Legal Framework

The constitution of the Federal Democratic Republic of Ethiopia, in accordance with Article 40, ensures the right to the ownership of private property, including the right to acquire, use and dispose of such property.

The Government of Ethiopia has made commendable efforts, through legislative and procedural reforms, to improve the investment climate of the country and thereby attract more foreign direct investment. In line with market-oriented economic policy, the investment regime has been liberalised through a series of Government legislations. Since 1992, the investment code has been revised to ensure the participation of more foreign investments in various sectors of the economy.

The Ethiopian Investment Agency (EIA) is implementing an improved system and organizational structure following the promulgation of the current Investment Proclamation No. 769/2012 and Council of Ministers Regulation No. 270/2012.

The core objective of the current law is to specifically encourage and promote the manufacturing industry sector and accelerate the flow of capital and technology transfer by creating fair competition between industries and thereby boost the economic development of the country and enhance the living standard of the society.

EIA has identified over 29 licensing and registration services to be rendered to investors owing to a complete one-stop-shop service delivery arrangement provided by the current law. The services pertaining to licensing and registration, customs duty free importation approval for capital goods of manufacturing investment projects and other facilitation and aftercare services are provided by the Agency. Industrial zones with the necessary infrastructure and facilities are ready for investors.

Investment Opportunities

Ethiopia has vast investment opportunities. The priority areas are agriculture, horticulture, manufacturing sector such as agro- processing, textile and garment, leather goods, chemical, pharmaceuticals, metal etc.., and mining sector.

Why Invest in Ethiopia?

Stable Political and Economic Situation

Ethiopia has a vibrant and rapid growing economy with a double digit GDP growth rate for the last ten years. It has a mature and stable political system.

Growing Domestic Demand

Ethiopia is the second largest domestic market in Africa with 84 million population and with the growing middle income class the demand is growing very fast. Ethiopia has an access to the markets of 19 member states of Common Market for Eastern and South Africa (COMESA) with a population of over 400 million with a preferential tariff rate.

Proximity to major International Markets

Ethiopia is strategically located in Eastern Africa with an easy access to the lucrative markets of the Middle East, Europe and Asia. Market opportunities such as preferential access to European Market under EUs everything-But-Arms (EBA) initiative, preferential access to Austria, Canada, Finland, Japan, Norway, Sweden, USA and most other EU countries under Generalized System of Preference (GSP), and under the African Growth and Opportunity Act (AGOA) program Ethiopia is entitled to duty-free U.S. market access.

Abundant, Affordable and Trainable Human Resource

Ethiopia has abundant, hard working, disciplined and easily trainable workforce. Average monthly cost of labour is $50. Furthermore, more than 30 government and private universities and colleges provide trained personnel. On top of this English is widely spoken and understood.

Rich in Natural Resources

Ethiopia has exceptional climate due to location on highlands, half the country experiences average annual temperatures of 20C to 30C. There are 18 major agro-ecological zones and 49 agro-ecological zones and 49 agro-ecological sub zones. There is an untapped natural and mineral resources and fertile soil with sufficient surface and ground water resource.

Investment Guarantees

The Constitution of Ethiopia and the Investment Proclamation and the legal system protect private property. Ethiopia is a member of Multilateral Investment Guarantee Agency (MIGA) which issues guarantees against risks to entrepreneurs that invest in signatory countries. Ethiopia has signed Bilateral Investment Promotion and Protection Agreements as well as Avoidance of Double Taxation with several countries including India.

Investor friendly policies and Incentives

The Government of Ethiopia has formulated policies that encourages and supports Foreign Direct Investment. The Government invests on infrastructure, telecommunications, Industrial Zones and Clusters and other facilities. The following are investment incentives.

  • Customs duty exemption
  • 100% exemption from payment of import customs duties and other taxes levied on imports to import all investment capital goods, such as plant machinery and equipment, construction materials, as well as spare parts up to 15% of the value of capital goods imported.

  • Export Incentives
    • Duty Draw-back Scheme: Duty paid at the port of entry and locally on raw materials used in the production commodities is refunded, 100 percent, upon exportation of the commodity processed.
    • Voucher Scheme: It is a printed document to be used for recording balance of duty payable on raw materials imported for use in the production of goods for external market. The beneficiaries of the voucher scheme are also exporters.
    • Bonded Manufacturing Warehouse: Producers wholly engaged in exporting their products who are not eligible to use the Voucher Scheme and who have license that enable them to operate such Warehouse.