Chinese investors are leaving Ethiopia and relocating to neighboring countries, citing unfavorable working conditions as a key factor.
Many of these investors, who have played a significant role in Ethiopia’s economy, are reportedly moving their operations to countries such as Kenya, Uganda, and Tanzania.
A report from Capital newspaper indicates that the Chinese investors, once dominant in Ethiopia’s investment landscape, are facing various challenges that have led to their departure.
According to a representative from the Chinese Embassy in Ethiopia, the trend of Chinese businesses shifting to other countries is alarming.
He stated, “This is a significant concern not only for the embassy but also for the country, as our mission is to facilitate cooperation between the two nations. The current situation poses a serious threat, particularly to Ethiopian society.”
Several key issues have been identified as contributing to the exodus of Chinese investors.
According to the representative of Chinese investors in Ethiopia, these challenges include the ongoing security crisis, cash shortages, and a shrinking trade environment.
He further explained that taxation, especially customs-related taxes, has become an additional burden for businesses.
Despite these challenges, Chinese investors have contributed immensely to Ethiopia’s infrastructure development.
By May 2024, they had invested in over 2,000 projects with a total investment of up to $5 billion, creating over 600,000 job opportunities. This highlights their critical role in Ethiopia’s modernization efforts.
China stands tall as a strategic partner to Ethiopia, and presently Chinese companies are undertaking many investment projects amounting to nearly 5 billion U.S. dollars in Ethiopia.
On the other hand, local Ethiopian construction companies have voiced concerns about the overwhelming presence of foreign, particularly Chinese, contractors.
The Ethiopian Construction Contractors Association has urged the government to restrict foreign contractors to bidding on projects valued at over 2.5 billion birr, to allow more opportunities for local contractors.
Girma Habtemaryam, president of the Ethiopian Construction Contractors Association, noted that foreign contractors are supposed to be limited to projects worth more than 600 million birr, but this rule is not being enforced.
He mentioned that foreign companies, particularly Chinese firms, have been bidding for projects worth as little as 50 million birr, pushing local companies out of the market.
Girma emphasized that more protections and priorities should be given to domestic contractors to ensure fair competition.
Additionally, the Ministry of Urban and Infrastructure recently announced that Ethiopia’s construction industry policy is undergoing revisions, signaling potential changes in the sector to address these concerns.
