1. Could you comment on the economic and financial situation in Ethiopia and the main elements of your policy?

The Ethiopian economy has showed a strong performance despite the occurrence of drought that affected the agricultural sector. Economic growth measured by real GDP growth rate on the average was about 5.3% between 1992/93 and 2001/02. Comparing it with the 1970-90 average growth rate of about 2%, the performance of the economy is encouraging. It is important to note that drought, which the country faced in 1993/94, 1997/98, 1999/00 and 2001/02, as well or the Ethio-Ertiria war (May 1998- June 2000) seriously affected the economic performance of the country. In the same period, investment has shown upward trends. Investment measured by Gross fixed Capital formation as a share of GDP on the average was about 17% between 1992/93 and 2001/02.

The country has also achieved macroeconomic stability since the start of the economic reform program in 1992/93. Low inflation rate, which was contained below 5% in most of the years, low interest rate, stable foreign exchange depreciated at a slower rate, have contributed for the macroeconomic stability of the country.

The economic policy of the country since 1991 has focused at reorienting the command economy of the previous regime to market economy, rationalizing the role of the state and creating legal, institutional and policy environment to enhance private sector investment. In line with this, the fiscal policy of the government aimed at reducing government deficit to a sustainable level at the same time divert capital and recurrent spending to poverty reducing sector such as agriculture (food security), natural resource, education, health and road construction. On the revenue side, the government is trying to improve performance through among other things, tax reform.

The monetary policy is geared towards containing inflation below 5% and achieving international reserve at reasonable level.

2. What are the main measures taken to increase investment in Ethiopia, local and foreign investment?

In the market-oriented economic system, the government of Ethiopia considers itself as a facilitator for the development of private sector rather than the main actor of the economy. Accordingly, the government has undertaken economic, political and institutional measures to create conducive environment for the development of the private sector. Consistent with its role as a facilitator, the Government's fiscal policy has been re-oriented towards the expansion of social and economic infrastructure with focus on expansion of roads, access to water and sanitation, education, health, as well as rural and agricultural development. The main favorable conditions put in place since 1992/93 for the development of the private sector are: -

· Peace and Stability: - the country has relatively stable internal political stability. Moreover, the country has good international economic and political relations, which are the key factors for investment attraction and sustained economic development;
· The democratization process underway in the country has helped to create peace and stability. After the adoption of the federal system, power has devolved from the center to the regions. The decentralization process currently deepening to woredas (districts) level. The civil service reform program, which is a major component of the economic and political reform being implemented, aims at building a fair, transparent, efficient, effective and ethical civil service;
· Property rights have the protection of the law;
· The government has enhanced its institutional capacity to fight corruption by, among other things, establishing on anti Corruption Commission.
· Macroeconomic Stability: - Low inflation rate, low interest rate and a relatively stable exchange rate have contributed for the macroeconomic stability of the country.
· Institutional and Legal Environment: - Following the market oriented economic policy announced in 1992, an investment code, passing the way for domestic and foreign private investment, was issued in the same year. The code has been updated three times with; the last revision made in March 2003. The investment code creates space for private investment with a number of incentives. Investment offices have been established at federal and regional levels to coordinate and facilitate private sector investment. The investment law has given 3 to 7 years income tax exemption for investors who are engaged in manufacturing, agro-industrial activities or the production of agricultural products for export activities. The code further provides for exemption from the payment of Customs Duties for the import of capital goods and construction materials for the establishment of firms as well as raw material used for the production of export goods.
· Taxation: - There has been revisions of income tax and tariff many times. As a result, the maximum income tax reduced from 89 to 35 percent. Tariff revisions, which were amended for about six times, slashing down the maximum tariff rate from 230 percent to 35 percent. Further more Value Added Tax (VAT) has been introduced since January 2003 replacing sales tax. To improve tax administration, tax reform program is under implementation.

3. What are the incentives for investors to get land easily?

Now we have streamlined it with a package for investors. When he comes, he will not look for land, now the government will make it ready with a minimum price just to cover the cost of infrastructure, power, telecom. So now we have a system whereby investors can really get land within a matter of two or three weeks. We are working hard to improve on this.

4. Could you speak about the privatization process in Ethiopia?

Privatization is one of the key interventions that the Government took to rationalize the role of the state. The country's privatization has three main objectives. These are:-

· to generate revenue required for financing development activities undertaken by the Government;
· to change the role of the Government in the economy and enable it exert more effort on activities requiring its attention, i.e. poverty reduction projects such us education, health, water, road etc; and
· to promote the country's economic development through encouraging the development of the private sector.

To implement the privatization program as part of structural adjustment program, the government established the Ethiopian Privatization Agency in 1994 to manage the process.

Up to January 2002, about 233 public enterprises have been privatized. Of these 133 are small firms operating in the retail trade, 40 manufacturing, 31 agricultural, 18 hotel & tourism and 1 mining firms.

