“Companies coming to Ethiopia should be encouraged to invest heavily in education of their employees”
Sam Rosmarin is an American strategist based in Ethiopia and has become a noted advocate for investment to the nation. The one time Director of Programs, with the Economic Policy Analysis Unit of Ethiopia reflects with Samuel Getachew of The Reporter on his time in the country, on the nation’s progress towards achieving more investment to its shore, on the recent reforms that have taken shape and on how he envisions Ethiopians to think of the United States. Excerpts:
The Reporter: You have been in Ethiopia for almost a decade. What have been the highlights for you so far?
Sam Rosmarin: One notable highlight is a daily occurrence: peeling the onion of this incredibly complex and intriguing country. The way, this country perseveres and grows gets me out of bed each morning feeling energized and inspired. Over the past seven years, I have seen this country completely transform politically, economically, and socially. On the personal level, it is definitely the relationships I have formed – friends and colleagues who treat me like family. The biggest highlight of all was meeting Afel, my wife-to-be (I’m getting married in January).
Ethiopia has been advocating for trade and foreign investment to change its narrative. How is the country doing so far?
I am impressed by Ethiopia’s commitment to shaping its own narrative on trade and investment. This country is leading the formation of the Africa Free Trade Agreement, it thinks strategically about how to engage with (and borrow from) China, it pushes back against liberalization to ensure reforms serve Ethiopian needs. Ethiopia has also invested heavily in electricity, roads, rail, airlines, and other critical infrastructure – such strategic investment makes Ethiopia an attractive trade and investment destination. Ethiopia is also doing a good job in having the vision to link its raw materials and labor into a globally-competitive manufacturing hub. It is not quite there in facilitating critical (imported) manufacturing inputs.
Overall, the ease of doing business has greatly improved, especially at the federal level. I believe the large challenge now is to disseminate these reforms and build the capacity to implement them across all levels of federal and regional government. For example, the federal one stop shop at EIC is a tremendous improvement, but business is not confined to the federal level and investors need to find regional buy-in and support to build factories, link to infrastructure, and run their day-to-day operations.
As a noted strategist, what do you think are the best approaches to lure foreign investment and talent to Ethiopia?
Investors and talent come here for the macro picture: the world’s fastest growing economy, a market of 100 million consumers, relative peace and stability, and new liberalization. However, keeping those investors and talent here requires a commitment to streamline processes. Ethiopians often grumble about the bureaucratic processes – imagine how complicated it is for new foreigners! Investors understand that processes cannot always happen quickly, but it is important that they happen consistently.
From the investment perspective, dividends are one overlooked area in need of reform. Investors are excited about the potential of Ethiopia, but they also have a fiduciary responsibility to their investors to repatriate profits. The first question I’m asked by potential investors is “how am I going to get my money out?” They do not mean this in a predatory way, but rather are concerned that they won’t be able to fulfill their fiduciary responsibilities. Easing the dividend policy would create a net positive inflow of FOREX. On talent, Ethiopia should focus on making Addis Ababa a more walkable and livable city by investing in green space and regulating pollution. There is overwhelming economic evidence to support the economic return on investing in green cities.
You describe yourself as an Ethiopia-inspired mixologist. What does that mean?
Bartending has always been a form of artistic expression for me. For me, a good cocktail starts in the kitchen rather than in the bottle of some fancy imported liquor. I wander around Bole Japan market searching for fresh ingredients for my cocktails. Ethiopia has an incredible food culture and I try to find a way to fuse those flavors with my western-learned cocktail making techniques.
What are some of the recent reforms that have inspired you so far?
Paramount is the government’s commitment to openness and transparency. From government officials like Fitsum [Arega] and Mamo [Mehretu] on Twitter to the set of ease of doing business reforms announced this week, it is clear that the government is not only stating ambitious goals but also asking to be held accountable by the public. As an investor, I am most excited by the Letter of Credit (LC) guarantee agreement with the IMF, which I hope will dramatically decrease LC waiting times.
I hope that this reform is focused on the priority sectors – especially manufacturing and pharmaceuticals. Last, but certainly not least, I am incredibly inspired by the government’s commitment to women in leadership. I believe this wave of strong Ethiopian women in government will be transformational for this country, and it makes me proud to call Ethiopia my home.
You worked on the draft National Entrepreneurship Strategy. What are, in your opinion, good areas to invest in Ethiopia to help create jobs for young people?
The youth in this country are incredibly resourceful, but it is incredibly difficult to become an entrepreneur in your early 20s, and the failure rate of entrepreneurship at any age is high – particularly in a risk-adverse culture. In fact, the most successful entrepreneurs begin their ventures in their 30s and 40s after becoming experts in their fields. Building strong internationally-competitive companies will do the most to help create jobs in this economy.
I think many Ethiopians do not realize the quality of labor they are competing with, and the best way to learn how to be world-class is to work in world-class firms. Companies coming to Ethiopia should be encouraged to invest heavily in education of their employees. Companies should also be encouraged to provide paternity leave to male employees and make it clear to female employees that they will be supported to climb the corporate ladder. Like most countries, Ethiopia’s economy loses too many brilliant women.
If you were asked by a potential investor to Ethiopia on advice on investment opportunities, what would that be and what wisdom would you share?
At the moment, a good investment is anything that generates forex. The government has crafted a clear policy to build an export base and that is where investors are most incentivized. I also tell investors to only enter if they have patient capital and are willing to invest time, energy and money. The private equity sector is in its nascent stage and there are more opportunities to build a business from scratch. In addition, I view agriculture as an overlooked investment opportunity in this age of manufacturing.
Ethiopia has a large and un-optimized agricultural potential, especially as an input to manufacturing. The liberalization of the logistics sector has created immense opportunities for catalytic foreigner investors; this country is vast, and companies will be willing to pay for optimized logistics solutions. In the medium/long term I also think Ethiopia’s medical sector could piggy-back on the tremendous success of Ethiopian Airlines to become a medical tourism hub
As an American, how do you want your nation to be known in Ethiopia and how does America shape your identity here in Ethiopia?
America is in a difficult and troubling political era, but it is a resilient country grounded in a strong democratic foundation. America’s strength comes from its institutions, its commitment to civics, and its robust space for civil dialogue. We also find strength in our differences. Ethiopians know America as a land of opportunity, and that’s certainly true, and it’s important to know those opportunities come from a free exchange of ideas. In many ways America is similar to Ethiopia – both are proud countries full of generous people.
Both see themselves as leaders in this world and are audaciously ambitious. I want America to be known as a country that welcomes immigrants and understands how much value immigrants add to the American economy and society. Like most Americans, I come from a family of immigrants seeking opportunities. This mirrors my journey to Ethiopia – a country where I have stayed for the potential and opportunities. I hope that Ethiopia one day makes it possible for committed long-term foreigners like me to establish permanent residency.