Economic Sectors Permitted for Foreigners Provide Multi-faceted Positive Impacts 

Addis Ababa, April 23/2024 (ENA)  The decision passed by the government to allow foreign investors to take part in economic sectors that were previously restricted only for Ethiopian citizens will have a multi-faceted positive impact on the economic development of the country,  economists remarked.

The Ethiopian Investment Board has recently passed a directive that would allow foreign investors to participate in wholesale and retail trade in the country.

The economists who talked to ENA noted that the directive will reportedly provide more opportunity for legally viable competitive trade and would play a clear role in providing broader choices for consumers. 

A senior economist, Constantinos Berhe remarked that allowing foreign investors to take part in wholesale and retail sale trade has greater value for economic development of the country. 

Citing the experiences of several countries across the world, the economist added that foreign investors in the sector will bring in their work experience, capital expenditures which will allow them to play a clear and positive role in the country’s economic development.

Companies who take part in foreign trade in Ethiopia will help to further expand foreign trade coverage and market network for the country and will enhance the nation’s capacity to compete in world trade.

Moreover, the directive is instrumental in increasing the quantity, quality and type of commodities that will be delivered at the international markets, Constantinos  further added.

In addition, the directive will help to curb illicit foreign trade in live animals and will help to establish a standard framework to streamline foreign trade in the sector, he indicated. 

Constantinos quoted a report from Global Financial Integrity which said the nation loses more than 1.5 billion USD due to illegal foreign trade transactions.

Allowing foreign companies to participate in wholesale and retail trade in the country will discourage illegal trade transactions and will pave the way for those illegal traders to join the formal and legal trade transactions, the senior economist further remarked.

He said those merchants who hoard commodities badly needed in the market and also those who demand higher prices for their goods as well as those who disrupt the normal market activity have been multiplying the grievances from consumers.

According to him, the participation of foreign investors in whole sale and retail trade will help to ensure stabilization of market prices and would play a positive role in promoting legal trade transactions across the country.

He added that the directive will help local merchants to be more competitive and thereby provide better choices for consumers. 

Constantinos recommended that the government would need to carefully scrutinize the operational history of the investors, their current mode of operation and the values they would add to the national economy before issuing licenses for their formal operations.

Measures taken in introducing new financial policy which will provide for the formation of capital market and allowing foreign banks to operate in Ethiopia will help to expand the provision of financial resources for economic development.

 

Researcher of economics and instructor at Arsi University, Adem Fato  said that inviting foreign investors to take part in whole and retail sale which was restricted only for Ethiopian nationals will have a multi-faceted positive impact on the economic development of the country.

He stated the decision made by the government will help to beef up foreign currency by promoting domestic and foreign trade which will in turn increase government revenue. Allowing the investors to take part in whole and retail trade will help to improve the quality of the commodities on market and would provide better choices for consumers.

Adem said that this would provide an ample opportunity for local traders to work in unison to engage in a meaningful competition in the market 

The instructor further added that necessary guidelines that will promote competitiveness, the national economy and promotion of public benefits must be put in place as soon as the directives become operational. 

The economists noted that economic measures taken by the government over the last 6 years in opening up the economy to the private sector have helped to promote sustainable economic development and competitiveness among the traders.