5. How do you see the economy of Ethiopia for the next 5 years?

I hope we will maintain the macroeconomic stability of the economy, which we have achieved so far and this has created a good ground for rapid and sustainable economic development of the country. I believe the agricultural sector will come out from the influence of drought and thus we will achieve food security at national and household level.

The ongoing reform, including the judiciary the civil service, capacity building in public and private sectors, and decentralization, among others, is expected to bring about positive results in poverty reduction and economic development.

We have plans to improve and diversify our exports, through the production of high value agricultural products and increased support to export oriented manufacturing sectors, with particular emphasis high quality leather and textile garments.

6. You have signed an agreement with the United States to export freely and you have some arrangement with foreign countries concerning exports?

Yes, lately these economies, the US and the EU, have started opening their markets gradually. One of these is the US initiative known as the African Growth and Opportunity from which we have started to benefit. However, to take full advantage of this opportunity, we need to build adequate capacity on our side, a task which has one of the top priorities on our development agenda. The European Union also has the initiative "Everything But Arms", which allows duty and quota free access to goods from ACP countries. So we hope we will start with these benefits. We think that if we get a foreign investor who has the management, the marketing capacity, we can really benefit from this opportunity. So we are also working hard on telling foreign investors who know European market, who know American market, to come and to invest here. This is a unique opportunity.

7. Are you also working with NEPAD?

The new Partnership for African Development (NEPAD) is a development framework developed, managed and owned by African. Ethiopia is playing its role actively for the successful implementation of NEPAD. We believe NEPAD is a compressive and integrated development plan that addresses key social, economic and political priorities in a coherent and balanced manner so as to accelerate the economic development of the continent. NEPAD is a comprehensive strategy for African development which African partners from the rest of the world should be committed for its implementation. Many positive things are looking good about NEPAD because of the following reasons: -

· It brings the concept of a new partnership with the rest of the world based on mutual commitments, obligations, interest, contributions and benefits;
· It can assist the democratization process through "peer review mechanism";
· It strengthen economic relation among African countries by facilitating the mobility of people, goods and services and through the improvements of terms of trade; and
· It can serve as an instrument for creating global constituencies of solidarity, which, in turn, can induce populations in the developed nations to see the lop-sided and uneven nature of global economic relations.

8. What would be your massage to investors who want to invest in your country?

I think the first thing investors should look for and know is what opportunity and resources are available here. In this sense, let me put few points I think that attract investors to come to the country. As it is well known, the country has long history, diverse and rich cultural heritage and reasonably good resource potential for development.

Given its diverse physical features in climate, terrain, topography, agro-ecological zones, Ethiopia is endowed with abundant natural resources for agriculture. The economy possesses one of the largest and most diverse genetic resources in the world. Of the total land area of the country, about 66% is estimated to be suitable for agriculture of which only 16.5 million hectares (or 22%) is currently believed to be under cultivation.

The country has abundant water resources, which has had tremendous irrigation potential. There are ten major rivers (7000 kms long) and lakes (7400 sq. km in area). The country's annual flow of water is about 110 billion cubic meters whereas that of ground water is 2.2 billion cubic meters. These make the country at the top in the world in terms of water resources. The potential for irrigated agriculture is currently estimated at 3.7 million hectares of which only about 4.4% (or about 0.16 million hectares) is believed to be under irrigation.

The country has an immense potential for livestock development. The country stands first in Africa and tenth in the world in livestock population.

Ethiopian's hydropower development potential is the range of 15.000 to 30,000 MW. This has classified Ethiopia as one of the world's leading hydro potential countries. So far, less than 1% of this potential believed to have been utilized.

Given its outstanding archeological sites, scenic beauty, wildlife and national parks, arts and rich cultural diversity; Ethiopia has got a promising potential for developing tourism.

The availability of a huge work force with one of the lowest wage rates (compared to other developing countries) is also another opportunity for foreign investors.

Apart from the availability of natural resources I mentioned above, the existence of a vast domestic market and a possibility of exploiting the geographically close by lucrative foreign markets in the neighboring countries are good opportunity for investors.

Our positive track record in macroeconomic management, which is a prerequisite for a stable economy, is another incentive towards attracting foreign investment in Ethiopia. There are also many economic, political and institutional measures so far undertaken by the Government believed to have a positive impact in creating conducive environment for the development of the private sector and so attract the investors.

9. What is your biggest achievement since you have joined the team at the Ministry of Finance and Economic Development?

I had worked for 8 years as the Minister of Finance, before the merger of the Ministry of Finance and the Ministry of Economic Development and Cooperation in 2001. and the last 2 years I have been also responsible for the economy. The new ministry is called the Ministry of Finance and Economic Development, which I now head. I think our biggest achievement during my tenure is to have macro economic stability which is rare in many countries. But this is not an end in it self; it is a means. My hope is that this opportunity really continues to grow, to reduce poverty in this country, where people would share the growth and where every citizen will benefit from the economic growth. So the most important achievement I want to single out is macro economic stability in the country.