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Al-Amoudi Accounts for 60 Percent of Ethiopia's Total FDI
BY MIKIAS WORKU
FORTUNE STAFF WRITER
Sheik Mohamed Al-Amoudi's massive investments channeled towards Ethiopia's diverse economic sectors have placed Saudi Arabia, the Sheik's country of citizenship, at the forefront of foreign direct investment (FDI) that the country attracted during the past 10 years.
Saudi Arabia has been the source of 60pc of the total 14.61 billion Br foreign investment capital that flowed into the country for projects launched during the period 1992 - July 2001, with Sheik Al-Amoudi's Midroc Ethiopia behind most of Saudi investment funds, according to the Economic Report on Africa 2002.
The report, launched by the Economic Commission for Africa (ECA) on Tuesday July 16, indicates that FDI accounted for 20pc of the country's total investment during the stated period, including private and public domestic investments, totaling 71.85 billion Br.
The figures include only the projects that have commenced operations.
The report says that Sheik Al-Amoudi's investment arm -Midroc Ethiopia- and its subsidiaries account for the majority of Saudi-owned foreign investments.
Based on the report's indicators, Sheik Al-Amoudi's direct investments in Ethiopia would be estimated to the tune of 8.7 billion Br, 30pc of which (2.6 billion Br) was spent for acquiring various enterprises that were sold through the privatization process.
Around one billion Birr spent for building Sheraton Addis, 100 million dollars investments in Pharmacure's drug manufacturing plant and setting up a nursing college; 350 million Br allocated for Nani Building; and sizable investments in construction, soft drinks, paper and corrugated iron sheet manufacturing companies, and real estate, are among the prominent projects that the Sheik is investing in.
European Union member states have been the second largest source of FDI next to Saudi Arabia, providing 30pc of the total foreign investment capital.
Ethiopians living abroad have considerably contributed in the rest of the FDI, according to the economic report.
Private domestic investment has the lion's share in the country's total investment with 46.16 billion Br (64.3pc), followed by FDI, which made up 20.3pc of the overall investments. Public domestic investment come third accounting 15.4pc of total investments.
According to the report, FDI has been increasing steadily since 1992 economic reforms, peaking to 59pc of the total investments in 1997/98, up from two per cent in 1995/96.
This sharp increase in FDI flow, however, started tumbling steeply at the breakout of the two-year border conflict, falling to 31.8pc in 1998/99 and further shrinking to 9.9pc in the following year.
ECA's report notes that although some progress has been registered in FDI compared to the previous regime, barring foreign investors from participating in important areas of the economy, including banking, insurance, broadcasting and printing, coupled with weak infrastructure, have considerably contributed in undermining FDI flow into the country.
Ethiopia receives the least amount of foreign investment capital compared to FDI flows to other developing nations, the report stated.