Business and Political Opportunity of Ethiopia - Coursework Example

Ethiopia Project Introduction Ethiopia is one of the quick growing economies in the world with an impressive GDPgrowth for past several years, ranging between 6% and 12% according to World Bank and IMF reports (Briggs et al 66). It has an overwhelming population of roughly 90 million, making it the second highly populated country in sub-Saharan Africa. Its political history stretches back to antiquity, and key political feature about Ethiopia is that it has never been colonized. Weather patterns such as rainfall and dry seasons have huge influence on its economic aspects, majorly year to year growth. Further, its poor political dynasty with dominant interest groups and shifting policies to cater for the politically dominant interest groups is reflected on investor’s behavior. At microeconomic level, investors portray a pervasive conduct on both exogenous and policy generated economic risks in relation to income and property. The political-economic has multiple structural vulnerabilities and weakness in their governance (Praeg 86). Weak Institutions From time immemorial, Ethiopian economy is controlled by elite kings, usually described as slavery in modern world (Clarke 97-101). Private ownership of lands had never been heard of until 1970’s, with inequitable land holdings of the country under the slogan, ‘Land to The Tiller” where the state ended up owning lands itself instead of giving it to the people. Though the state controls land ownership, rural peasants and pastoralists are guaranteed a lifetime of “holding right”, while urban residents are guaranteed the right to get land for residence for 99 years lease based; these rights gives all rights to the people of Ethiopia except sale and mortgage right. However, from 1974 during the fall of emperor Hailesilassie, land remained public property despite earlier socialist oriented military government to make land property of the people and not the state. At the moment, Ethiopian economic growth is estimated to remain strong in year 2015 under the Growth and Transformation Plan. This plan aims at boosting agriculture as the heart of the country economic growth, promoting industrial development and aiding development of quality infrastructure. However, corruption is a key issue in Ethiopia. Historical background of economic policies reflects centuries of internal conflicts and external threats. Internally, varying customs, religions, and ethnicity served as focal points in the contest for power and control of economic resources (Adejumobi 187). Externally, regardless the fact that the country has never been colonized, it’s fought hostile and powerful colonial powers that encircled it and rendered its independence a besieged one. Consequently, it strengthened itself as a militarist state to protect itself, highly importing weapons and exporting commodities. Thus, this paper states that the institutional legacies of internal conflict and militarization are the key influences of major internal growth and development of Ethiopia economy. To date, Ethiopia economic performance is highly correlated with internal and external conflicts and political processes that compliment these conflicts. Financial resources are considered vital for any economy for its development, and in Ethiopia, such a consideration is not exceptional and the government promotes the accessibility and availability of financial resources. They influence the pace of industrialization and economic development. Currently, Ethiopia highly depends on the degree of private capital input, which in turn necessitates government willingness and ability to provide incentives and create a conducive investment climate in various sectors of the economy. Being one of the least developed countries yet developing at a fast rate, microfinance institutions have established themselves in large volumes and are operating towards resolving the key finance problem of credit access by the poor, who are the majority of its population. Although these microfinances reach the very poor of the country, their reach to women and disadvantaged is limited (Rodgriguzz 316). In any economy, labor institutions play vital roles with regard to employments relations, employee protection and provision of labor market services. In Ethiopia, these institutions are considered weak. This is due to the limitedness of regulatory framework and absence of social dialogues amongst institutions themselves such as trade unions and employer’s organizations. Existing regulatory instruments and institutions majorly serve the formal and wage employment sector; without any effort to embrace the informal and self-employment sector. This may be attributed to lack of job security, job protection, social dialogues, and poor labor market services in the face of labor market imperfections background. Trade unions are weak (Praeg 211). This is due to time immemorial ruling anarchy interferences with market players in a bid to protect those in power. Currently, public enterprise trade unions are relatively stronger than their private counter parts because private employers are reluctant to allow their workers to organize themselves under trade unions. Employee efforts to organize themselves and ensure their fundamental rights at work are meet are often meant with stiff resistance from employers. Employers are able to impose these restrictions because of the loopholes provided by Ethiopia labor law where workers must have their employer’s permission to join such unions, or risk the outcome of losing their jobs. Public enterprises allow their employees to join trade unions bowing to international pressure, and in addition to allow their private counterparts to follow suit in their bid of upholding international labor laws because domestic labor laws are construed by unfavorable policies by the ruling anarchies. Ethiopia is large than United Kingdom five times, yet without extensive rail network thus it has paramount road transportation (Clarke 102). Over the last decade, there has been massive increase in funds allocated for road construction with state accounting for a quarter of each year infrastructure budget on road accounts. At the current state, government has earmarked around USD four billion to maintain and upgrade roads under the Road Sector Development