asfaw-alemayehu
Market Analysis

Ethiopia Perspective: A Businessman in Addis

Kathryn Cave speaks to Asfaw Alemayehu, East Africa Rep. for the Corporate Council on Africa and MD of Gazebo International, an organisation which provides consulting services for those who want to do business in Ethiopia.

Asfaw Alemayehu moved to Ethiopia from the US four years’ ago and has already seen significant changes. “[Back then] I only had electricity every other day, now I have no problem with electricity,” he says when I speak to him on the phone from Addis Ababa on Wednesday.  Alemayehu is of Ethiopian descent, had lived and worked abroad for 16 years and decided to return “because there are lots of opportunities for me as a businessman. The country is growing and the middle class is emerging. I’m happy with my move and have no regrets. It’s not an easy place, but there is a lot happening.”

Much of the obvious signs of growth have been government-led. “The government made a very calculated decision to provide incentives and invest in infrastructure,” Alemayehu explains. The aim was to improve local conditions, create jobs and build the right framework so that foreign companies would come in. “The government is spending very heavily on… roads, power supplies and transportation. In the private sector we’re seeing a lot of investment in agriculture as well as manufacturing.”

The problem for foreigners coming in is that Ethiopia is, “totally different in terms of background, perspective and way of doing business on the ground.” It was a communist country until 1991 and “there was no private sector. Now our private sector is opening up and thriving, but it is a learning curve.  To some extent the government is more open than it was a couple of years ago, although to this day there are still some areas which are closed for foreign investors. This makes it different from our neighbours in Kenya where the private sector is very strong. In Ethiopia the private sector is at its infancy stage which is both attractive to many companies, but makes understanding Ethiopia very complex.”

Overall Alemayehu is positive about foreign investment and believes “the Middle East is a natural partner. We have our own relationship with the Saudis and Arabs as well as Egypt.” This is both because of proximity and a shared religion: 35-40% of Ethiopians are Muslim. However, he does stress that cultural differences do come into play when companies approach the market: “Asian companies are more flexible in the way they approach Ethiopia [than European and US organisations] due to their background and experience. I see more Asian companies coming, looking and investing.”

It is Alemayehu’s belief that the future of the country is in agro-processing and the emerging middle class. “In the supermarkets at present you mostly see imports, but the government is providing a lot of incentives for food processing and agribusiness in general. This is also causing interest from the private sector. [And as] a middle class - by Ethiopian standards - is emerging, anything that has to do with consumer goods would make a very profitable business.”

He is keen to stress how different Ethiopia is from neighbouring Kenya. “In the past, the bigger companies have looked at Ethiopia as an extension of the Kenyan market.” Now companies are starting to see Ethiopia as a place in its own right. “I see this every day - that is no exaggeration - I meet a lot of investors.  A couple of years ago multi-nationals did not see it as an attractive country. Now they think that the middle class is growing and people are buying more consumer goods.”

Ethiopia is a very different market from elsewhere. In a lot of ways everything is starting from scratch. “This means both opportunities and challenges... and companies need to have their own strategic entry into the country in order to be successful.” It will certainly be interesting to see what changes the next four years’ bring to such a fast progressing country…

 

We’re interested in connecting with professionals on the ground in Ethiopia. Please drop Kathryn a note if you would like to chat.

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