Decline in Ease of Doing Business Should be Reversed: Investment Commissioner, Economists

Addis Ababa January 16/2019 The government should strive to make “doing business” easy and enable the private sector to become the engine of economy, economics scholars said.

The scholars told ENA that it is high time the government considered creating conducive business environment and effectively utilized the big role of the private sector.

The economist Zemedeneh Negatu said doing business in Ethiopia has become much more difficult due to many reasons.

Ethiopia, which was 107th of 190 countries in eight years ago in doing business, has plummeted to 159th.

Among the bottlenecks in doing business are 32 days to start business, 93 days to get electricity, and 300 hours to comply with tax regulations.

Zemedeneh insists that Ethiopia “has to make it easy for people to start business, to operate, to make money, to hire people and essentially contribute to the economic growth of the country.”

He noted that Ethiopia was the second largest FDI recipient country in Africa, with about 3.6 billion USD last year. “To sustain this, we need to make doing business easier.”

Investment Commissioner, Abebe Abebayehu, admitted that Ethiopia’s rank in doing business has declined over the years due to various impediments.

The nation is working to bring significant improvement in doing business, he said, and pointed out that “the plan over the next two years is to make Ethiopia from the current rank of 159th to below 100.”

The Commissioner said clear interventions were identified, a roadmap developed and technical committee set up to realize the goal.

“The government fully recognizes that the role of the private sector can only be enhanced through creating a favorable business climate. To do so, we must make sure that the constraints affecting the growth of the private sector in Ethiopia are fully addressed,” Abebe underscored.

He further revealed that “not only starting business is difficult in Ethiopia, exiting business equally, if not more difficult.”

The Commissioner stated that “in all the ten indicators gathered to rank countries, we have significant number of limitations that have to be addressed; and that will mean enhancing the growth of the private sector.”

Another economics scholar, Belay File, said the involvement of the government in the economy has been crowding out the private sector.

The most important steps in boosting the share of the private sector in the economy are “creating enabling environment for the private sector and making financing arrangements for the medium and small enterprises,” Belay pointed out.  

Economic growth rests largely on the shoulder of the private sector, he stressed, adding that “the government should serve as enabler instead of owning business enterprises.”