Investment Environment

Ethiopia offers significant investment opportunities in a number of sectors that the government has identified as areas of priority for stimulating growth, expansion and diversification of the economy.

Ethiopia’s market oriented economic development strategy embraces wide reforms with inducements to both domestic and foreign private investments. The private sector is encouraged to invest in almost all areas of the economy. A foreign investor can invest on his or her own or jointly with domestic investor or investors.

Investment Opportunities

Agriculture is the backbone of the Ethiopian economy.  It contributes about 45-50 percent of the GDP and 63 percent of the total exports. It also provides raw materials for industry.

Endowed with wide ranging agro-ecological zones and diversified resources, Ethiopia is suitable to grow all types of cereals, fiber crops, oil seeds, coffee, tea, fruits, flowers, spices, vegetables, grasses and trees. The country has also some 10 million hectares of potentially irrigable land.

It has the largest livestock resource in Africa. Fishery and forestry are also the other resources found in the country.  Owing to the abundant natural resources Ethiopia has great investment opportunities both in production as well as processing. Among the areas that can offer vast investment opportunities are production of food crops.

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 Investment Proclamation No.280/2002. Any foreign investor has the right, in respect of an approved investment, to make the following remittances out of Ethiopia in convertible currency at the prevailing rate of exchange on the date of remittance;

• Profits and dividends accruing from an investments;
• Principal and interest payments on external loans;
• Payments related to technology transfer or management agreements;
• Proceeds from sale or liquidation of an enterprise;
• Proceeds from the sale or transfer of shares or of partial ownership of an enterprise to a domestic investor:
• Compensation paid to a foreign investor;
• Expatriates employed in an enterprise may remit in convertible foreign currency, salaries and other payments accruing from this employment in accordance with the foreign exchange regulation or directives of the country.

Guarantee against Expropriation

The constitution of the Federal Democratic Republic of Ethiopia protects private property. The Investment Proclamation also provides investment guarantee against measure of expropriation and nationalization.

Other Guarantee

Ethiopia is a member of the World Bank affiliate Multilateral Investment Guarantee Agency (MIGA). It also concludes bilateral investment promotion and protection treaties with any country.  The country has also signed the World Bank treaty, “the International Convention and Settlement of Investment Disputes between States and National or other States (ICSID).

Major Investment Incentives

·        Customs Import Duty

There is 100 percent exemption from the payment of import custom duties and other taxes levied on imports of all investment capital goods, such as plant machinery, equipment as well as spare parts worth up to 15% of the value of imported investment capital goods, provided that the goods are not produces locally in comparable quantity, quality and price.

Investment capital goods imported with out the payment of import custom duties and other taxes levied on imports may be transferred to another investor enjoying similar privileges.

Exemptions from custom duties or other taxes levied on imports are granted for raw materials necessary for the production of export goods. In accordance with Proclamation No. 249/2002, three duty incentive schemed are available for exporters. They are Duty Draw-back Scheme, Voucher Scheme and Bounded Manufacturing Warehouse Scheme.

·        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 a given period of time, depending upon the kind of investment selected, the volume of export, and the investment location.

• Other Privileges for Investment Domestic Market

With a population of about 70.3 million, Ethiopia provides a steady and growing domestic market, which is one of the largest in Africa.

·        Regional Market Access

Ethiopia is a member of the Common Market for Eastern and Southern Africa (COMESA), which embraces 20 countries with an aggregate population of approximately 353million. Export and import with member countries enjoy preferential tariff rates.

·        Access to the EU Markets

Ethiopia is a beneficiary of the “Every thing but Arms” trade opportunity offered by the European Union.  This opportunity is helping Ethiopian export products, access European Union markets free of duty and quota restrictions.

For more information Visit Website: http://www.investinethiopia.org.