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Nordic businesses eye opportunities in Ethiopia

Nordic businesses are zeroing in on opportunities in Ethiopia despite what they are expressing as daunting challenges in the Ethiopia business environment. This was reflected in a seminar organized by the Royal Norwegian Embassy and Embassy of Sweden on October 24, 2018 at the Sheraton Addis Hotel, Addis Ababa.

Held on the aftermath of the government’s decision to partially privatize some of the major State Owned Enterprises (SoE), the seminar brought potential investors and policy makers from the two countries in the Nordic region to discuss how they could exploit these new opportunities. The participants, both investors who have already set foot in the country as well as the new ones, reflected on the business opportunities in the country and raised their concerns.

The participants of the seminar includes: ABB, an electromechanical and technology company, AARO systems, an accounting firm, SOZO Consulting, a consulting firm specializing in health sector investments, MIKRA, a vehicles solution provider, Indezi, a leather product exporting company, H&M, a textile manufacturer, Ericson, a telecom multinational and many more involved in different businesses.

Themed “Nordic Solutions for Business Development” the seminar aimed at introducing solutions both to the operations of the government to improve the business situation in the country as well as introduce products that fit the Ethiopian market.

Speaking at one of the panels, Marie Nielsen, Founder and CEO of Penda Manufacturing, a paper recycling company in Ethiopia, said that doing business in Ethiopia has been fun for her so far, despite challenges like telecom reach limitation and power outage. But, she says she hopes for their improvement and tries to fill the gaps using power backups.

Anteneh A. Senbeta, deputy commissioner of the Ethiopian Investment Commission (EIC), admits the challenges are well-known to the government and that “they are not easily fixable in a short time.”

But, with reforms in the past six months, things have started improving and the major remaining task to sustain the reforms is institutionalizing, he said.

As migration of jobs and investments from East Asian countries is likely to increase as the result of skyrocketing cost of production, Antheneh says the government has to work hard on acquiring and transferring technology since most of investments from this region have already started using robots in the manufacturing process.

Similarly, replying to H&M’s questions regarding the need to enhance the capabilities of Ethio Telecom and services to suite manufacturers in the country, Klas Norden, Head of Digital Services for Ericson’s East Africa Office, indicated that there needs to be more pressure from customers on Ethio Telecom to improve the service it provides. As far as Ericsson is concerned the relationship it has with the telecom monopoly has been so far a supplier relationship, Klas noted, adding that they expect to grow this to a higher relationship.

In spite of serious concerns about bureaucracy and red tape, SOZO consulting looks very much optimistic regarding the opportunities in Ethiopia, especially in the health sector.

Replying to questions from The Reporter via email, Amen Hultström, the General Manager of SOZO, says investing in the sectors prioritized by the government significantly minimizes the challenges.

“There are great opportunities for any investor looking to invest in long term projects, especially in local production of any kind. I would recommend to align with the government and invest in the listed priority sectors. Any kind of local production is bound to succeed, whether for export purposes or for domestic distribution,” she says.

In addition, she observes that the industrial parks, access to bank loans, financial incentives and the access to new sectors like Telecom, energy and logistics are clear signals showing the willingness to change, learn and support both local and foreign investors by the government.

Mentioning local pharmaceutical production, import of medical equipment and technologies, improving e-health systems, knowledge transfer and capacity building as some of investment opportunities in the country in the health sector, she also adds that, “The 5 university hospitals in the country are all expanding and looking for partners and investors to either collaborate or sign turn key agreements with. The Ethiopian government has developed a strategy for PPPH (private public partnerships in Health) in order to minimize the gap and support the collaboration between the private and public sector.”

She also seems concerned in the foreign currency shortage which is a hurdle for investors and she recommends capacity building of local investors so as to put a lasting solution to the problem.

“There should be more focus on developing the export sector not only through financial incentives, but by training local companies in export management and providing them with the necessary data for accurate decision making,” Amen says.

In addition to the business opportunities and challenges, the seminar also raised labor issues, financing investments and energy sector experiences which can be learnt from Nordics.