Mapping Investment Incentives Related Processes in Ethiopia

As per the structural economic transformation plan, FDI into Ethiopia has been increasingly driven by the manufacturing sector. The country attracted USD 2.2 billion in 2016. The largest number of FDI projects under implementation is in the manufacturing sector, accounting for 41% of new FDI projects under implementation and 70 percent of FDI capital investments. The GoE uses different incentive instruments to attract investments in priority sectors.

As part of its Investment Climate Project, the World Bank Group (WBG) / International Finance Corporation (IFC) supports the GoE in undertaking various reforms. One of the key project components is related to Investment Policy and Promotion (IPP). This component has successfully supported the revamping of the national Investment Promotion Agency – the Ethiopian Investment Commission (EIC) – and its full reorganization. In collaboration with EIC, the project is reducing barriers to investment entry, increasing investor confidence, and facilitating new investment in targeted sectors. In addition, the project is also helping the GoE make its incentives policy more competitive to attract investment by: increasing transparency; improving effectiveness in attracting FDI in key sectors; streamlining procedures to apply and receive incentives; and enhancing monitoring systems.

The World Bank has engaged Apex Consulting to review and map investment related procedures and make recommendations that will:

1. Make the administration of incentives in Ethiopia easier to comply with for the private sector, thus reducing compliance costs and increasing investor interest in the country;
2. Make incentives in Ethiopia easier for the government to grant, administer and monitor, thus reducing internal administrative costs;
3. Increase the regulatory predictability of incentives and reduce the room for discretion by government officials, thus boosting investor confidence in the incentives administration

Apex provided specific and actionable reform recommendations to the concerned authorities on the basis of global best practices and previous experiences in similar economies. This increased the consistency and predictability of granting and administration of investment incentives related procedures by narrowing the gap between investors’ and government’s experience in going through these procedures.