Mekelle, Ethiopia - Millennium Cities Initiative - Columbia University

18 Mekelle, Ethiopia: Potential Opportunities for Investment
Investment climate
Due to its proximity
to a former military
zone, Tigray State has
underperformed in
terms of economic
growth and inflow of
private investments
and is therefore ripe
for investment.
FDI by state, 2005–2008
Birr, bn
8.00
6.00
4.00
2.00
0.00
1.87 2.28
1.61
0.870.33 0.95
0.09
2.55
3.82
1.26
0.53 0.56 0.46
0.18
Ethiopia suffered from lack of investment
from 1998 as it was at war with Eritrea.
The war took place from May 1998 to
June 2000.
As we can see from the graph of FDI
distribution, historically Tigray state
underperformed against most Ethiopian
regions in attracting FDI.
On 18 June 2000, the countries agreed to
a comprehensive peace agreement and
binding arbitration of their disputes under
the Algiers Agreement.
7.08
4.74
2.04
1.23
1.02
0.40 0.52
2005/2006 2006/2007 2007/2008
Source: National Bank of Ethiopia, Annual Report, 2008
Key
Oromia
Addis Ababa
Multi-regional projects
Amhara
SNNPR
Tigray
Others
A 25-kilometre-wide Temporary Security
Zone was established within Eritrea,
patrolled by United Nations peacekeeping
forces. On 12 December 2000, a
peace agreement was signed by the
two governments.
The relationship between Ethiopia and
Eritrea is no longer antagonistic and
the political environment is peaceful.
Interview feedback indicates that there
are no premises for impairment of the
situation, although the border is unlikely to
be opened in the short term.
© 2010 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG
International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG
International have any such authority to obligate or bind any member firm. All rights reserved.