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Country Profile Ethiopia is located in northeastern Africa, commonly known as the Horn of Africa. It lies at the crossroads of Africa, the Middle East, and Asia. It is a diverse country with vibrant economy. It has recorded double digit growth since 2003 and is projected to continue for more than two decades. The Ethiopian government has demonstrated a strong commitment to the private sector, which has helped paved the way for the remarkable economic progress. The exchange rate in Ethiopia is stable, and working and living environments are safe and secure.
Some good reasons to invest in Ethiopia Untapped Market: Ethiopia has a large population and thus potentially one of the largest domestic markets in Africa. Abundant Natural Resources: Ethiopia is endowed with abundant natural resources. Altitude in Ethiopia ranges from 125 meters below sea level in the Danakhil depressions of the Afar region to 4,620 meters above sea level in the Amhara region. Thus the country has 18 major and 49 sub agro-ecological zones, each with its own agricultural and biological potential. It possesses one of the largest and most diverse genetic resources in the world. It has the soil and climate suitable for the production of a variety of food crops. Affordable & Ample Human Resources: There is ample easily trainable labor force. The cost of labor is relatively low compared to the African countries. The number of skilled workers and technicians is increasing steadily as a result of the ever increasing number of universities, colleges, and vocational and technical training schools. The labor law of Ethiopia is prepared in conformity with international labor norms and standards. It provides adequate provisions for the conclusion and termination of employment contracts with safeguards that do not infringe the rights of investors. Easy trade access to other African countries: By virtue of its membership of the Common Market for Eastern and Southern Africa (COMESA), Ethiopia also enjoys preferential market access to 19 countries with a population of over 400 million.
Entitlement for Trade Preferential Treatment: Ethiopia qualifies for preferential access to the European Union market under the EU’s Everything-But-Arms (EBA) initiative and to USA markets under the African Growth and Opportunities Act (AGOA). Due to this, most Ethiopian products can enter into these markets quota and duty free. Furthermore, a broad range of manufactured goods from Ethiopia is entitled to preferential access under the Generalized System of Preference (GSP) of the USA. No quota restrictions are placed on Ethiopian exports that are included in the 4,800 products currently eligible under the GSP. The Ethiopian economy is based on agriculture, which in 2008/09 contributed approximately 43 percent of the gross domestic product (GDP) and 86 percent of foreign currency earnings. The country is among the top performing economies in Sub-Saharan Africa. For the last six consecutive years (2003/4-2008/09) real GDP grew by an average of 11.5 percent per year.Support: The Government has made commendable efforts to improve the investment climate of the country through legislative and procedural reforms, and thereby attract more foreign direct investment. In line with market-oriented economic policy, the investment regime has been liberalized through a series of government legislations. Since 1992, the investment code has been revised three times to ensure the participation of more foreign investments in various sectors of the economy. Investment Incentives: To encourage private investment and promote the inflow of foreign capital and technology into Ethiopia, the following incentives are granted to both domestic and foreign investors engaged in areas eligible for investment incentives: Customs Import Duty: One hundred per cent exemption from the payment of import customs duties and other taxes levied on imports is granted to an investor to import all investment capital goods, such as plant machinery and equipment, construction materials., as well as spare parts worth up to 15% of the value of the imported investment capital goods, provided that the goods are not produced locally in comparable quantity, quality and price. Investment capital goods imported without the payment of import customs duties and other taxes levied on imports may be transferred to another investor enjoying similar privileges. Exemption from Payment of Export Customs Duties: Ethiopian products and services destined for export are exempted from the payment of any export tax and other taxes levied on exports.
Income Tax Holiday: Any income derived from an approved new manufacturing and agro-industry investment or investment made in agriculture shall be exempted from the payment of income tax for the periods depicted in the following table, depending upon the area of investment, the volume of export, and the location in which the investment is undertaken. Loss Carried Forward: Business enterprises that suffer losses during the tax holiday period can carry forward such losses for half of the income tax exemption period following the expiry of the exemption period. Guarantees to Investors: Ethiopia provides the following guarantees to foreign investors: Repatriation of Capital and Profits: Capital repatriation and remittance of dividends and interest is guaranteed to foreign investors under the Investment Proclamation. Any foreign investor has the right, in respect of an approved investment Guarantee Against Expropriation: The constitution of the Federal Democratic Republic of Ethiopia protects private property. The Investment Proclamation also provides investment guarantee against measures of expropriation and nationalization that may only occur for public interest and in compliance with the requirement of the law. Where such expropriations are made, the Government guarantees to provide adequate compensation corresponding to the prevailing market value of property and such payment shall be effected promptly. Other Guarantees: Ethiopia is a member of the World Bank-affiliated Multilateral Investment Guarantee Agency (MIGA) which issues guarantees against non-commercial risks to enterprises that invest in signatory countries. Ethiopia is currently concluding bilateral investment promotion and protection agreements with a number of developed and developing countries, and it is ready to conclude such treaties with any country at any time. Ethiopia has also signed the World Bank treaty, “the International Convention on Settlement of Investment Disputes between States and Nationals of other States (ICSID)” If you are interested in doing business in Ethiopia or would like more information, please Contact Us:
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