Invest in Ethiopia Presentation prepared for Canadian Investors - - PowerPoint PPT Presentation

Invest in Ethiopia

Presentation prepared for Canadian Investors June 28, 2017 Toronto, Canada

Content

1.

Key Facts

2.

Economic Overview

• 3. The Goals of the Growth and Transformation Plan

4.

Investment Facilities and Infrastructures

5.

Investment Opportunities in Priority areas

6.

Logistics

7.

Investment Incentives

8.

Why Invest In Ethiopia?

9.

Tourism Attractions

Key Facts

Location:-

• In the Horn of Africa
• GATEWAY TO AFRICA
• AT THE CROSS ROAD

BETWEEN AFRICA, MIDDLE EAST, ASIA AND EUROPE

1 2 3 4 5 6 7 8 9 10 11

Regional States of Ethiopia

Regional States

Administrative cities

• 1. Tigray
• 2. Afar
• 3. Amhara
• 4. Oromia
• 5. Somalia
• 6. SNNP
• 7. Gambela
• 8. Benishangul

Gumuz

• 9. Harari
• 1. Addis Ababa

(Capital City – Diplomatic Hub)

• 2. Dire Dawa

Key F y Facts cts

Population : 100 million

• World Rank: 13th
• Africa Rank : 2nd

Ethiopia & Nigeria account for 25% of total African population. Ethiopia Land size:

• 1,140,331 sq. km
• World Rank 27th
• Africa Rank 8th

45% (513,000 sq.km)

• f the total Land is

arable and suitable for Agriculture 10 million hectares

• f irrigable land

(only 3% utilized) 18 major agro- ecological zones and 49 agro- ecological sub- zones Rich resources of cattle and minerals

Economic Overview of Ethiopia

A Reg

egio ional l Pil illar r of Econom

• nomic

ic Growth wth and S d Stabil ilit ity y

SOURCE: World Bank Country data;

Institutional Support Policy

Stability

• There is macro-economic stability
• sustainable economic growth (double digit GDP

growth for more than 12 years)

• There is visible institutional support: EIC, LIDI, TIDI,

MIDI etc…

• Infrastructure development: industrial parks, road,

railways, irrigation, energy

• Investor friendly policies
• The Growth is broad based. Ethiopia is not only

growing, but it is Transforming: Uplifting the society out of poverty and illiteracy

• Pro poor policies - poverty is declining

Ethiopia Rising: Ratings Ethiopia Rising

World Bank forecasted this year that Ethiopia will be the fastest growing economy in the world IMF called Ethiopia the star performer in the African Continent this year

UNCTAD reported that Ethiopia is 2nd largest recipient of FDI in textile and apparel, next to

• Vietnam. (FDI flow increased by 46% this year)

Ethiopia is emerging as a leading manufacturing hub in Africa. Fitch (rating agency) affirms Ethiopia at ‘B’ . The Economist has ranked Ethiopia as the fastest growing economy in the world.

SOURCE: The World Bank; The Economist; Ministry of Finance and Economic Cooperation (FDRE), Fitch, UNCTAD

The Growth and Transformation Plan (GTPII)

11

FOCUS AREAS

Economic development, focused on an increase in the non-agriculture economy; Manufacturing. Social development by improving the quality of life through integrated progress in health, education, and overall living standards. Environmental development through the sustainable use of natural resources as well as increasing the resilience of the environment to adverse impacts of climate change.

Growth and Transformation Plan II (2015-2020)

VISION: To become a Carbon Neutral middle income country by 2025. Ethiopia defines middle income more broadly than a quantitative target; including achievement of aggressive poverty reduction and advances in health, education, and the environment.

The Second Growth and Transformation Plan (GTPII)

• Priority sectors:
• Agriculture
• Industrialization-light manufacturing
• Infrastructure
• Human resource development and technological capacity

building

Export focus

EXPORT

• Over the next 10 years, Ethiopia aims to

create 2 million manufacturing jobs to develop the manufacturing sector by four- fold.

• Ethiopia aims for a four-fold growth in

manufactured exports during the coming decade.

• The development of industrial zones is

critical

• Industrial parks are under construction

and agro economic zones and horticulture hubs are under plan

• On track to generate about 12,000

megawatts of power by 2017

• Developing a 5,000 kilometers of

railway network

• Integrated air and sea transport and

logistics infrastructure

• >50 universities with ½ million

student population and >1300 technical and vocation education and training schools with annual intake of 1 million. 70 % in engineering, technology and naturals sciences.

