Chinese Foreign Direct Investment (FDI)into Africa is on the rise and Ethiopia is at the forefrontof this trend. On request of the Government, the World Banksurveyed 69 Chinese enterprises doing business in Ethiopiawith a 95-question survey in May/June 2012. The surveycovered various aspects of the foreign direct investmentclimate in Ethiopia, including infrastructure, sales andsupplies, land, crime, competition, finance, humanresources, and questions about general opportunities andconstraints for doing business in Ethiopia. This reportsummarizes the results of survey and provides policysuggestions in light of the analysis; the report alsoprovides some broader background of the expected benefits ofFDI into Ethiopia as well as current policies and approachesto promote incoming investment. Addressing identifiedobstacles could help Ethiopia to take better advantage offoreign investors in order to accelerate the shift from apredominantly low-productivity agriculture-based economytowards a higher-productivity manufacturing and export-basedeconomy. Experiences in successful countries around theworld, and especially East Asia show that foreign investmentis instrumental to facilitate such a structuraltransformation and to maintain sustained and broad-basedeconomic development. This study recommends five main areasfor policy adjustments to facilitate foreign investorscoming into Ethiopia: adjust customs clearance proceduresand trade regulations; facilitate currency convertibilityand increase transparency of the exchange rate policy;improve tax administration consistency and efficacy; executeimpartial labor regulation; and increase the supply andquality of skilled workers.
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