Several Chinese investors who have been operating in Ethiopia have been increasingly shifting their business operations to neighbouring countries such as Kenya, Uganda, and Tanzania, it has been observed.
With investments exceeding $5 billion across over 2,000 projects, Chinese companies have been central to Ethiopia’s industrial growth over the past few years.
However, these companies have been packing their bags and leaving for other countries in the region.
But why?
According to the representative of Chinese investors in Ethiopia, several pressing issues have caused significant disruptions to business operations for foreign investors from China who see incentives in other nwoghbouring countries as more attractive.
“Ethiopia is facing serious difficulties,” Wu said.
“Key concerns include security challenges, a shortage of foreign currency, and a limited market for goods,” he said.
He also pointed at ongoing tax-related complications.
“Dealing with customs is particularly frustrating, and once products are delivered, the feedback from customers is often negative” he added.
In addition to these domestic issues, global trade challenges have further complicated the situation for investors.
The ongoing security concerns in Ethiopia have disrupted international freight and logistics, making it increasingly difficult for businesses to operate smoothly.
The flight of Chinese businesses from Ethipia has sparked concerns among both the Chinese embassy and Ethiopian authorities about its potential impact on the nation’s economy, said Hanna Arayaselassie, Commissioner of the Ethiopian Investment Commission (EIC) at a relevant meeting over the issue on Monday.
By mid-2024, Chinese companies had provided approximately 610,000 jobs in Ethiopia, contributing significantly to the country’s modernisation efforts.
Arayaselassie, also acknowledged these difficulties during the Ethio-China Friendship Cooperation Forum held earlier last month.
She highlighted that while efforts to strengthen trade and investment ties between Ethiopia and China have shown promise, the current business environment remains a challenge for many foreign investors.
A representative from the Chinese embassy also voiced serious concerns over the recent exodus of investors.
“Several factors have led Chinese businesses to relocate to neighbouring countries. This shift is a major concern, not just for the embassy but also for Ethiopia, as we aim to promote continued cooperation between the two nations,” Andy Wu, a representative of Chinese investors in Ethiopia said.
MG/as/APA
