Chinese investors are relocating their operations from Ethiopia to neighboring countries in response to various challenges. Chinese investors, having made substantial contributions to Ethiopia’s economy through investments of roughly $5 billion in over 2,000 projects, are progressively moving their operations to neighboring nations like Kenya, Uganda, and Tanzania. This shift is due to a variety of challenges encountered in Ethiopia.
A report from the Capital Newspaper cites Andy Wu, a representative of Chinese investors in Ethiopia, who has pointed out several critical issues impacting their business operations. “Ethiopia is currently grappling with significant challenges,” he stated. These include a security crisis, shortages of hard currency, and diminishing market opportunities. He also detailed the tax-related difficulties faced by investors, saying, “Dealing with the customs bureau is consistently problematic. When production is delivered, the reaction from customers is rarely positive; it’s predominantly complaints.”
As of May 2024, Chinese enterprises have generated approximately 610,000 job opportunities in Ethiopia, significantly contributing to the country’s modernization. The representative from the Chinese Embassy in Ethiopia has raised concerns over a recent shift in investment patterns. For various reasons, Chinese investors are redirecting their investments from Ethiopia to neighboring countries. This shift is worrisome for both the embassy and the nation, as their mission is to foster business cooperation between the two countries.
The persistent insecurity and political instability arising from ethnic conflicts have negatively impacted the investment climate. The genocidal conflict in Tigray, which concluded in November 2022, along with the continued unrest in areas such as Oromia and Amhara, have resulted in a downturn in foreign direct investment..
Chinese investors have been crucial to Ethiopia’s economic growth in recent decades. However, their recent pivot to neighboring countries highlights substantial challenges that need to be confronted.