africa, has injected the largest volume of capital among African nations into Ethiopia. So far, the fund has invested more than $61 million in the country.

 

"If we combine the direct investment in infrastructure (of contracted projects), China is already the largest investor here," said Zenawi.

 

According to the Ethiopian Investment Agency, China's investment has reached $900 million, if the contracted projects are taken into account.

 

In 2010, Ethiopia's economy grew by 11 percent from a year earlier, registering double-digit growth for the seventh straight year. According to officials, the nation expects growth of 11 to 15 percent over the next five years.

 

"China is willing to encourage and facilitate Chinese companies becoming actively involved in Ethiopia's economic development," said Fu Ziying, China's vice-minister of commerce, during his recent official meeting with Zenawi in Addis Ababa.

 

The countries have discussed the possibility of more cooperation to strengthen Ethiopia's industrial capacity.

 

He Mingliang, chairman of China-Africa Leather Co Ltd, said: "We have a long-term strategy here, thanks to the low cost of labor, rich raw materials and huge market potential."

 

His company has invested 159 million Yuan ($24.5 million) to manufacture 1.5 million square meters of finished leather and 1 million pairs of leather gloves annually, mainly for export to China and the European Union.

 

Ethiopia is a very important market in Africa for China's engineering contractors, and China is involved in many projects, including telecommunications, hydroelectricity and roads.

 

China's presence in Ethiopia's telecommunications industry is huge. In 2006, ZTE Corporation, China's second-largest telecommunication equipment maker, signed an exclusive agreement worth $2.1 billion to build a national telecommunications network in the country.

 

China is Ethiopia's largest trade partner and the largest export destination for Ethiopian goods.

(China Daily)