Infrastructure

Massive investments in infrastructure

 Electricity  Roads  Rail road  Telecom etc…

15

Achieve annual average real GDP growth rate of 11 percent at the end of 2020: Infrastructure:

• Road: close to

100,000 km road

• Railway:

2741km

Electric coverage: 90 % Telecom: mobile 38.8 million to 103.8 million Power generation: 17,347 MW

• Hydropower:

13, 817 MW

• Wind : 1224

MW

• Geothermal:

577 MW

GTPII Major Targets

Sector GTP I Average Five Years Average Projection GTP II (2016-2020) Agriculture & allied Activities 6.6 8.0 Industry 20.2 20 Manufacturing 14.7 21.9 Service 10.8 10 Real GDP 10.1 11.0

Priority Sectors of FDI

Priority Sectors For FDI Manufacturing Investment Opportunities with a backward linkage to Agriculture

Textiles & Garments/Apparel

yarn, fabrics, garments and Apparel

Leather & Leather Products

• Tanning of hides & skins up to

finished level

• Leather

goods & articles (shoes, garments, etc.)

Agricultural Investment )pportunities Agricultural- Opportunities

• Horticulture:

Flower, Vegetables, Fruits, Herbs etc plantation,

• Cotton plantation
• Sugarcane Plantation for the growing sugar industry,
• Livestock & poultry breeding for processing

• Canned fruits
• Canned jackfruits
• Corn flakes
• Maize popcorn
• Avocado oil

(industrial use)

• Bakers yeast
• Biscuits
• Corn/maize oil
• Poultry feed
• Soya milk
• TEJ drink
• Margarine from

vegetable oil

• Edible avocado
• il
• Red meat

processing plant

• Pineapple jam /

marmalade

• Macaroni & pasta
• Maize flour
• Malt
• Milk powder

(dairy product)

• Beeswax
• Cattle meat

processing

• Confectionary
• Egg albumen flakes
• Mango processing
• Milk processing &

dairy

• Potato chips
• Poultry processing
• Egg powder
• Fruit squash
• Leather sole
• Ready to eat

vegetables

• Sesame oil
• Soya bean flour,

defatted soya flour (DSF)

• Tomato ketchup
• Tomato soup (ready

to cook)

• Turmeric polishing
• Vegetable oil

refinery

• Vegetable wax

(CARNAUBA WAX)

• Honey

Mining: Huge untapped resources

 Opportunities exist both in upstream & downstream operations  Ethiopia has an emerging oil and gas opportunity  Currently major gold exporter  Ethiopia is Africa’s only producer of opal  Mining potential includes;  Potash, Platinum, Iron and Tantalum

24

Potential

• clean energy potential
• Hydro: More than 45,000 MW
• Wind: More than 10,000 MW
• Geothermal: More than 5,000 MW
• Supply chain opportunities
• Engineering & tech. consultancy

Strategy

• Maximize the utilization of the country’s hydro, wind, solar and geothermal resources,

develop fuel efficient stoves, reduce the role of hydrocarbon fuels in industry and transport

Emission

• Low Level of Emission

CLIMATE E RESILIE LIENT NT GREEN EN ECONOMY OMY STRATEG EGY

Industrial Parks Developments

By 2017 Specialisation

• 1. Hawassa II

Apparel & Textile

• 2. Mekelle

Apparel & Textile

• 3. Adama

Apparel & Textile 2Machinery & Equipment

• 4. Dire Dawa

Apparel & Textile

• 5. Kombolcha

Apparel & Textile

• 6. Kilinto

Pharmacutical

• 7. Bole Lemi II

Apparel and Textile

IND NDUS USTRIAL TRIAL PARK RK DE DEVEL VELOPM OPMENTS ENTS

Upcoming Industrial Parks:

Hawasa Industrial Park (HIP)

1.4 million m2 land 400,000m2 factory buildings, World-class parks , ready for ‘plug and play’ Strategically located along the new railway corridors Specialized in Apparel and Textile Eco-industrial park (Zero Liquid Discharge) One window service

IND NDUS USTRIAL TRIAL PARK RKS S DE DEVEL VELOPMENTS OPMENTS

IND NDUS USTRIAL TRIAL PARK RK DE DEVEL VELOPM OPMENTS ENTS

Advantages

• Abundant labor with competitive wage
• Proximity to Airport, railway
• Anchor and leading firms
• Attractive incentives

