Department of marketing management

Assignment on import and export

Name . ID.NO

Feven alme 2299/18

Harnet Tilahun 1089/18

Ehtalem zeben 1078/18

Kalikdan sahela 1000/18

Eden desslgn 1070/18

Misker eshete 1079/18

Samuel elias 1145/18

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Table content page number
Import procedures in Ethiopia
 Pre-shipment inspection 3
 Arrangement and mode of payment 3
 Customs proceedings for imported goods 5
 First example on importing 6
 Second example on importing 7
Export procedures in Ethiopia
 Application to the NBE/ authorized commercial bank 8
 Customs proceedings 8
 Example on exporting company 11

Summary 12
Reference 13

Import producer In Ethiopia

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 Importing refers to buying goods and services from foreign sources and bringing them back to the
home country. Importing is also known as global sourcing.
An importer with an import license/ investment permit has to follow certain producers for importing
goods.

Import and export Regulation in Ethiopia to learn about the producers for obtaining import export
licenses.

Pre-shipment inspection

Goods imported are not required to be inspected prior to shipment except when:

 They are import from china (but goods that will be used as inputs from manufacturing will be
exempt from this requirement). The certificate obtained for pre shipment inspection of goods
from china is called CIQ certificate.
 The goods imported have compulsory Ethiopian standard. In case, the goods have to be inspected
by an internationally recognized inspection company prior to shipment and certificate issued.
 The importer and supplier have an agreement for pre-shipment inspections.

Arrangements and mode of payment

An importer has to fulfill two major requirements to settle payment. The first is that the importer must
apply for an approval of foreign currency to a commercial bank which is authorized by national bank of
Ethiopia. As part of the request, the importer must present his/her valid business and import license or
investment permit, and a pro-forma invoice from supplier. The pro-forma invoice should describe the
imported goods, state the unit additional charges that may be applied on the transaction.

After an approval of foreign currency, the importer must obtain a bank permit in order to arrange the
mode of payment. The bank permit is obtained from NBE. However, an importation of exceptional goods
allowed on franco-valuta basis.

Importation of goods on the basis’s of franco-valuta means the importer is allowed to use his/her own
hard currency for the payment of goods instead of applying for it and getting it from the government.

The goods which may be imported on a franco-vaulta basis include:

 Imported good by diplomatic personal for diplomatic purpose

 Specific personal goods
 Goods imported for investment activities including capital goods and raw materials adequate to

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 commissioning stage and for their personal use by investors having license from appropriate
government office.

In most circumstance importer should arrange the payment of the imported through banks. After the bank
permit has been issued by the NBE, the importer then chooses the mode of payment in accordance with
his\her agreement with importer (and also exports) in Ethiopia;

 Letter of credit in which the bank undertakes to pay the supplier a stated sum of money within a
prescribed time limit and against the hand-over of the documents needed for the release of goods
form customs. A letter of credit normally includes a commercial invoice manufactures invoice
packing list country of the goods origin original sets of bill of lading, airway bill, truck way bill,
and railway manifest(depending on the mode of transportation) and a certificate of quality.
 Cash against document where the importers bank hand over to the importer the document needed
for the release of goods from costumes against full payment.
 Advance payment, such as the importer order the bank to pay the seller via SWIFT transfer prior
to bank to pay seller via SWIFT transfer prior shipping or rendering the service.

An application for the above mode of payment is usually accompanied with the following documents:

 Import license/ investment permit

 Tax identification number (TIN)
 Other documents required for the foreign currency approval
 The foreign currency approval
 Insurance certificate
 Regulatory permit (for products requiring pre-import permit)and ownership certificate from
country of purchase (for used vehicles)
 An original price confirmation (for used commodities)
 A written waiver (in case of shipment by foreign vessel)
 An undertaking letter for the entry of goods (in case of advance payment)

For all methods of payment, the importer is required to have an account with the bank, TIN and his\her
must not be listed on the national bank of Ethiopia delinquent list which is a register that includes account
holders whose cheques have been dishonored repeatedly; and whose accounts are closed by banks.

Once payment has been effected, the importer should be sure to collect his document from the bank in
case of letter of credit or cash against person and from the supplier in case of advance payment

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Customs proceeding for imported goods

1, customs declaration 0000000erca

An importer should first prepare a customs declaration (goods declaration) and submit such declaration to
the customs commission (the former ERCA). The custom declaration must include the contract of sale,
goods, description, and tariff classification, valuation and payment of duties and taxes, and other
supporting data (such as the name and address of the trade operator and, the mode of transportation to be
used).

After the submission, the customs commission will examine the declaration by verifying the correctness
of data information, tariff classification, valuation and payment of duties and taxes registered and
supporting documents attached to declaration. The verification process may also include the fulfillment of
legislative requirements administered by other regulatory agencies, such as veterinary health issues.

