Diagnostic Study- How to incentivize for private sector involvement in NDC implementation

Private sectors had been engaged in investments in Ethiopia since late 1880s when the royal family members and foreign investors invested in the manufacturing and production areas in key economic sectors, namely in transport, hotel & tourism, industry, agriculture, forests. Examples of such earlier investment initiatives include: Ethio-Djibouti Railway (1894 – 1917), Tayitu Hotel (1898), Wood processing Sawmill at the Mengaesha –Suba forest (1905), Dire-Dawa Cement (1936). Since then, the government’s development policies developed by the various government systems generally do anchor at the overall approach to economic growth focusing on capital accumulation in the industry, construction, infrastructure sectors and creation of large scale commercial farms in the agriculture sector to feed the growing urban population, generate export earnings and provide agricultural inputs to the industry. However, the landscape of private investment in various economic sectors was hampered by economic and political police reforms, popular upheavals, climate related risks. This attributed to stagnated contribution of the private sector to GDP, as demonstrated by the private sector contribution below 5% of the GDP over a century; and it is very recently that the private sectors’ contributions to the national economy approaches to reach close to 20% of the GDP. The participants of the diagnostic study (FGDs and KIIs) from private and public sectors and funding agencies identified key investment barriers.