The Socioeconomic effects of Foreign Direct Investment in Ethiopia: Evidence from Awash-Kombolcha-Woldia Railway Project

Abstract

This research examined the socioeconomic effects of Foreign Direct Investment in Ethiopia particularly on Awahs-Kombolcha-Woldia railway project. The research employed qualitative exploratory research method. Both primary and secondary data was gathered from the local community, government officials and reports. The findings indicate the increase of foreign direct investment contributed for the development agenda of Ethiopia. The railway project contributing for the socioeconomic development of the country through employment and constructing social services infrastructures. However since the railway is not functioning due to lack of finance and failure to provide electric supply, the expected effects were found unrealistic. There is a gap in project cost estimation, and compensation management for the local community. Therefore, the observed limitation that affect the project from contributing for the socioeconomic development of the country at large has to be resolved by effecting the following recommendations; (1) power supply from Ethiopian electric agency has to be secured to commence the railway transport services. (2) Budget constraints has to be secured from internal and external sources to raise the benefits of people’s mobility and freight. (3) Inefficient farmland management and compensation practice has to be improved since land and compensation is a key fault line of the local and national development issues. (4) Poor work environment and labor right problems has to be improved.