Hirut zemene the role of the government to support private sector - ethiopia
The Role of the Government to Support & Promote Private Sector Development in Africa The Case of Ethiopia Entrepreneurship and Economic Development in Africa Embassy of Ethiopia 10 march 2012 SOAS, London
The National Development Path• Ethiopia is a country endowed with diverse natural resources, 2nd largest populous country in Africa;• Ethiopia is on a fast track development, it has registered 11 % GDP growth over the past 7 years;• It aims to join middle income countries by 2025- meet MDGs Goals by 2015;• The country’s successive 5 year development plans have given due emphasis to Private sector development;• Ethiopia has advanced a free market economy in the past two decades;• Private sector is an engine of the economy;
• Agriculture is the main stay of its economy, which constitutes 40 % of employment and more than 60 % of exporter earner;• It is the major source of private sector development;• Ethiopia is a country of small holder farmers managing their own private property;• Hence, entrepreneurship is a deep rooted culture;• The current 5 year plan emphasises on SME and industrialization;• This constitutes of an expansion of the private sector both in the urban and rural areas;
Legal and administrative frameworks• The constitution protects Private property;• Ownership of multiple businesses is allowed;• Relaxation of quota and tariff restrictions on trade;• Investment Code – with a number incentives;• Micro finance – one of the largest micro- finances is found Ethiopia (provision of seed money for small businesses and farmers)• Protection of local businesses;• Intellectual Property Rights;• Almost non-existent corruption;
Support structures• Associations: leather, textile, major exporters association, Chambers of Commerce;• Centres of Excellence: metallurgy, Leather, textile, agriculture, horticulture support centres, commodity exchange market• Privatization: more than 60 companies are out there for privatization• Education: TVET #253and higher learning institutions #32;• SMEs: from MSEs to SMEs;• Dialogue: high-level dialogue with the private sector;
Investment Incentives• 100% duty free privilege for construction equipment and 15% worth of spare parts to be allotted to the initial stage of investment;• Exemption from income tax – 2 to 7 years tax holiday;• Loss carry forward- investors that suffer losses during the income tax holiday period, by the end of the term, get extension for half of the term;• Bank loans – on a 30-70% basis;
• Remittance – investment profits, dividends, payments to loads to foreign banks and buying of technology transfer;• Encourages increased flow of the Diaspora
Outcomes has become the major source of• The private sector employment;• Competitiveness and growth;• Youth employment on the rise;• Backward and forward linkages;• Work ethics and innovation;• Flourishing of towns;• Poverty headcount reduced by half in the past 10 years;• Local capacity development, engineering, business, agro- processing;• On the right path to meet MDGs Goals and target of being a Middle Income Country.
Thank You Hirut ZemeneTrade & Investment Minister Counsellor Embassy of Ethiopia e: email@example.com
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