Ethiopia is the sixth largest economy in Africa, with a GDP of $111 billion in 2022. It is, in fact, on track to overtake Kenya for fifth place by 2023. As part of its strategy to achieve this, the government has successfully resumed its drive for foreign investment to boost economic growth. Its latest initiative is the introduction of a new visa for foreign investors. Here's what it means.
New visa for investors in Ethiopia
There's indeed good news for foreign investors in Africa. Ethiopia is launching a new visa that will allow them to stay longer in the country. So far, investors have had to rely on the 3-month short permit, which could be renewed for 15 days. With the new visa, they will be able to stay longer: from 3 to 5 years, depending on their status, thanks to an entirely online system. The government will provide a 5-year visa for foreign managers and shareholders and a 3-year visa for executives and directors. The cost of these visas is $1,000 for the 5-year visa and $750 for the 3-year visa.
In an effort to welcome all types of potential investors, Ethiopian authorities are not limiting the new visa to any specific form of investment. However, applicants, especially if they are on their first business trip to Ethiopia, will need to provide information on their investment objectives. If they are invited by an Ethiopian-based company, they will be required to provide the company's letter of invitation to Ethiopian immigration authorities. In any case, the process is designed to be as smooth as possible to attract foreign investors.
Why is Ethiopia relying on foreign investors?
The African giant is determined to keep its economy growing. Despite the conflict in Tigray, between January and September 2022, the Ethiopian government managed to collect $2.4 billion in foreign direct investment (FDI), representing an 18% increase compared to 2020. Such investments mainly drove the industrial sector ahead of services and agriculture, and the government wants to go further by targeting 3.6 billion FDI by the end of the year. According to the Ethiopian Investment Commission, FDI should enable the country to create 57,000 new jobs.
It is, therefore, easy to understand the importance of this new visa for foreign investors. It is also a very positive signal from Ethiopian President Sahle-Work Zewde. On November 2, the government and the Tigrayan rebels reached an agreement that ended a two-year conflict. That came as a relief for the country and for the African Union (AU), which had been overseeing the talks. As a reminder, the AU is based in Addis Ababa, the capital of Ethiopia.
Despite some setbacks, the country intends to retain its position as an African leader. Thought as a symbol of its economic ambition, the "Renaissance" dam project on the River Nile has caught the attention of foreign investors. The inauguration of the first phase of the dam project, which started in 2011, took place earlier this year. However, given the war in Ukraine, the world is not paying much attention. And the largest hydroelectric dam on the African continent could well be the one of discord, with Egypt and Sudan being the only countries opposed to the construction of the dam, concerned about their access to water. But the government is committed to the project and began work on the second phase in August.
For foreigners, Ethiopia remains a very good investment opportunity. France, China, the United States, Israel and Italy are among the major investors in Ethiopia.
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