2, payment of customs duty and taxes

The importer is required to pay duties and taxes on the imported goods which include customs duty at 0-
35% based on the type of good imported, VAT at 15%, withholding tax at 3% on the CIF (cost+
Insurance +freight), surtax at 10% and exercise tax for few selected goods at 10%-100
3, Inspection

There is also physical examination that will be conducted on the goods in order to ensure that the
imported goods are not harmful to the public. Further, the imported goods will be examined so their
origin, country of export, nature, condition, quality, quantity, tariff classification and value of the goods
are in accordance with the information furnished in the declaration.
4, clearance and goods release

In addition to the customs commission (ERCA’s) clearance activities (based on the physical examination
conducted above) other regulatory bodies will also be involved in the clearance of certain imported
goods. This applies to all goods for which pre-import permits are issued as well as the ones for which an
import permit issued only at the time of clearance. The importer or agent is responsible for obtaining the
necessary permits from the regulatory agencies at the time of clearance. For instance a person importing
medicine is required to obtain a pre-license before the starting of the import procedure an import permit at
time of entry in order to obtain clearance.

After physical examination and obtaining the necessary license the importer will obtain a goods release
charges upon the payment of services charge. The goods will then be released and the importer takes

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possession of them. In addition, the custom commission will issue a final declaration for the import as a
certificate of completing the import procedures and importation of goods.

Note that an importer should keep all records and document related to the import for five year from the
date of custom commission (ERCA’S) acceptance of the goods declaration. During this period, customs
commission may perform a post clearance audit of the import.

FIRST EXAMPLE FOR IMPORTING COMPANY

Face mask Importer

 The importer must follow the procedure of minister of tread. First they have to take import
license/investment permit so our example importer take permit paper from bole subcity and apply
his taxpayer registration certificate. And take permit paper from the minister.
 After that he apply to food and medicine minister and get the permit paper.
 The other one is letter of credit from commercial bank of Ethiopia and get the letter.
 The exporter make pro-forma invoice to the importer this invoice have detail information about
the product (face mask) like packing and related document. And the face mask importer sends
commercial invoice.
 Then the exporter prepared manufacturer certificate. And send picking list to the importer
 After that the exporter contact fright forwarder (king fright forwarder) this forwarder make deals
with the transportation.
 The mains of transportation may be different the example we take airway
 The airline prepare some documents about the packaging to the importer
 Finally the importer take the package

SEOND EXAMPLE FOR IMPRTEING COMPANY

Oppein construction finishing materials importer

The company we choose is afro- chin group as the name indicate the company involves in many sectors.
From these sectors furniture is one of them. Here are how they import its.

 The company is in many sectors so they have license and the require documents to importing so
 First the company will search exporter company to import the furniture
 After that the exporter company with send pro-forma invoice to the exporter and the importer
will send commercial invoice back to exporter
 Than the importer go to national bank of Ethiopia and the exporter ask to import goods with the
money that company have in the bank and the bank will connect with the exporter bank and

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 finish in the behalf of the exporter
 After that the exporter will transport the packaging to the border of the exporter country. From
than the importer will take the responsibility to the package and Shoppe it to the border of jebuti.
This transportation depends on the interest of the importer.
 When the package reach to jubuti border they will send we the packing list.
 After that the importer go to the office of custom and pay tax, insurance to the package and the
office will gave the importer the require document to enter the package.
 Than the package will be transported to mojo.
 Finally the importer take the package from here.

Export procedures in Ethiopia

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Exporting is defined as the sale of product and service in foreign countries that are sourced or made in the
home country.

Application to the NBE \Authorized commercial bank

An application must be submitted to the NBE that is accompanied with the export contract, seller’s, TIN,
export permit application, letter of seller stating that consignment will be settled within 90 days maximum
and any other relevant document.

Note that the exporter must notify the ministry of trade that a contract deal has been made with a buyer
within 15 days of the conclusion of the contract for export.

Further, the buyer must first, open an irrevocable L\C documentary credit in favor of the seller. The
exporter should go through the text of the L\C opened in their favor and make sure that compliance can be
met without doubt.

Custom proceeding

1. Custom declaration

The custom declaration should include the type of export regime, detailed information about the exported
goods and also tariff classification and custom valuation which is relevant to determine the correct export
duties and taxes. The exporter then submits the customs commission which may accept or reject the
declaration.

Upon acceptance of the customs declaration the exporter pays the due export duties and taxes which is
almost at 0%. The customs duty on exported goods is 0%exepet for selected hides, skins and leathers.
VAT also calculated at 0%for exported goods. But there is an exercise tax imposed on the exportation of
selected goods.
2, Obtain certificates

After customs declaration the exporter then must obtain the necessary certificates. When export product is
ready the exporter must obtain certification from the inspection center that the commodity is prepared in
accordance with the characteristics of the agro-ecology of production area and meets the required grade

The exporter also must obtain a certificate of origin from chambers of commerce and special movement
forms or certificate issued by the customs authority
3, Obtain export customs clearance and ship goods

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The customs commission (ERCA) should physically examine the export goods in a particular whether
they confirm to the customs declaration and depending on the risk assessment. Further exported goods are
subjected to pre-shipment mandatory inspections. The export may also inspect the export cargo.