Program. On airports, Ethiopia has upgraded existing ones and constructed new ones to facilitate efficient movement of commodities and attract foreign investment. Opening of new airports has led to opening of wide economic opportunities for the entire country. Foreign investments boost the economy of a country in different ways such as creating numerous job opportunities, new markets and bring about new ideas to the community. Citizens of Ethiopia enjoy new experience, get to know new approach of doing business, when they interact with foreign investors who acknowledge the country’s effort to connectivity through transport. Proper transport infrastructure does not bring new investors only, but boost the tourism of the country both local tourism and international tourism. Telecommunications infrastructure is headed by two bodies; the telecommunication corporation which main role is to expand and improve the services and revitalize the infrastructure, and the telecommunication authority which key role is to regulate the industry (Briggs et al 63-67). Prior to setting up of these two bodies, Ethiopian telecommunications authority was the only governing bodies tasked with tasks concerning telecommunication. Telecommunications corporations run as a decentralized body, where each state is responsible for providing its own telecom services and decision making at the local level. This is a less attractive and competitive compared to other developing countries telecommunication infrastructure, such as Kenya, where the government has delegated the role of providing these services to private sector. Government only role is to regulate with the interest of consumers at heart; consequently, Kenya turned out to be first developing country to interface telecommunication with financial sector thus introducing mobile money. Business Opportunity Owing to its rich cultural set-up and the absence of colonization of this country, non-government organizations are the key firms that stand to gain by investing in this country. Evaluating strategies that will cater for the cultural beliefs in the country would be a big boost for anyone interested in investing. The detrimental situation of financial service providers creates an opportunity for non-governmental organizations to offer these services at low interest, especially focusing on women and disadvantaged members of society who possess entrepreneurial skills but do not qualify for credit from existing financial providers. Further, the telecommunication sector provides an opportunity for foreign investors to invest in and reap good returns, because currently, the state of telecommunication is poor a factor contributed by poor governing and regulation by the government. Private firms also stand to gain by investing on construction sector due to the prevailing rate of economic growth in recent years. These opportunities have not been exploited by private firms in the past due to the structure of Ethiopian government, but currently due to civilization of people of Ethiopia, any firm that invests in any of them will reap maximum benefits (Adejumobi 112-118). The big population, is a big advantage to investors who should take the advantage and study what the needs and wants of the population is and what do they lack in the country or what is underprovided. The research, should form the basis under which investors make a choice to invest in the country (Praeg 45). Conclusion Ethiopia political, economic, finance, labor and infrastructure sectors are unique in comparison with other developing nations in Africa. The uniqueness is due to the fact that all these other nations were colonized, and thus during independence they borrowed some key development techniques such as decentralization of ruling government processes and activities, need for private ownership of land and property to encourage entrepreneurships and motivate their citizens, the rights for quality life for all citizens for economic development, and the move to capitalism from socialism for general productivity and creativity among citizens (Praeg 147). Ethiopian population exhibit negative attitudes towards trust and honesty, due to the long-term suffering of the citizens in the hands of its government. Because of the approach and perception of Ethiopians, investors should evaluate the best ways in which they will tap to the culture and empower the communities as they make profits. Market research should be conducted to ensure that investments do not go to waste because foreign investors can easily be discouraged disadvantaging the country from many opportunities that come with foreign investments. Consequently, in an effort to earn a better living, corruption has become immerse in every aspect of life making it difficult for foreigners to transact business freely in the country. Further, manual labor is the major contributor of employment in major sectors, yet the laborers’ are not adequately compensated. In conclusion, the movement by the ruling body to establish Ethiopia economic power as an agriculture country may have killed the spirit of innovation in majority of its citizens, because since time immemorial, the population has continuously exhibited creativity as witnessed in their culture and traditions. This portion of population may be left out in contributing to economic development of the country, as well as contributing to exports volume and promote the country as a tourist destination for quality international relations and mutual benefits between the country and other countries. Works Cited Adejumobi, Saheed A. The History of Ethiopia. Westport, Conn: Greenwood Press, 2006. Print. Briggs, Philip, and Brian Blatt. Ethiopia. Chalfont St. Peter: Bradt Travel Guides, 2009. Print. Clarke, Joseph C. Alliance of the Colored Peoples: Ethiopia and Japan Before World War Ii. Woodbridge, Suffolk, GB: James Currey Ltd, 2011. Print. Mokyr, Joel. The Oxford Encyclopedia of Economic History. Oxford [u.a.: Oxford Univ. Press, n.d.. Print. Praeg, Bertus. Ethiopia and Political Renaissance in Africa. New York: Nova Science Publ, 2006. Print. Rodriguez, Junius P. Slavery in the Modern World: A History of Political Social and Economic Oppression. ABC-CLIO, 2008. Print. Shinn, David H. Historical Dictionary of Ethiopia. Lanham: Rowman & Littlefield Pub. Group, 2004. Internet resource. Read More