Experts, Private Sector Actors Say Special Economic Zones Will Encourage FDI, Expedite Economic Dev’t

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Addis Ababa (ENA) November 28/2022 The establishment of Special Economic Zones (SEZ) in Ethiopia will encourage foreign investment vital for the economic development of the country, private sector actors and experts said.

The government of Ethiopia is working to strengthen international trade connectivity by establishing Special Economic Zones.

In a bid to realizing this government is set to modify the Special Economic Zones (SEZs) Proclamation.

The proclamation aimed at strengthening the country’s drive to attract foreign direct investment, create jobs, enhance trade and productive sectors, integrate into global value chains, and generate sustainable growth.

Members of the private sector actors and experts have lauded governments’ commitment to the establishment of Special Economic Zones which is believed to play a vital role in improving the export system of the country, increase Foreign Direct Investment (FDI), and create wide employment opportunities.   

GIZ Key Expert to E-governance, Elie Sawaya, said the establishment of SEZ will undoubtedly make Ethiopia a regional hub for manufacturing and service provision for neighboring countries.

It is a good step where special economic zone allow improving service delivery and economic growth.

According to him, SEZ will be a tool for the government in order to improve the services delivered by different branches of administration.

China had applied this model back in the 70s, he said, adding SEZ’s has allowed rapid economic expansion in China. The country has grown from being a closed economy with little interaction beyond its borders, he said.

It enabled it to spread economic development across different verticals, Sawaya said.

The Association of Southeast Asian Nations (ASEAN) countries have also used the SEZ model in order to develop their economy, industry and their regional economic machines, he added.

Mesfin Tafesse & Associates, Managing Director, Mesfin Tadesse, who provides legal assistance to companies in industrial parks, said, we in Ethiopia have been forming industrial parks in the past many years.

The proposed  proclamation drafted with the objective to expedite the development of SEZ in Ethiopia will enable the country to expand and cover industrial parks that are primarily aimed at manufacturers, especially export oriented ones.

‘‘SEZ’s includes other sectors, for example, services; it enables broader intervention to improve better efficiency and effectiveness as a development endeavor.’’ he said adding ‘by bringing together different areas of activities and providing very targeted services to this organization, the business entities would be able to be more efficient in their services, in the treatment of their taxation status, in various ways to bring a better prospect for businesses operating in these zones.’’

The Ethiopian Netherlands Business Association in Ethiopia (ENLBA) Coordinator, Betelehem Fikre, on her part said that the planned SEZ modification will have a lot of benefits for businesses to flourish in Ethiopia.  Among the first one is a less bureaucracy and greatly improve doing business process.

According to her, since the Netherlands is the 10th largest investor in Ethiopia and the largest in the European Union, the establishment of SEZ’s will be very beneficial to Dutch businesses as well.

If done well, SEZs are a great vehicle for international trade and foreign direct investment (FDI) to drive economic development, Betelehem stated.

Until 2021, some 93 Dutch businesses have already invested over a billion USD in Ethiopia.

It is to be recalled that Ethiopia had opened its first Free Trade Zone in Dire Dawa last August.

The establishment of free trade zone, one of the initiatives set in the 10-year perspective development plan of Ethiopia, is aligned with the African Continental Free Trade Area (AfCFTA) as well as realizing regional integration.