Hawassa Eco-Industrial Park

Hawassa Eco-Industrial Park

Sustainability: Africa’s 1st park with zero liquid discharge facility (ZLD) Apartments for industrial parks

Mekelle Industrial Park Upcoming Industrial Park

HIP’s 1st exports to USA & Canada

PVH and leading manufacturers at HIP

Integrated Agro Industry Parks

IAIP IAIP IAIP

• open area production zones,
• controlled environment growing
• precision farming
• knowledge hubs and research facilities
• social infrastructure and agri-marketing
• rural hubs, agri-infrastructure
• collection centers
• primary processing hubs

IAIP Business Model

IAIP

Modern Farm Clusters Green Houses Livestock farms Mushroom Nursery FP Zones Utilities & Services Commercial Complex R&D Incubation QCL Commissaries & Packaging Common Infrastructure Agribusiness

• Mgt. Trg. Inst

Convention Center IT/ Library Training Center Agro tourism Wellness & Nutrition Terminal Markets Logistics Cold Stores Ripening Chambers Warehousing

Rural Transformation Centers Rural Transformation Centers Rural Transformation Centers Rural Transformation Centers Production R & D Trade

Integrated Agro Industry Parks cont…

RTC

Village

Village

Village

Village Village Village

Village

• 1. Each IAIP is served by

a network of rural transformation centers which provide linkages to producers.

• 2. Serve as raw

material aggregation points in the catchment areas (100 km radius)

• f each IAIP

Agro Industry Growth Corridors (17)

Four ACPZs selected for piloting

Integrated Agro Industry Parks cont…

Selection Criteria:

• 1. Production

potential

• 2. Triggering Effect
• 3. Infrastructure
• 4. Market potential
• 5. Access to support

services

• 6. Attractiveness for

investors

Bird Eye View for IAIP

Integrated Agro Industry Parks cont…

Bird Eye View for RTC

Integrated Agro Industry Parks cont…

IAIP – Region and Focused Product Lines

Integrated Agro Industry Parks cont…

Horticultural Hubs

Horticultural Hubs

Shallo – 1200

• ha. 260 km

from Addis

Alage - 217km from Addis 1,500 hectares Bahir-Dar 565 km from Addis 900 ha

Arba Minch, 2500 ha. 503 km from Addis

Horticultural Hubs

Trade

EXPORT PERFORMANCE

The The overall erall per erforman

• rmance of
• f mer

merch chandiz andize expor ports ts has has shown a remar remarkable able growt wth rat rate. The The annual average age growt wth rate; First st development lopment plan - (SDP DPRP RP 2004 2004-2006 2006) = 26 26%.  Second nd development

• pment plan - (PASDEP

ASDEP 2005 2005/06 06-2009 009/10 10) = 22 22%  The The Gr Growth th and nd Transf nsformat

• rmation

ion plan perio iod (GTP TP 2009 2009/10 10 and nd 2012/13 13 ) = 54 54%.  In In 2010/11 11, mer merch chandiz andize expo xport earnin earning has has be been 2.8 billion billion USD, SD, sho showing wing an an increase ease of

• f 37

37% from the level of

• f USD 2 billion

lion in in 2009 2009/10 10.  Sim Similarly ilarly, tota tal mer merchand chandise ise expor xport re revenue enue in in 2012 12/13 13 amount amounted ed USD USD 3.1 bill billion ion, 2013/2014 amoun unted 3.26 26 billion llion.

11.5 11.1 9.3 6.9 6.3 6.2 4.5 3.9 3.1 2.8

China Germany Somalia Saudi Arabia Swizerland Nethrlands Sudan United States Djibouti United Arab Emirates Export Destination countries 2012

EXPORT PERFORMANCE

EXPORT PERFORMANCE

784,288,083.06 , 26.34%

74,268,868.14 , 2.49%

125,417,489.75 , 4.21% 1,242,325,993.16 , 41.72% 255,563,791.3 8 , 8.58% 174,472,562.38 , 5.86% 79,469,408.36 , 2.67% 162,019,677.03 , 5.44% 80,090,198.61 , 2.69% Coffee Sesame Hide, Skin and leather products & footwear Agricultural Crops (Both processed & unprocessed) Live animals and Products of animal origin Roses & flowers Textile Products Minerals (Gold & others) Others

