The otherwise quiet compound of the Ministry of Foreign Affairs (MoFA) was abuzz on August 6, 2015. With only days to go to the first ever National Diaspora Day, registration was ongoing at full speed and excitement filled the air.
Among the crowd were Siasy Abera, 50, and his wife, 45. The two and their four children live in Calgari, Canada. Sisay, a geologist working for the Canadian government, left Ethiopia 21 years ago but he wants to invest in Ethiopia, where he eventually wants to return.
“I am now in the process of obtaining a mining licence for gypsum, with local partners,” he said.
Investment opportunities are higher now than during the military regime, and much remains to improve the bureaucracy, he added.
“The bureaucracy is so disheartening that the Diaspora gives up and returns,” he complained. “When I first came here six years ago to look at the opportunities, my friends were even advising me not to waste my time here.”
The MoFA is currently undertaking various activities and treating the Diaspora as the Diaspora Day approaches, but it should continue doing that afterwards, he says.
In the face of Sisay’s experience, another person from the Diaspora, Webshet Demssie, 58, felt differently. The tall, US resident, works as an expert in an employment training centre in Virginia. He says that the government is now doing a better job of engaging the Diaspora in investment. The bureaucracy is smooth in Addis Abeba, although it gets more difficult in the regions. Currently, Webshet is the owner of a chemical and detergent importing business in the capital.
Diaspora flow back to the country started growing after the Ethiopian Millennium celebration, supported by various incentives the government offered, Getahun Negash, Public Relations Directorate director at the Ethiopian Investment Commission said.
The number of diaspora investment projects operating in the country has reached 236 since the New Millennium, according to the Commission. These investment activities generate around 1.2 billion Br revenue, creating 4,460 permanent and 13,211 temporary employment opportunities. There are also 114 projects that are in the implementation stage with capital of 965 million Br. Once they begin operations, the ongoing projects are expected to create an additional 5,546 permanent and 1,553 temporary employment opportunities in the country.
However the diversification of investment is very limited because mostly, this particular group of investors prefers the service sectors. Real estate, machinery & equipment rental and consultancy services take the lion’s share of the service sectors, with 171 operating companies and 28 ongoing projects since 2014. The number of projects involved in the manufacturing and agriculture sector since 2014 is reported to be 20 and 19 projects respectively with 31 and 11 in the pipeline. They have ignored the manufacturing sector mainly because of financial and technical limitations. There are only two ongoing projects in the mining sector.
“The majority of the Ethiopian Diaspora left their country as refugees. It is rare to find those that left for education and business,” says Adamnesh Atnafu (PhD), a social work expert and instructor at Addis Abeba University, whose thesis was on Diaspora engagement. “Many of the ‘Diasporas’ are employed in low pay jobs that require limited skills, hence they have no financial and technical capacity to engage in the capital intensive manufacturing sector.”
Diaspora investment engagement is very little and dominated by such entertainment related businesses such as bars, restaurants and cafes. They are less interested in farming, education and hospital services with most of them failing after taking land and obtaining licence, Adamnesh said.
The problem is related to the registration of the investments, said Yohanse Assefa, co-founder and executive director of the Ethiopian Diaspora Business Forum and managing director of the Ethiopian American LLC.
The term Diaspora refers to any people living away from their homeland.
Most of the people in the Ethiopian Diaspora live in a western environment, which has much more than just the manufacturing sector. Because of this, they lack experience and skill. The collateral system applied by banks in Ethiopia is not helping to meet the needs of those investors who have no property to mortgage, he added.
A major incentive the government has availed to Diaspora investors after the Millennium was the provision of land.
“A consensus is created that it is not fair treatment to give land to someone just because he or she is a ‘Diaspora’. They should be motivated by other investment incentives,” Getahun said.
Incentives include the option of investing either as a foreigner or a local investor, liberty to invest in any sector and to face no capital limit, unlike the requirements for foreign investors. The latter are required to have at least 200,000 dollars.
The assumptions behind the incentives are that they will not be interested in just profits but also in supporting their citizens, and that they would also be more liberal with technology and knowledge transfer to their citizens.
Having established a Diaspora Department in 2012, the Investment Commission is working with the regional states to facilitate investment services and disseminate information about the investment opportunities throughout the country. It also hosts a forum twice a year with the regional states, on the challenges hindering Diaspora investment, improvement measures and implementation of the National Diaspora Policy.
This year 1,500 persons who live in the Diaspora, have requested investment permits which may be concluded as evidence of the impact of engagement to increase their investment; their attraction could also be a result of the inflow of giant and internationally known foreign companies, Getahun said
Regions also have offices catering to the needs of these Ethiopians. Such offices have helped the Amhara region to attract around 384 investors this year with 9.5 billion Br worth projects and the employment potential for 82,100 people, said Awelachew Mesreie, Diaspora Public Relations Affairs director in the Amhara Regional State.
Incentives in the region include land, housing, arrangement of industrial zones, linking Diaspora elites with universities in up to three months of training in Civil Engineering, ICT and Human Resource Management to transfer technology. In 2015/16, the region plans to engage up to 3,000 persons in the Diaspora.
The role of the directorates established in the regional states is to address Diaspora problems and facilitate investment services by identifying their challenges and talking with the respective organs. Their ultimate goal is to utilise the skill and knowledge of people that have originated from the respective regions.
The regions report every three months to the MoFA on the participation and challenges of engagement of the Diaspora. In their forum with MoFA, the activities done to resolve the challenges and their Diaspora service rendering system is evaluated, with training delivered on how to improve the Diaspora service using the experience of other countries.
MoFA has provided a letter of support to the regional offices to facilitate the investment services and also make Diaspora engagement easy, through embassies and consular offices, Teferi Melesse, director of Diaspora Information & Research Directorate of MoFA told Fortune.
With the technology transfer there is the tie of the universities and Diaspora experts. But the Ministry of Science & Technology has not yet established a separate department for technology transfer from the Diaspora. The ties are not regular because there is no incentive for these Diaspora elites to come and give training. These people are extremely busy and cannot come regularly unless an organ that follows and pushes their engagement is established, according to Adamnesh.
Remittance flow is another area of engagement with the Diaspora. The Commercial Bank of Ethiopia(CBE)has created formal remittance windows at the Bole Airport for this purpose.
CBE has also opened an exclusive Diaspora Services facility at its International Banking Department. These services include additional interests for savings of 10,000 dollars for at least three months and current accounts that enable Ethiopians in the Diaspora to run business here. The Bank is advertising these special services, says Ephrem Mekuria, CBE’s communications head. The remittance flow during last year was 2.1 billion dollars, which is almost close to the total export revenue of the country. It is remittances that are hugely contributing to the economy with the majority of the flow made informally, Adamnesh commented.
“The government’s policy incentives are good but most of the ‘Diasporas’ are not informed of the opportunities. There is a need for a massive promotion through an exclusive organ with its own structure, resource management, fund, specific targets and strategies. MoFA has other tasks and may overlook the Diaspora issue because it needs separate focus. With the current structure the policy may not be implemented as needed,” Adamnesh noted, adding that a clear population study of the Diaspora should also be given emphasis.
MoFA is mapping the population of the Diaspora to solve the random counting estimated to be between 2,000 to 3,000 people, Teferi responded.
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