Chinese investors have a big appetite to invest in Ethiopia’s tourism destinations

Posted on 03 June,2017


Chinese investors have expressed a desire to engage in 13 Ethiopia’s tourism destinations, said the Ministry of Culture and Tourism.

Hirut Woldemariam (PhD), Minister of Culture and Tourism told the Ethiopian News Agency (ENA) that, “an agreement to develop Ethiopian tourism destinations will be singed with Chinese investors next July”.

China and Ethiopia have been enjoying excellent economic relations, particularly over the past two decades. Chinese companies have a massive presence in Ethiopia, especially in the construction sector, according to the government.

Earlier, Prime Minister Hailemariam Desalegn had an official work visit to China and discussed how the Chinese investors can invest in tourism attraction areas, according to Hirut.

According to studies, the growth of FDI from China to Ethiopia from zero in 2004 to about USD 60 million in 2010 and how Chinese FDI in Ethiopia is motivated by the desire to take advantage of the current state of the economy, which the World Bank (WB) says is growing at a rate of 10 percent in the past few years.

According to the WB’s study, this increasing Chinese FDI is also motivated by “the incentive provided by the governments of China and Ethiopia, political stability in the country and the idea of using Ethiopia as a strategic launching pad for Chinese expansion in the rest of Africa”.

WB points how the Chinese FDI in Ethiopia is found to be constrained by inefficient Ethiopian bureaucracy, foreign exchange risk, lack of finance and skilled labour in the economy, companies spending valuable company time dealing with government officials and their regulation, where the government is taking over 30Pct of senior Chinese management time.

In Ethiopia the WB survey under discussion offers a figure of USD 58 million in 2010 and USD 74.3 million in 2009 as Chinese FDI in the country.

This is consistent with that of Chinese Ministry of Commerce. However, if the World Bank didn’t fail to go a bit further, it would have discovered figures that were much less in the previous periods; just USD 9.7 million in 2008 and USD 13.2 million in 2007, USD 23.9 million in 2006 and USD 4 million in 2005. Thus, the average annual figure since 2005 is just USD 18.3 million. In Ethiopia, the Chinese FDI as a percentage of the total FDI flow in the country since 2005 is just 6.9 percent.


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