Major exported commodities from Ethiopia by the year 2014 Volume (USD)

424,805,554.45 , 2.89% 2,496,558,846.37 , 16.96% 1,730,845,277.91 , 11.76% 1,189,896,637.13 , 8.08% 3,837,548,360.53 , 26.07% 409,886,372.08 , 2.78% 519,983,806.47 , 3.53% 557,191,186.08 , 3.79% 322,678,781.52 , 2.19% 174,596,418.79 , 1.19% 3,054,284,833.44 , 20.75%

Major imported commodities to Ethiopia by the year 2014 (Volume (USD)

Fertilizer Petroleum and related items Iron and Metals Vehicles, spare parts and accessories Machineries, Electronic equipments and accessories Medical and Pharmaceutical items Food items Textile products Chemicals Aircrafts, Ships, arms & Railway locomotives & accessory Others (stationaries, soap, detergent, cosmotics & others)

WTO ACCESSION

The Government believes that, joining the WTO will expedite the process of Ethiopia's effort in the economic reforms and will also push forward the in- depth structural reform of foreign trade. Being part of the global trading system will help benefit of :-

• the multilateral dispute resolution mechanism;
• in case of any frontal trade frictions and conflicts with other states,

thereby effectively safeguarding the country’s legitimate rights and interests.

The Government of Ethiopia has started the process of the WTO Accession to become a member of the organization.

Logistics

Logistics

• 75 years se

servi vice ce with th internat ernational ional and d local destin tinat ation ion

• The

e safest est and d chea eapes pest t in air freight ight rate e the he region ion

• Membe

mber of Eu Euro star

Interconnect Africa with the World

Extensive Cargo Connection Network

• Min

inim imum um 14 4 car argo go flig ights/ ts/Week eek to Eur urope

• pe
• 35 Cargo

go and d pa passen enge ger flig ights ts to Chin ina to 3 de destin ination ions/W s/Wee eek

• 12 pa

passen enge ger flig ights hts to USA:- Los Ange geles es, , Washin ingt gton

• n D.C and

d New York, ,

Logistics: Africa’s 1st electric-powered Railway

Logistics: Railways

Logistics: Railways Network plan

Investment Incentives

Incentives cont…

Manufacturers

• Exempted from income tax up to 8 - 10 years
• Exempted from duties and other taxes on imports of machinery,

equipment, construction materials, spare parts, raw materials and vehicles

• Zero taxes on exports
• One-stop-shop government services
• Land lease term: 60-80 years at zero charge for factories and

residential quarters

Incentives cont…

Industrial Park Developers

• Exempted from income tax up to 15 years (outside Addis Ababa)
• Land lease term: 60-80 years at nominal rate with sub-lease rights
• Provision of necessary infrastructure, including dedicated power

substations

• Exempted from duties and other taxes on imports of machinery,

equipment, construction materials and vehicles

REMITTANCE

 A foreign investor has the right to make the following remittances out of Ethiopia in

convertible currencies:

 Profits and dividends  Principal and interest payments on external loans;  Payments related to technology transfer agreements;  Payments related to collaboration agreements;  Proceeds from the sale or liquidation of an enterprise;  Compensation paid to an enterprise; and  Proceeds from the transfer of shares or partial ownership of an enterprise to a

domestic investor.

EXPORT INCENTIVES

WHY INVEST IN ETHIOPIA?

Ethiopia’s competitive advantages Top Reasons Ethiopia

Peace and Stability Committed leadership Fastest Growing Economy Safe investment (bilateral and multilateral investment agreements Huge untapped resources Demographic advantage Active, disciplined and trainable young work force of more than 45 million with competitive labor cost, Geographic and market access advantages: huge local, regional and global market

Ethiopia’s competitive advantages Top Reasons Ethiopia

New electric-driven railway: 4-12 hours from industrial parks to Djibouti port. Africa’s aviation hub: Ethiopian Airlines serving 98 international destinations Electricity rate at 3 US cents/kwh: one of the lowest in the world

Construction of Biggest Hydro-electric dam in Africa

Extensive development of ready for ‘plug and play’ industrial parksFast development in

Infrastructure and Power:  Africa’s Aviation Hub (Ethiopian Cargo)  The Biggest Hydro-electric dam in Africa  Roads & Electric powered Railways  Expansion Land is prepared in Horticulture

