AN ASSESMENT OF OPPORTUNITES AND CHALLENGES OF FOREIGN DIRECT INVESTMENT IN AGROPOCESSING, TEXTILE AND GARMENT, LEATHER AND LEATHER PRODUCTS SECTORS

Abstract

Ethiopian Government has adapting different strategies and incentive packages to enhance its foreign direct investment performance. The main aim of this paper is to assess the macro environment foundation for foreign direct investment in Ethiopia and identify challenges and opportunities for foreign investors at pre implementation and implementation stages of the project life cycles. Political, economic, socio cultural, technological and legal variables are given much emphasis in the study. To this end primary data are collected from 119 and 35 foreign investors at pre implementation and implementation stages respectively since 2012 onwards and employees of Ethiopian Investment commission. Questionnaire and interview were the main data collection tools used in collection of primary data. The study has found insufficient supply of foreign exchange, getting financial loan, getting investment land and electricity as the main challenges of foreign investors. On the other hand, political stability, huge market potentials, and raw materials supply are among the prospects foreign investors can reap because of investing in Ethiopia. Finally, the study recommended scale upping of industrial park expansion to potential areas, , formulating harmonized national investment land giving procedure with some flexibility and increasing EIC’s medium of communication that may enable to solve the observed problems and enhance the efficiency of foreign investors