Opportunities and challenges faced by foreign mining investors in Ethiopia
Date
2019
Authors
Mudau, Dakalo Glacias
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Abstract
The purpose of this research is to provide a comprehensive understanding of Foreign Direct Investment (FDI) and its impact on the mining sector of a developing economy. The ideology and principles discussed aim to assist economists, investors and governments in understanding the need for FDI and how to set up a viable and conducive framework. The research links development economics to FDI as a means to creating and sustaining economic growth.The results of the analysis indicated that there is a direct relationship between development economics and FDI. Political, social and economic risks pose a direct threat to the levels of FDI that a country attracts. A study performed in this research revealed that the higher the perceived risk level, the lower the investment levels. Africa is a resource rich continent; however it ranks low on the investor attractiveness scale. This is due to authoritative political leaders that control corporate and fiscal regimes, ethnic unrest between local tribes and political warfare that is played out in the media. Despite these drawbacks certain African countries are taking steps to improve their attractiveness. Ethiopia is one of them and was selected as the main case study for this research. A benchmark acid test was performed on the policies implemented by government. The Growth Transformation Plan (GTP) I and II (plans set by the government to transform Ethiopia) were reviewed and analysed for feasibility due to the Ethiopian government setting ambitious growth targets. The results of the analysis reveal that investors were attracted to Ethiopia through policies that safeguarded investors’ interests, geological attractiveness, afforded tax and duty havens and allow for the repatriation of profits. The research also highlights the negative impact that social unrest and political violence had on mining FDI. The research concludes on its findings that government policies play a key role in attracting investment. Monetary and fiscal policies must be set to alleviate poverty and create economic growth through the attraction of foreign investment.
Description
A research report submitted to the Faculty of Engineering and the Built Environment, University of the Witwatersrand, Johannesburg, in fulfilment of the requirements for the degree of Master of Science in Engineering
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Citation
Mudau, Dakalo Glacias, (2019). Opportunities and challenges faced by Foreign Mining Investors in Ethiopia, University of the Witwatersrand, https://hdl.handle.net/10539/29155