Market acess

ETHIOPIA’S GEOGRAPHIC LOCATION AND ITS PREFERENTIAL TRADE AGREEMENTS PROVIDE ACCESSIBLE MARKET ACCESS  Preferential duty treatment to markets such as China, India, Japan,

Canada, and Australia

United states

European Union

Sub-Saharan Africa

Others

Proximity

3.5 billion people live within 8 hours of flight from Addis Ababa

Preferential trade opportunities

• Duty free market access through AGOA
• Duty free market access Everything but Arms
• A founding member of the Common Market for Eastern and

Southern Africa (COMESA)

TOURISM

Land of Origins

• Ethiopia is the cradle of humanity, where our ancestors first walked on two legs;
• It is also the source of the Blue Nile;
• Ethiopia is the origin of coffee, one of life’s best pleasures and our gift to the world;
• The land is also the origin of great athletes;
• A unique alphabet;
• Unique cuisine;
• Many other original things found in Ethiopia only.
• Ethiopia's excellent network of national parks, UNESCO World Heritage Sites and other tourist

attractions along several well-established routes.

Tourist Destinat ions

Investing in Tourism in Ethiopia

International Air Connections

• Strategic location in the crossroads between Africa,

the Middle East, and Asia and to the national carrier Ethiopian Airlines (a member of Star Alliance),

• Addis Ababa is a top air hub in Africa
• Ethiopian 90 destinations worldwide.

Domestic Air Travel

• A well-developed network of domestic airports and

flights serves the main tourism destinations

• The majority of tourism destinations can be accessed

by paved roads

Investing in Tourism in Ethiopia

The Diplomatic Capital of Africa, Addis Ababa

• Addis Ababa hosts 120 foreign embassies and diplomatic

missions plus the headquarters of important international

• rganizations including the African Union (AU) and the United

Nations Economic Commission for Africa (UNECA).

• A growing number of international standard hotels like

Hilton, Sheraton, Radisson, Golden Tulip, Marriott and Ramada an ever-improving infrastructure,

• a hub airport and world-class conference venues at the AU,
• the UNECA and the Millennium Hall, make Addis Ababa a

destination of choice for meetings, conferences and exhibitions.

Investing in Tourism in Ethiopia

Unique Cultural and Natural Attractions, with great potential to be further developed:

• Highest number of UNESCO World Heritage sites in Africa (8

cultural world heritage sites, 1 natural world heritage site, 1 intangible cultural heritage),

• Land of Origins. Ethiopia is the cradle of humankind, where our

ancestors first walked on two legs. It is also the source of the Blue Nile and it is the origin of coffee that still grows wild in the lush forests of the West,

• A wealth of archaeological sites and treasures: the oldest tools in

the world, the remains of great civilizations like Yeha and Aksum, with its giant monoliths, of powerful kingdoms that gave splendor to Gondar with its 17th century fairytale castles unique in Africa

Investment Opportunities in tourism sector

• Star rated hotels, lodges and resorts
• Specialized restaurants
• Tour operation
• Lodges and shelters along trekking routes in

National Parks and other locations

• Running camps for high altitude training, targeting

elite athletes and also “fun” recreational runners (representing a much bigger segment)

• Specialized spa and wellness hotels taking

advantage of natural hot springs

Blue Nile, the great river whose power and fertility nurtured the

• rigin of civilization itself

Ancient ancestor the hominoid skeleton ‘Lucy’ at the National Museum

The mystical churches of Lalibela, hand-hewn from rock

The Obelisk of Aksum

A MOSAIC OF CULTURES LIVING IN HARMONY

festivals

TIME-HONOURED CELEBRATIONS

DRAMATIC LANDSCAPES and active volcano

A LAND OF RARE SPECIES IN THEIR NATURAL HABITATS

Great Ethiopian Routes

• Addis Ababa Route
• Historic North and the Simien Mountains Route
• The East – Danakil, Harar and Bale Mountains Route
• The West – Lush Nature and Coffee Route
• The Rift Valley and the Cultural Mosaic of the South Route

Great Ethiopian Routes Historic North and the Simien

Mountains

Route

Great Ethiopian Routes The East – Danakil, Harar and Bale

Mountains

Route

Great Ethiopian Routes The Rift Valley and the Cultural Mosaic of the South Route