To add, The Birr (Ethiopia’s currency), is unreliable in banks and can cause delays while trying to exchange in business transactions and because of Ethiopia’s absence in the World Trade Organization (WTO), there is no way to regulate the coin, the value, and its exchanging mechanisms. In 2012, the US FDI in Ethiopian stock was $11M, and this reflected a 22.2% increase from 2011. Despite these promising figures, there are some investment barriers listed by the United States Trade Representative (USTR). As far as investments in the telecommunication services industry, as well as defense industry; any investment is prohibited unless it is being done within a partnership with the Ethiopian government. The banking, insurance, and micro-credit industries are restricted to domestic investors only. Only Ethiopian nationals may invest in broadcasting, domestic air transport services (aircrafts with a seating capacity over 20 people), forwarding and shipping agency services industries. Foreign investors are also barred from small retail and wholesale enterprise in industries such as, printing, restaurants, and beauty shops.
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Along with these restrictions and limitations, state-owned enterprises continue to be privatized. All in all, these barriers influenced by the political scene in Ethiopia, along with a foreign exchange managed by a Central Bank of a strict regime that bends for governmental benefits, are all reasons why an investor might see set-back from the political aspects of Ethiopia.
Now, we will construct an analysis on the economic situation ongoing in Ethiopia. The economy of Ethiopia is based on several factors including: Industrial, Trade, Regulatory, Investment, Government Procurement, Labor, Development, SMEs, and Consumer Protection. These are all sectors that become intertwined when discussing economics in Ethiopia. Industrial development in Ethiopia is under the Industrial Development strategy, this was established in 2001 which is fairly new for an industrial strategy. Since the private sector now controls a lot of the industrialization, it is important to understand regulations currently have eliminated limits for private businesses to conduct business without the government interfering so much in day to day functions. (???) In regards to GDP growth factors, exports lead production with regards to the economy of Ethiopia. However, if the export chain of command is simplified and developed for decreasing error while maximizing production, then consequently there could be a boost to the Ethiopian economy. The foreign and domestic investment into industrialization will play a crucial role in this development. Furthermore, we can see that Ethiopia has been making significant progress toward increased economic accessibility via improving trade policies with Ethiopia’s political regime. Thus, there has been a significant decrease in import tariff rates, also a reduction of the tariff dispersion. Additionally, Ethiopia’s trade protection system has no quotas; no tariff rate quotas and no seasonal tariffs. As a result, if trade regulation was loosened in Ethiopia, there would be more active channels for boosting the economy, although due to export market being somewhat closed, that boost has not been visible in the global market. An analysis of the GDP for this country shows projected growth and potential, but it requires the proper support, and outlook. According to the International Monetary Fund’s (IMF) latest assessment of Ethiopia’s GDP, “[it] is on track for a growth of 8.7% this fiscal year” (Miller, 2015). The GDP is expected to grow and the government hopes to reach middle class in the next ten years (WorldBank, 2015). Ethiopia’s growth and development of their agricultural sector is vastly important for the countries’ economic status. Other markets are more limited and less known. Ethiopia 's economy is primarily based within agriculture, being half of GDP, 60% of exports, and 80-85% of employment. In a sense, efforts of foreign direct investment into other economic segments, as well as the pre-existing agriculture industry in the last ten years, have fueled Ethiopia’s national average regarding economic growth. Although, there are still huge concerns lurking with inflation. Ethiopia has been battling high inflation in recent years. Year-on-year inflation peaked at 64% in July 2008—the second highest in Sub-Saharan Africa after Zimbabwe. After declining to 10.2% as of November 2010, it has gradually resurged to a high of 40.6% in August 2011. (Ethiopian Informant) However, increase in willingness of foreign investors to give African countries consideration for capital investment is a major reason why Ethiopia’s GDP and
Along with these restrictions and limitations, state-owned enterprises continue to be privatized. All in all, these barriers influenced by the political scene in Ethiopia, along with a foreign exchange managed by a Central Bank of a strict regime that bends for governmental benefits, are all reasons why an investor might see set-back from the political aspects of Ethiopia.
Now, we will construct an analysis on the economic situation ongoing in Ethiopia. The economy of Ethiopia is based on several factors including: Industrial, Trade, Regulatory, Investment, Government Procurement, Labor, Development, SMEs, and Consumer Protection. These are all sectors that become intertwined when discussing economics in Ethiopia. Industrial development in Ethiopia is under the Industrial Development strategy, this was established in 2001 which is fairly new for an industrial strategy. Since the private sector now controls a lot of the industrialization, it is important to understand regulations currently have eliminated limits for private businesses to conduct business without the government interfering so much in day to day functions. (???) In regards to GDP growth factors, exports lead production with regards to the economy of Ethiopia. However, if the export chain of command is simplified and developed for decreasing error while maximizing production, then consequently there could be a boost to the Ethiopian economy. The foreign and domestic investment into industrialization will play a crucial role in this development. Furthermore, we can see that Ethiopia has been making significant progress toward increased economic accessibility via improving trade policies with Ethiopia’s political regime. Thus, there has been a significant decrease in import tariff rates, also a reduction of the tariff dispersion. Additionally, Ethiopia’s trade protection system has no quotas; no tariff rate quotas and no seasonal tariffs. As a result, if trade regulation was loosened in Ethiopia, there would be more active channels for boosting the economy, although due to export market being somewhat closed, that boost has not been visible in the global market. An analysis of the GDP for this country shows projected growth and potential, but it requires the proper support, and outlook. According to the International Monetary Fund’s (IMF) latest assessment of Ethiopia’s GDP, “[it] is on track for a growth of 8.7% this fiscal year” (Miller, 2015). The GDP is expected to grow and the government hopes to reach middle class in the next ten years (WorldBank, 2015). Ethiopia’s growth and development of their agricultural sector is vastly important for the countries’ economic status. Other markets are more limited and less known. Ethiopia 's economy is primarily based within agriculture, being half of GDP, 60% of exports, and 80-85% of employment. In a sense, efforts of foreign direct investment into other economic segments, as well as the pre-existing agriculture industry in the last ten years, have fueled Ethiopia’s national average regarding economic growth. Although, there are still huge concerns lurking with inflation. Ethiopia has been battling high inflation in recent years. Year-on-year inflation peaked at 64% in July 2008—the second highest in Sub-Saharan Africa after Zimbabwe. After declining to 10.2% as of November 2010, it has gradually resurged to a high of 40.6% in August 2011. (Ethiopian Informant) However, increase in willingness of foreign investors to give African countries consideration for capital investment is a major reason why Ethiopia’s GDP and