The Ethiopian Opportunity

Ethiopia is undergoing unprecedented economic expansion accompanied by rapid growth of the private sector, and underpinned by increasingly market-orientated economic policies. With annual GDP growth of over 10% between 2005 and 2007, and over 7% in 2008 and 2009, the potential of the Ethiopian economy has begun to capture international investors’ attention. Ranked ninth among 46 Sub-Saharan African countries in the recently-published Doing Business 2010 Report, Ethiopia has attracted investors due to the combination of its increasingly stable political landscape, significant infrastructure development, emerging middle class and rising income levels. Moreover, under-penetration within the sizeable Ethiopian market presents enormous domestic growth opportunities and cross border expansion for Ethiopian companies.

Notwithstanding this favorable economic landscape, demand for financing, especially from the SME sector, far exceeds the available supply, and risk capital is almost entirely absent in the country. This presents a unique opportunity to establish an SME focused private equity fund. Importantly, the Fund will benefit from the Manager’s local knowledge and networks in Ethiopia, deep relationships in East Africa and international experience in investment identification and asset management.

Key reasons to invest in Ethiopia

• Strong macroeconomic performance: Annual GDP growth of over 10% between 2005 and 2007, and over 7% in 2008 and 2009.
• Improving business enabling environment: Ethiopia was ranked tenth among 46 Sub-Saharan African countries in Doing Business 2011 Report, recently published by the International Finance Corporation (IFC).
  
• Strong domestic demand: A growing consumer market with a population of over 80 million inhabitants, Africa’s second-most populous country. 
• Strategic geographical location: Centrally located within East Africa, and at the cross roads of Africa, the Middle East and the Gulf states, Ethiopia stands to play an increasingly vital role in this commercial, economic and political nexus.