The Dutch are coming! and The Dutch are here!

With these one-liners the Netherlands Embassy has summarized the increasing Dutch involvement in Ethiopia during the last years via the Trade and Business Newsletter, regularly published by the Netherlands Embassy in Addis Ababa. At present about forty Dutch companies - sometimes as a Dutch-Ethiopian joint-venture – are active (or will be soon active) in Ethiopia, of which twenty three in the flori- or horticulture sector. And every week the Netherlands Embassy receives requests for information from potential Dutch investors in many different sectors.

Let’s go back in time, for a closer look at the beginning of this Dutch interest in Ethiopia. After a successful visit of a group of fifty Dutch business representatives to Ethiopia in May 2003, trade and business moved fast forward for the Dutch in Ethiopia. Mainly in the field of flori- and horticulture, but also in other sectors (like tourism) where new markets are expanding rapidly.

For what reason are the Dutch coming to Ethiopia? In short, the Ethiopian ‘emerging market’ provides good opportunities for Dutch businesses, including Dutch-Ethiopian joint ventures, to expand their investments and trade relations. From March 21 – 23 2007, 30 Dutch companies will present their products at the biannual Hortiflora Ethiopia Trade Exhibition with stands at the Holland Pavillion. Opportunities present themselves especially in flowers and vegetables, but also in the production and marketing of coffee and honey. A new Dutch-Ethiopian company will start producing seed potatoes for the Ethiopian market. Furthermore, there is growing interest in the production of oil seed and edible oils. In September 2007 a Dutch trade mission on oil seeds and edible oils is expected to visit Ethiopia.

The Ethiopian climate, the altitude, the availability of land, low labour costs, favourable conditions for foreign investors and proximity to the European market are positive elements for Dutch entrepreneurs to start in Ethiopia. And on the other hand, trade and investments stimulate growth of the Ethiopian economy, generate employment, and enable the local population to improve its standard of living.

To promote these goals the Dutch government makes available several programmes for supporting trade and business with the least developed countries, including with Ethiopia.

For example through the PSOM-programme, a programme for Dutch Cooperation with emerging markets to reduce poverty by supporting sustainable economic development. The aim of PSOM is to share some of the initial financial risks that Dutch companies, or Dutch-Ethiopian joint ventures, will face when investing in emerging markets in developing countries. Proposals amounting to a maximum of Euro 800,000 can be awarded a contribution of up to 60 percent of the financial requirements.

Interesting to note is that from 2003 to 2005 thirteen Dutch-Ethiopian companies, who joined hands on joint ventures, have been awarded PSOM grants for Ethiopia given by the Netherlands government. The total investment for these thirteen companies is more than 10 million Euro, for which the Netherlands government granted the amount of 6.2 million Euro. In 2006 five more PSOM grants were approved.

Please find out the deadline and the requirements for the next PSOM-round ( www.evd.nl/psom or read the latest Trade and Business Newsletter of the Netherlands Embassy in Addis Ababa), which will hopefully give you the chance to submit your proposal.

Other programmes are PESP (financial support to feasibility studies and project identification activities, www.evd.nl/pesp) and ORET (export transactions that are important for development purposes, www.oret.nl).

For new investors in the Horticulture sector a manual was prepared to give potential investors a quick and systematic overview of the steps involved in starting a horticulture enterprise and to indicate the main issues to take into consideration. The publication “Investing in the Horticultural Sector of Ethiopia, a Guide for New Investors” is a joint effort of the Ethiopian Ministry of Trade and Industry, the Ethiopian Investment Agency and the Ethiopian Horticulture Producer-Exporters Association, with the support of the Netherlands Ministry of Agriculture, Nature and Food Quality (The final draft of this publication can be found else where on this website).

However, as stated before, Ethiopia is a developing country and the private sector development and the investment climate are still in the process of growing. The World Bank publication “Doing Business” shows that the climate for foreign investors in Ethiopia is definitely improving. The way the Government deals with foreign and larger companies is seen as satisfactory by most investors.

A lot remains to be done and in the coming years, key reforms for private sector development should be further implemented. Foreign investments call for liberalisation of the banking, telecom and other sectors, for a better infrastructure, like roads and efficient airport facilities, and of course for competitive freight prices and the availability of enough cargo space to export all the products from Ethiopia.

For entrepreneurs, considering starting business in Ethiopia and willing to face the challenge of investing in a developing economy, the country offers very interesting opportunities.

Source: Embassy of the Netherlands in Addis Ababa, Ethiopia