Just when the inhabitants of Addis Ababa began reaping the fruits of years’ worth of road construction, Air Force One touched down and sent the city spiraling into chaos. Those brave enough to leave their neighborhood found themselves stuck for hours in standstill traffic. While others who went by foot soon discovered that walking was not permitted if they stumbled within a nearby radius of President Obama.
Yet despite the disruption this caused to local businesses and work commuters, most of the city buzzed with excitement as the first active duty American president visited their beloved country.
As the praise for his visit still continues, many have hailed it as heroic– opening East Africa’s door to further economic and social growth.
Diaspora Returning
People that is, like Ariam Asmerom. Ariam is a leading partner at CVT International Consultancy whose headquarters are located in Addis Ababa, Ethiopia. Their mission is to guide foreign companies through a sometimes murky path to market entry, as well as to support local businesses and project owners who could benefit greatly by partnering with the right investor.
Ariam spent only the first three years of her life in Ethiopia, deciding to return in 2012 after spending decades abroad in Kenya and then the United States. She made the life altering decision to return to Ethiopia, “simply because of its amazing growth story and its bright future.”
“The decision was not difficult,” she recalls. “I was at the proverbial ‘fork in the road’ after leaving a 15-year career to raise my two children. My husband and I started to consider many options for our future and coming back to Africa was high on our list.”
As someone who has made a successful transition, she has many words of wisdom for other diaspora contemplating a return.
“Don’t overthink it,” she suggests. “If your life circumstances seem to be driving you toward change, then take a very close and critical look at the opportunities in Ethiopia and plan a quick transition.”
If your reason for coming is more tangible such as a job offer or an investment opportunity, she recommends making the transition even quicker. However, she is also quick to advise, “be realistic in your expectations, understand the financial implications and give yourself time to ramp up and adjust to a big life change.”
For those still daunted by the decision, Ariam’s confident that once you arrive and sense how vibrant the energy is here, you’ll become even more inspired and reassured of your decision.
Investment Knowledge for Local Business Owners
Through her short time back on African soil, Ariam has observed that some local investors have false ideas regarding investment partnerships. For example, she says, “There is the misconception that investors are indiscriminately drawn to this market and are easy to find. Yes, there is a strong attraction to investment in Ethiopia but this doesn’t make the process easy by any means.”
“Another misconception,” she says, “is that foreign investors will always want a majority stake. Some will, but others will actually prefer a lower equity, lower risk scenario.”
The last commonly misconstrued idea by some local business owners is that the land secured for a project (free hold or leased) is a significant equity contribution. This is mostly not the cuotase simply because the land factor does not weigh heavily in shared risk.
For local Ethiopians wanting an investment partner, Ariam says that in her experience investors are looking for three key ingredients. First is a clean land title if the project is to be built. Second, investors are keen to see a well-prepared business plan or feasibility study. And third, there must be evidence of the local partner’s ability to make a minimum equity contribution, typically between 20-40 percent of the total project cost.
Investment Opportunities in Ethiopia
For individuals thinking about investing in Ethiopia, they can anticipate the release of the government’s Growth and Transformation Plan II which is expected to happen any day now. Ariam says this will guide investment trends in the coming years to some extent, while the market will continue to spike in many sectors like retail and real estate with little influence from public policy.
She also adds, “We work quite a bit in the hotel sector and I’d say there is definitely room for investment here, including many related goods and services that are still under supplied.”
When asked about Africa’s reputation for corruption and undeveloped sectors, she admittedly reports, “There is associated risk, that’s for sure.” However, she also says, “There should be the necessary due diligence from the foreign investors side, but it’s also very important to have strong local partners who can navigate through some of these obstacles more effectively than a foreigner could probably do.”
She believes the World Bank’s “Ease of Doing Business” ranking is worth serious consideration by investors. Stating, “I’m eager to see Ethiopia and other strong emerging economies move up this ranking, sooner rather than later.”
Making History
In another World Bank report, Ariam remembers reading that for the first time ever, we are seeing growth and success in all regions of the world with sub-Saharan Africa leading rather than following the pack. She admits she’s a little biased toward the cup-half full side of the story, recognizing that there is still a lot to be done.
However she says, “It just makes me beam to know that my children are a part of this history in the making.”
Transforming Obama’s call for increased business and trade in East Africa into an attainable reality is both challenging and energizing, and for Ariam, “It’s exactly what I hoped this journey would be.”