After the examination, the export is granted a release note upon the payment of warehouse fees and other
service charge
4, Arrange payment issue

An arrangement for payment may be through the franco-valuta basis or bank permit. A bank permit
allows for three types of payment modalities, letters of credit, cash against payment, and advance
payment. To obtain a permit for any of these, the exporter is required to present a completed bank from,
which available from banks along with the following documents to his/her bank.

 An original sales contract agreement

 The exporter business license
 The exporter TIN certificate
 For L/C advice and shipping documents (commercial invoice, packing list, bill of loading or air
way bill, certificate of origin and regulatory permit , if required
 For advance payment original credit advice and advance payment receipt advice (incoming
telegraphic transfer) or custom’s declaration along with a bank advice for the sale of cash notes to
the bank
 Commercial invoice including one copy duly certified by the customs
 Packing list
 Foreign exchange declaration forms
 Customs declaration annex from (CDAF) in duplicate
 Certificate of origin and
 Insurance policy in duplicate

For all methods of payment the exporter needs to have an account with the bank and must not be listed on
NBE delinquent list. Additionally the exporter should collect his documents from the bank or the buyer
when the payment has been effected.

In case of a documentary credit the commercial bank negotiates these documents to the importers bank in
the manner as specified in the letter of credit. Before negotiating documents the exporter’s bank scrutinize
them in order to ensure that all formalities have been complied with and all documents are in order. The
bank then send the bank certificate and attested copies commercial invoice of the exporter.

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Next the exporter can get immediate payment from his/her respective bank on the submission of
documents by signing a letter indemnity. By signing the letter of indemnity the exporter undertakes to
indemnity the bank in the event of non-receipt of payment from the importer along with accrued interest.

Further where payment should be effected via a documentary credit (L/C) banks have the obligation to
verify documents in a way that the documents strictly conform to the instruction contained in the credit.
The bank is however not liable where the document are on their face value in conformity with the
instruction received (article 966 of commercial code). When the bank refuses the documents it will notify
the presenter with the errors found for rectification.

5, Pay service charges and receive final export custom declaration

This is the last page of export producer. After fulfilling all obligations for customs clearance and the
release goods, ERCA will issue the final declaration to the NBE. This is requirement for imports, an
exporter must keep all records and documents related to the export for five years from the date of
ERCA’S acceptance of the goods declaration. During this period, the custom commission may perform a
post clearance audit of the export.

EXAMPLE FOR EXPORTING FACTORY 6(CAMPANIES)

Kangaroo shoes factory PLC exporter

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  The factory sent to customer pro-forma invoice then if the customer |importer | accept the pro-
forma invoice. The customer |importer sent to commercial invoice.

 If the customer is new or first time to order the package or if the customer order new kind shoes,
quality the cost will be high in this case the payment will be TT payment or 100% full payment
or total transaction.
 If the customer have long period of relationship with the factory and agreement may be 30%
down payment the other 70% will be paid after the package is delivered.
 The exporter make the package list to the importer and packaging list included kilo gram, amount
at shoes, color, pair of shoes, box number, name of shoes.
 The factory choose the transportation system, if the package is small it use airway also depend on
the customer interest.
 The factory use agents to deliver the package for example kangaroo shoe use role X agent to
deliver the package
 They may use the application EXW or FOB, this depend on the interest of the customer
 Final the document of declaration will be given to the exporter. When document of declaration is
written the companies (factory) name must be perfectly named otherwise the package may be
return and in this case the agent will be responsible for the mistake information.

Summary

Importing refers to buying goods and services from foreign sources and bringing them back to the home
country. Importing is also known as global sourcing.

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Required documents for imports

 Agency agreement
 Bank permit
 Bill of landing/ airway bill
 Certificate of origin
 Commercial invoice
 Foreign exchange authorization
 Import license
 Insurance certificate
 Packing list
 Tax identification number(TIN) certificate
 Pre-shipment inspection clean report of findings
 Transit document
 VAT certificate
 Exporting is defined as the sale of product and service in foreign countries that are sourced or
made in the home country.

Exporting is defined as the sale of product and service in foreign countries that are sourced or made in the
home country.

The document required for export permit

 Seller’s invoice
 Tax registration certification (TIN certification)
 Export license valid for the year
 A duly signed contract between the seller and the buyer
 Export permit application from duly filled, signed and stamped by the customer
 Letter of undertaking from the customer indicating that the consignment will be settled in full
within 90 days from the date of the foreign exchange permit for the CAD, or the authenticated
massage of opened letter of credit.

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Reference
Google

2Merkato.com

The companies that included in the assignment

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