Interview with Henok Assefa
High time for exploring opportunities in Ethiopia
Precise Consult International PLC (PCI), a premier consulting firm operating in Addis Ababa and New York City, is to link 200 foreign CEOs with 200 local CEO tomorrow before the upcoming World Economic Forum is in full swing the following day. Henok Assefa, PCI managing partner spoke to The Reporter’s about the significance of the event and the role of the diaspora in Ethiopia’s economy.
Your company is to organize Ethiopia Investment Forum next Wednesday before the World Economic Forum is in full swing. What is the significance of convening the event in the first place?
The World Economic Forum on Africa actually gathers the most important people in terms of leaders (including those in civil society, businesses, government and so on) within the Africa context in one location every year. Because of its prominence and successfulness, what happens is that the Forum gathers a really good number of people who look forward to the next meeting every time. As part of that, whenever you have an interesting group like that, you want to divert them for your own purposes. In our case, the benefit of hosting the World Economic Forum is not much if we cannot get some of them to look at our country in a different way and see if we can get them to invest in our country. So our objective is to divert a group from the total list of attendees of the Forum, the business-oriented ones, those that are curious about Ethiopia and looking for opportunities to invest in the country. In addition to that, our objective is to provide these prospective investors with a platform to better understand the economic dynamics here and meet with Ethiopian entrepreneurs, business leaders and government authorities and policymakers.
Who are these people, by the way, and what is their significance?
One thing I want to say here is that we are holding this conference and creating the linkage with foreign companies because we think the way of doing business in the past, say a few decades ago in Ethiopia, is gone. As a country, if we are going to prosper, we need a private sector which is more visionary that looks outward, not just content in the domestic area. We need a private sector that thinks about regional markets, for instance. We need a private sector that is visionary enough that invests in its own capacity to fend off competition in its own home market. Most of the visionary leaders in Ethiopia already understand that they need more experience, more partnerships with foreign companies, more financing and more access to markets. So the idea of the Ethiopia Investment Forum 2012 is to link our leading CEOs to these capacities. The World Economic Forum brings businesses and business leaders that are actually doing quite a lot on the African continent already, and, as such, who are familiar with the challenges and opportunities that accrue from doing business in the continent. As such, the chances of turning the investment forum into a success story are higher when you compare it with efforts under way to bring investors from Europe and the U.S. who had not been here at all. At least 200 CEOs of major global corporation working within Africa are selected to attend and participate at the investment forum. We have picked a few sectors where we think Ethiopia has a future such as manufacturing, agribusiness, mining, tourism and ICT. At the end, we will have 200 CEOs from overseas and 200 CEOs from Ethiopia as well as a good number of high-level government authorities from Ethiopia, including Prime Minister Meles Zenawi, who will open the investment forum. These minds will be talking about business and investment opportunities in Ethiopia. The sum total of that will be a change in the image of Ethiopia as a country of opportunities rather than as a country in need of food aid or supports from donors or so.
In a communiqué you sent us, you have mentioned of Africa’s economy as a lion economy and that there can not be any emerging lion economy than that of Ethiopia. Yet recent figures show that the numbers are declining this year. How do you affirm or justify your statement then?
I am not aware of those numbers. It would have been helpful if I have seen them first. Still I am not, really, worried. Because what we are focusing on here is long-term and productive foreign investment in Ethiopia. We think that Ethiopia is an emerging lion economy, because over the next, say 20 years this economy is really going to explode and is going to create many opportunities for many people. So, foreign investments coming into the country will definitely have advantage over time. We, as a matter of principle, are not even promoting foreign investment that comes in and goes, a short-term based investment. This is still a frontier market, a developing country, where we may have challenges. So this particular decline in investment you mentioned could be the sum of partly the challenges faced. But the biggest white elephant is the current economic situation in the world.
Aside from that, there are some changes in the way the investment agency is reporting those number of investments numbers. From the government side, there is a tendency to focus more on implemented projects than registered projects. That might explain some of the drops in the foreign investment numbers.
We are still working on improving our business environment. We still have a lot of things to do in terms of reducing risks in the regulatory system and I am an advocate of that. I think government and private sectors need to continue to work together to improve the business climate as we move forward. One of our selling points to the inflow of FDI is the population size of 85 million, the large number of consumers that investors will look forward to. But that is not unique anymore. If you just look the South of Ethiopia, some five or six African countries are representing a market of more than 100 million people. They are creating a system that will attract foreign investors. We need to continuously work on our competitiveness. We have improved quite a lot over the last ten years and there is still some time to go.
But before we talk about foreign investment coming from foreign investors, what is your comment on the current business climate in the country in attracting the diaspora to come and invest in their home land?
Obviously the opportunity is here. If Chinese, Indians and Turkish companies coming here and setting up businesses and end up by succeeding, I do not see any reason why the diaspora could not. But my views built on the diaspora over the last six or seven years is a little bit different. I think we need to approach the diaspora very opportunistically, asking this question: what can we get out of the diaspora? As we have a number of highly influential Ethiopian CEOs in the U.S. and Europe who make things happen in big global corporations, they could help their country by harnessing their potential to create networking opportunities for businesses here and so on, for which I place the most value in bringing FDI. Those are the ones who can make changes and whom we should be looking for, not the entire diaspora. And we should stop looking into bringing them here while they can be more helpful while they are there. The other thing to capitalize on the diaspora is to employ an innovative financial system to make better use of remittances; such systems are already in use elsewhere. The Ministry of Foreign Affairs has been working on a new diaspora policy to make better use of the diaspora to the economy and, I think, even if it is a bit of elitist approach, we are somewhere on the right track.
So are you suggesting that we better appeal or look forward to attract selected diaspora?
First of all we have to remember that when we talk about investment and starting a running business, it is done by entrepreneurs. In every group of people, the entrepreneurs are always a very small percentage of that people. It is not different for the diaspora. I think a diaspora for Ethiopia is more about the one percent of them. One percent of the diaspora can turn the country upside down in a positive way, position Ethiopia in a very good way overseas in terms of marketing and creating competitive industry back home or even bringing back scientific knowledge and all of that. So when it comes to business and investment or the economy at large, I would go for that one percent, I will opt to deal with the rest for social and political issues.
So how many of that one percent you are talking about we have now here engaged?
I think we are only scratching the surface. I think we are going to see much more coming back. The trend is encouraging, if I may say so myself. In just about every sector, be it public, private, social, NGO or civil society, you will find one, two or ten seasoned, experienced diaspora. By the way, there are some diapora who have made a change here but who would not even come or show up to take credit for that. Those are the people that can change Ethiopia and those are the people we have to focus on, not the ‘showy, showy’ ones.
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