hirut zemene the role of the government to support private sector - ethiopia
TRANSCRIPT
The Role of the Government to Support & Promote Private Sector Development in
AfricaThe Case of Ethiopia
Entrepreneurship and Economic Development in Africa
Embassy of Ethiopia 10 march 2012SOAS, London
The National Development Path • Ethiopia is a country endowed with diverse natural
resources, 2nd largest populous country in Africa;• Ethiopia is on a fast track development, it has
registered 11 % GDP growth over the past 7 years;• It aims to join middle income countries by 2025- meet
MDGs Goals by 2015;• The country’s successive 5 year development plans
have given due emphasis to Private sector development;• Ethiopia has advanced a free market economy in the
past two decades;• Private sector is an engine of the economy;
• Agriculture is the main stay of its economy, which constitutes 40 % of employment and more than 60 %
of exporter earner; • It is the major source of private sector development;• Ethiopia is a country of small holder farmers
managing their own private property;• Hence, entrepreneurship is a deep rooted culture; • The current 5 year plan emphasises on SME and
industrialization; • This constitutes of an expansion of the private
sector both in the urban and rural areas;
Legal and administrative frameworks
• The constitution protects Private property;• Ownership of multiple businesses is allowed;• Relaxation of quota and tariff restrictions on trade;• Investment Code – with a number incentives;• Micro finance – one of the largest micro- finances is
found Ethiopia (provision of seed money for small businesses and farmers)
• Protection of local businesses;• Intellectual Property Rights; • Almost non-existent corruption;
Support structures• Associations: leather, textile, major exporters
association, Chambers of Commerce;• Centres of Excellence: metallurgy, Leather, textile,
agriculture, horticulture support centres, commodity exchange market• Privatization: more than 60 companies are out there
for privatization• Education: TVET #253and higher learning institutions
#32; • SMEs: from MSEs to SMEs;• Dialogue: high-level dialogue with the private sector;
Investment Incentives • 100% duty free privilege for construction equipment and 15%
worth of spare parts to be allotted to the initial stage of investment;
• Exemption from income tax – 2 to 7 years tax holiday;
• Loss carry forward- investors that suffer losses during the income tax holiday period, by the end of the term, get extension for half of the term;
• Bank loans – on a 30-70% basis;
• Remittance – investment profits, dividends, payments to loads to foreign banks and buying of technology transfer;
• Encourages increased flow of the Diaspora
Export Incentives • Export Credit Guarantee Scheme
• Duty Drawback Scheme
• Foreign Exchange Retention Scheme
• Franco Valuta Import Facility
• Bonded Manufacturing Warehouse Scheme
Outcomes• The private sector has become the major source of
employment;• Competitiveness and growth; • Youth employment on the rise; • Backward and forward linkages;• Work ethics and innovation;• Flourishing of towns; • Poverty headcount reduced by half in the past 10 years; • Local capacity development, engineering, business, agro-
processing;• On the right path to meet MDGs Goals and target of being
a Middle Income Country.
Thank You
Hirut ZemeneTrade & Investment Minister Counsellor
Embassy of Ethiopiae: [email protected]