Ethiopia has opened doors for business more than ever, which is a very optimistic incitement for the private sector development in the nation. The Country’s economic growth could potentially be backed by providing the continental and international market with quality goods and services—preponderantly the task of the private sector.
The contribution the private sector has been making to the national economy in Ethiopia is well recognized, no doubt. As the private sector can play irreplaceable role in heightening industrialization, creating mammoth job opportunity and transferring technology, the country is advancing towards industrialization. It has left no stone unturned to make its vision a reality via addressing problems the private sector has faced. As part of the national effort to bring about change, the issue of encouraging the private sector is given due attention especially these days. This move would be a viable means to come up with development and progress. Having this in mind, the Ethiopian Chamber of Commerce and Sectoral Associations not long urged the government to consider addressing challenges with respect to capacity building and lack of skilled labor to encourage the private sector to be active players of the investment.
True, building the capacity of industries and addressing shortage of skilled labor is critical to attract more private sector investment into the manufacturing sub sector. Investors interested in tapping this vein still must clear a number of hurdles to attract private equity.
It is crystal clear that private investors are attracted to a range of investments because of the potential of higher returns. When we can scoop up investment properties that generate huge annual returns on investment, it serves as a magnet to wealth.
Ethiopia needs to harness private sector expertise and investment and look beyond its domestic markets to the global investment industry including multilateral institutions and private capital.
Some states are set out to improve their own governance structure and operational performance in order to become more attractive to investors. They began updating and improving their tax and non-tax collection strategies to boost revenue through attracting more private capital. However, a lot remains to be done along this line.
States are expected to be more accountable for their own development when the funds are raised locally and from investors to make a difference at national level. Without the machinery of governance being in place to support the legislative or legal framework, the concept of investment friendly becomes merely illusory. Each action plan needs to be tailored to the countries specific context and challenges, providing technical assistance on issues such as revenue and debt management, capital investment planning as well as structuring and execution.
Most of the areas abundantly found in the country are invisible to investors looking for opportunities. So, the country is expected to make conditions conducive to investors to be able to reap much out of the untapped investment potential areas. This initiative has the potential to leverage private investment that will finance the infrastructure necessary to help the nation meet the demands of citizens for basic services, and build resilience to the effects of the changing climate.
Another important consideration in attracting investors is sustainability—some states have started funding infrastructure projects, and they must adhere to an independent verification process to certify that the application of the funding is for suitable green projects, which if handled right can open up a new swathe of investors to provide the assistance they may need.
The government of Ethiopia has introduced a variety of reforms aimed at improving macro-economic stability, accelerating economic growth, and increasing the private sector’s share in the overall economic well-being of the country.
Expansion of the infrastructure, institutional, organizational and regulatory frameworks aimed at improving investment climate of Ethiopia can be taken as a great opportunity for private sector development. Although, Ethiopian economic growth seems to be public sector-led in reality, it is hard to deny the significant contribution of the private sector to the economic growth of the country.
However, the private sector is not yet close to contributing the expected level of share to Ethiopian economy following many hurdles. As learned from some studies, the expansion of private sector in Ethiopia is baffled by lack of adequate capacity and weak institutional frameworks. The private sector faces many problems associated with issues, among others, business environment, bureaucratic red tape. Interestingly the government is working to clear these progress shackles.
In sum, government is expected to well address the myriads of challenges the private sector has been experiencing though there is a ray of hope to well break the bottlenecks.
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