Ethiopia emerged as the largest recipient of Foreign Direct Investment (FDI) in East Africa, a new report released by financial consulting firm EY shows.
The 2019 survey carried out by EY Attractiveness showed that Ethiopia attracted foreign investments worth Ksh.726.6 billion last year compared to Kenya’s foreign investments, which stood at Ksh.207.6 billion in the same period.
Tanzania’s foreign investment stood at Ksh.103.8 billion.
According to the report, the FDI Ethiopia received translated to 16,000 jobs from 29 projects, while Kenya created 6,000 jobs from 64 projects and Tanzania created 3,000 jobs from 19 projects.
An expert said that Ethiopia’s “efficient” business environment has helped its much higher FDI flow compared to the rest of the region.
Mr Francis Kamau, a tax partner at audit and consultancy EY East Africa said,” “Ethiopia has affordable electricity supply and is served by an efficient airline”.
Mr Kamau also added that Ethiopia has well served special economic zones with access to external markets to serve its huge domestic market.
Kenya’s FDI attraction is facilitated by being a hub for many multinationals who are doing business in the region and its status in the region’s financial centre. According to the report, Kenya has benefited from consistent strong growth rate and is forecast to continue growing at these rates over the next five years. This is supported by a more stable political climate and a focused approach on agriculture and horticulture exports.
In the Africa region Egypt, lead with $12 billion foreign investments and 91 projects with Algeria following with inflow of $9billion and 18 projects.
The publication did not give FDI figures for Rwanda and Uganda. According to the report, only Rwanda and Mauritius economies made it to the first quartile of Ease of Doing Business rankings. This is the third consecutive year that Rwanda has exceeded its peer group (by a substantial margin) in attracting disproportionally more FDI than its economic size seems to warrant.
KCB Group and Safaricom, two of Kenya’s largest blue-chip companies, have continued to pursue the establishment of operations in Ethiopia as it undergoes economic reforms which are opening up the economy and creating a conducive environment for foreign investors.