Ethiopia beat all other eastern African countries last year as the largest recipient of Foreign Direct Investment (FDI), according to a new report authored by financial consulting firm, Ernst & Young.
The EY Attractiveness Survey 2019 released this week, shows Ethiopia attracted foreign investment worth Shs26.8 trillion last year.
Kenya closely followed Shs7.68 trillion while Tanzania attracted foreign investments of Shs3.8 trillion in the same period.
The report did not document foreign direct investment figures for Rwanda and Uganda.
However, data from Bank of Uganda indicates that Uganda, in 2018, received about Shs2.9 trillion in foreign direct investment.
In Ethiopia, according to the EY report the Shs26.8 trillion foreign direct investment resulted in creations of 16,000 jobs from 29 projects while about 6,000 jobs were created in Kenya from 64 unnamed projects.
In Tanzania, 3,000 jobs were created from 19 projects.
Ethiopia is attracting higher foreign inflows compared to its regional peers thanks to an “efficient” business environment and the lure of a huge untapped domestic market.
“Ethiopia has affordable electricity supply and is served by an efficient airline,” says Francis Kamau, a tax partner at audit and consultancy EY East Africa.
“It also has a huge domestic market with guaranteed access to external markets through its well served Special Economic Zones.”
Kenya’s FDI attraction is helped by its status as the region’s financial centre, and a hub for many multinationals doing business in the region.
Two of Kenya’s largest blue-chip companies, KCB Group and Safaricom, have continued to eye establishment of operations in neighbouring Ethiopia where reformist Prime Minister Abiy Ahmed is opening up the economy, creating opportunity for foreign investors.