Ethiopia – a huge opportunity for UK investment

Two weeks ago all UK eyes were on China’s State visit to the UK. But the Chinese weren’t the only ones in town building commercial ties. It was also a week for Ethiopia in London, with a number of events where Ethiopia showcased their recent economic success and future potential.

I joined Ethiopia’s Foreign Minister Tedros and UK Minister for Africa Grant Shapps at the UK-Ethiopia Trade and Investment Forum, where some 250 British and Ethiopian businesses (over 400 individuals) came together to forge potential new partnerships. The following day saw a UK-China Collaboration on Africa infrastructure conference (addressed by Dr Tedros); the launch of an Energy Africa campaign promoting access to sustainable energy for all; and a London Chamber of Commerce and Industry event focused solely on Ethiopia. Dr Tedros was also the keynote speaker at a Chatham House event on Ethiopia later in the week. Last week the focus continued, with an Economist Summit in Addis Ababa focussed on commerce and investment.

It’s clear why the interest is so high. Ethiopia represents a very exciting opportunity for foreign investors: one of the fastest growing economies in Africa (at some 8% annually), with a workforce that is large (a population of over 90 million), cheap (a tenth the price of China) and young (70% under the age of 25). Ethiopia has an ambitious but not unrealistic aim of becoming a middle income country within the next decade, with zero net carbon growth, and of replacing Nairobi as the aviation hub of sub-Saharan Africa. Ethiopia ranks sixth on Barclay’s Africa Trade Index and is expecting $1.5 billion Foreign Direct Investment in 2015 (up from $953m in 2014 – making it the third largest recipient in Africa).

The challenge though is to translate interest into investment. It’s in both the UK’s and Ethiopia’s interests to build stronger and broader economic ties. Ethiopia offers investors a stable, fast growing economy. But it also remains a challenging place in which to build a business – with a number of obstacles which call for a long-term vision and a lot of patience from investors. Some UK companies are already operating in Ethiopia – Diageo, Pittards, GSK and Vasari to name a few. In my time as Ambassador, I’ve seen UK foreign direct investment take off dramatically, but from a low base. I believe there is a serious opportunity in the next few years to boost that investment dramatically and, as Minister Shapps called for in London, to double two-way trade with Ethiopia.

Boosting commercial ties with Ethiopia is not just about British business. It’s also about that UK-Chinese partnership…. And other forms of cooperation may also be possible.

Our commercial agenda in Ethiopia also overlaps neatly with our development agenda. Take the Energy Africa campaign – driven by Minister Shapps – around Sustainable Development Goal #7, sustainable energy for all. It saw Kofi Annan, Bob Geldof and Richard Branson, as well as African Union Commission Chairperson Madame Zuma, Ethiopian Foreign Minister Tedros, other African leaders, and a host of UK sustainable energy businesses, back a UK initiative to leapfrog carbon-fuelled energy sources and transform the lives of the 600 million people in Sub-Saharan Africa who live without electricity. As Bob Geldof said, “This is doable; this is the moment where Africa switches on, lights up and goes for it”. This is particularly valid Ethiopia, not just in terms of energy but of the economy more widely: Ethiopia’s economy is indeed lighting up; now is the time to go for it.