Ethiopia among Top Performing African Countries in FDI Flow: World Investment
“…The World Investment Report has put Ethiopia as one of the top performing African countries in FDI flow, registering a 46% increase in 2016.
Although the author of the report, UNCTAD, said FDI flows to Africa continued to decline in 2016, some diversified producers of East Africa registered strong FDI in 2016, with Ethiopia attracting more inflows than ever before.
In doing so, Ethiopia stood out to become one of the largest recipients of FDI in the continent posting strong and record growth (up 46 per cent to 3 billion USD) and became the second largest LDC host economy, up from the fifth position in 2015.
According to the report, much of this achievement is derived from investments in infrastructure and manufacturing. The report also stated that the largest cross-border M&A sale of the year (510 million USD) was also recorded in Ethiopia, with Japan Tobacco acquiring a local cigarette manufacturing facility.
It further noted that “Ethiopia attracted new FDI in manufacturing, which could create opportunities for local SMEs to link to global supply chains.
The country is also cited by the report as one of the top performers in its efforts to diversify its economy and consequently its FDI pool against extractive investment that hitherto African and land locked economies are known for. Diversification of inflows is advancing, especially in economies that have recently attracted sizeable FDI such as Ethiopia, despite the persistent weight of natural resources in FDI to LLDCs, the report pointed out.
The report added that “although China was one of the major sources of FDI, foreign investors from other economies have started investing more in Ethiopia’s agro-processing, hotels and resorts, as well as in its manufacturing activities.”
Similarly, it outlined a slight decline in FDI inflows to landlocked developing countries (LLDCs) — and these countries continue to play only a marginal role in the global FDI scene, Ethiopia stands out among these groups of countries by continuing in its positive trajectory for a fourth consecutive year…”