Promoting Sustainable Investment in Partner Countries: Ethiopia Pilot

Investing for sustainable development

China’s engagement and financing provide an opportunity to close development gaps in partner countries and advance the Sustainable Development Goals (SDGs) on a global scale when implementation is systematically aligned with the principles and practices of economic, social and environmental sustainability.  

The United Nations Development Programme (UNDP), in assisting partner countries to achieve their sustainable development goals in a way that is in line with their development strategies, aims at strengthening the capacities of partner countries and establishing a network of sustainable investment promotion (SIP) facilities that can help orient investments towards comprehensive economic, social and environmental sustainability outcomes.  

The overall objectives of the project are to strengthen institutional frameworks and build development capacity in the pilot country to leverage sustainable investments. The goal is to improve the overall investment climate in order to attract and sustain all foreign investments that respond to the country’s national development priorities and local needs. 

In line with the national strategies of Ethiopia, the SIP programme aims to sustain the manufacturing sector’s contributions to industrial and economic growth, increase industrial zone development, promote private sector development and integrate Ethiopian industries into regional and global markets. 

Supported by the Governments of China and Ethiopia, the SIP programme aims to provide a scalable blueprint for improving the sustainability of investments. In the short term, it will develop a pilot facility in Ethiopia to generate relevant and effective modalities for sustainable investments. It will also provide concrete lessons and recommendations on achieving positive development impacts. The latter will discuss which approaches, policies and mechanisms are suitable to an investment climate at the national level. In the intermediate and long term, it is envisaged the approach can be scaled up as part of a network to promote sustainable investment. 

The programme adopts an innovative 3P Approach: platform-building, policy engagement and pilot projects. Since 2019, it has had several early successes. In terms of platform-building, the United Nations Department of Economic and Social Affairs and UNDP successfully facilitated practical exchanges with public and private sectors to provide a framework of cooperation to leverage sustainable investment opportunities (in line with SDG 17 on partnerships) and to identify and address barriers to sustainable investment (SDG 9 on industry, innovation and infrastructure; SDG 11 on sustainable cities and communities; and SDG 13 on climate action).  

Two high-level forums, one study tour and two knowledge exchange programmes were held in 2019 in Ethiopia and China, attended by over 150 Ethiopian and 200 Chinese stakeholders from governments, the private sector, development agencies, think tanks and other institutions. These events provided an opportunity for in-depth discussion and knowledge exchanges on sustainable investment. 

With regard to policy engagement, the results of sector-specific diagnostic studies on sustainable investment in Ethiopia will be submitted to the relevant government authorities to improve the policy framework (SDG 16 on peace, justice and strong institutions). 

In terms of the piloting project, the programme has built on findings from both dialogues and policy analyses to identify potential pilot project areas, including capacity development to enhance technology and skills transfer (SDG 1 on poverty and SDG 8 on decent work and economic growth). The programme will further provide project-level advice and analysis to support the testing and application of practical solutions. It will share best practices and lessons learned for sustainable investment with other partner countries. Both the Governments of China and Ethiopia expressed a strong commitment to support the pilot project. 

With best practices and lessons learned from Ethiopia, the SIP programme can be further replicated and expanded to other partner countries. For a successful outcome, it is key that both the Chinese and host Government are willing to collaborate and able to provide implementation support.  The programme will help promote and realize sustainable investment on a larger scale to advance the SDGs and will ultimately form a sustainable investment platform for mutual learning, knowledge- and experience-sharing, policy coordination and capacity development.