The Effect of Foreign Direct Investment on Local Communities in Ethiopia: Empirical Evidence from Dangote Cement Factory

Abstract

This study examines the effect of foreign direct investment on local community in Dangote cement factory in Ethiopia. Specifically, it focuses on four themes—labor, landholders, infrastructures and environment. The study uses qualitative methods. The data were gathered from landholders, local elders and laborers through semi structured interviews and focus group discussions. Further, semi structured interviews were used to collect data from Adea Berga woreda investment bureau, Adea Berga woreda land and environment protection bureau and Dangote cement factory. The finding of this study reveals that foreign direct investment has both positive and negative effects on local labor; but it has negative effect on landholders. In contrast, foreign direct investment has positive effects on both infrastructures and environment. The researcher recommends that the there should be standardized rules and regulations which entails that what quota of local labors have to get job opportunity, and the landholders should be informed by neutral organization such as civil society organization about the investment. Further, sufficient preparation should be made to resettle landholders with adequate compensation.