ADDIS ABABA – Dr. Worku Zewde and his wife, Zinash, came back to Ethiopia ten years ago after spending 21 years in the United States, where they had become American citizens.
“Going to the United States was not a shock for me,” Zewde recalls. “It was coming back to Ethiopia that was difficult.”
The Zewde’s had come home hoping to invest money they had earned while living in the United States.
“The policy for investing was so prohibitive—especially for foreigners,” he said. “There was a cap. You had to bring in half a million dollars if you wanted to invest. Nobody would risk investing that much money in Ethiopia at that time.”
After two years, and an effort by the Ethiopian government with the assistance of the World Bank funded Public Sector Capacity Building Project (PSCAP) to reform the investment sector, the Zewde’s were able to start a business — Knit to Finish, PLC. They have been a success story ever since. The company exports quality garments to the United States where they are sold at sporting goods stores. The garments are manufactured by over 350 employees, mostly women, just outside Addis Ababa, Ethiopia’s capital.
Easing the process of doing business
Ethiopia’s Federal Investment Agency, the agency responsible for monitoring finances and investment, has dramatically improved its service delivery times and customer service, providing a more conducive environment for foreign investment. Ten years ago, it took an average 225 days to get a business license. Now it only takes half a day.
“There is definitely a sizeable difference in this country, which is keeping us going every day,” Zewde said. “We see the light at the end of the tunnel.”
This sense of great improvement in the business environment is shared by Ryiaz Shamji, a native of Uganda, who moved to Ethiopia ten years ago looking for investment opportunities.
Today, his family business, Golden Rose Agrofarms, exports 2.5 million roses per month. It also produces drinking water and a variety of consumer goods. When they got started, however, it wasn’t so easy.
“The whole idea of investment promotion was on a very different level,” said Shamji, whose company employs 830 people. “It wasn’t a question of incentivizing investors.
This is no longer the case, according to Shamji.
Government reforms
Efforts to reform the Federal Investment Agency began in February 1994 when a directive issued by the Council of Ministers mandated “one-stop shopping.” Previously, foreign investors had to visit many institutions, and the process was cumbersome. To accommodate this mandate, all of the varying processes from different ministries were brought into a single building. Even then, the burdensome and sometimes redundant processes remained the same.
A comprehensive study was commissioned in 2002 to look back at the previous 10 years. All stakeholders participated in the study which helped to generate recommendations. Government officials welcomed the recommendations, and in turn issued an even more comprehensive and radical transformation. The Federal Investment Agency was given the power to make decisions, and as a result redundancies were eliminated, processes were consolidated, and unnecessary procedures were abolished.
The Agency also embraced a culture of excellence, striving to do even more. The processing time for business licenses was reduced from 225 days to six hours in 2004, and then again to 3 ½ hours in 2006. The improvements in service delivery spread throughout the country to the regional trade and industry bureaus and city administrations.
Gaining investor trust
Understanding the value of the customer, the Agency now solicits customer feedback. Comments are systematically collected and analyzed on a weekly basis. Feedback, whether positive or negative, is shared with the relevant frontline staff, department or agency. This has led to a host of improvements.
Seifu Biratu, head of the Civil Service Reform Office for the Federal Investment Agency, collects the comment forms on a weekly basis.
“It has had a great effect on our frontline,” he said. “They know we are reading the comments so they are more conscientious in providing good customer service.”
Biratu’s colleague also heralds the improvements.
“What we have come to realize,” said Alemayehu Gebeta, head of the Licensing and Registration Department, “is that investors have become our diplomats. When they have a good experience, they tell others. They help us to attract other foreign investors.”
The numbers support Alemayehu’s claim. In 2003, 23 investment permits were issued. By 2006, that number had jumped to 1,000 permits issued.
Perhaps one of the most amazing feats of this success is that everything is still done manually. The agency is looking forward to achieving even greater efficiency once automation is introduced through the assistance of future PSCAP funding.