| Abstract: | Ethiopia has passed through a lot of changes for the last two decades in terms of economic
reforms where by several policy proclamations and provisions had been taken up by the
government. Since May 1991, the climate for foreign investment has improved dramatically.
Private investment policies are more liberal, commercial performance standards have been
applied to public enterprises, tax and tariffs have been reformed, and the currency has been
devalued. In 1996, a revised investment proclamation was approved that created additional
incentives for foreign investors. Major provisions included duty-free entry of most capital
goods and a cut in the capital gains tax from 40 to 10%. In addition, the government opened a
number of previously closed sectors of the economy to foreign investment, although financial
services, large-scale power production, telecommunications, and other public utilities remain
off limits. This study assesses the policy measures taken up by the government and how it
impacts investment flow to the country’s economy. Official figures indicate that as of from
1992 to 2011 out of a 55, 265 investment projects 6, foreign investors had been given
licenses. In 1998, amendments to the 1996 investment proclamation allowed Ethiopian
expatriates and permanent residents the ability to invest in industries that had previously been
reserved for nationals only. The inflow of investment by domestic, foreign and public
investors peaked in 2011 at $40billion. Investment projects launched between the period
2002 to 2011 creates job opportunity to 7.3million people of temporary and permanent
employment.
Floriculture industry is an agro industry activity that experienced a dramatic boom in
Ethiopia since 1992, particularly following the economic reform and investment policy
provisions by the government that creates conducive investment climate and more stable
economic environment. Attempt has made and detailed analysis got due attention to assess
the impact of the investment policy and how it opens up the door for the emergence of
floriculture industry and its economic impact, rural job creation.
Number of investment projects launched to undertake flower farming showed a sharp rise
from 1992 where it reaches to peak at 351 in 2011 with highest number in 2008, in which 79
new flower farms are established. It creates a job opportunities for 386,074 personnel of both
skilled and unskilled labour for permanent and temporary employment during the mentioned
period. This in turn resulted in improving the livelihood of the rural community where the
flower farms are located. A total of USD184.1million foreign earning has been gained by the
country in 2011 and it reaches to USD301million from 2000 to 2010. Furthermore,
technology transfer and experience sharing from those expertises of other countries counts
significantly and impacts the sector, undeniably, positively.
Although the sector is contributing to country’s economy and being one of the sectors that
contribute to the country’s foreign earning, there are some concerns from different groups on
its environmental and social impact particularly health and safety of workers on flower firms.
It should be taken as centre of discussion among all concerned parties to minimize the
negative implications and support the sector to maximize country’s potential benefit from the
industry. |
