Ethiopian Investment Agency

Ethiopian Investment Agency
ETHIOPIA
An investment guide to
Ethiopia
Opportunities and Conditions 2013
ETHIOPIA
An investment guide to
Ethiopia
Opportunities and Conditions 2013
TABLE OF CONTENTS
I. INTRODUCING ETHIOPIA 1
II THE OPERATING ENVIRONMENT 3

Political Environment 3
Economic Environment 4
Trade and Investment 5
Infrastructure 7
Financial Services 10
Taxation 11
Human Resources 13
Market 14
III. AREAS OF OPPORTUNITY 15

Agriculture 17
Manufacturing 21
Tourism 22
Mining 23
Hydropower 24
Social Services 24
IV. THE LEGAL FRAMEWORK 25

Legal and juridical System 26
Institutional Framework 26
Investment Incentives 28
Export Incentives 29
Remittance of Capital 30
Privatization 30
V. APPENDICES 31
I. Restrictions 31
II. Investment areas open for
foreign Investors 32
III. Areas of investment eligible for
exemption of customs duty 33
IV. Areas of investment eligible for
exemption of income tax 34
V. Bilateral investment Treaties 35
VI. Tips for foreign Investors 35
VII. Client Charter of EIA 37
VIII. Sources of Further information 38
I Introducing
Ethiopia Ethiopia at a glance
Official name Federal Democratic Republic of Ethiopia (FDRE)
Political system Federal system with multi-party system.

Head of state President Girma Woldegiorgis
Head of government Prime Minister Hailemariam Dessalegn
Capital city Addis Ababa
Area 1.14 million square kilometres.
Arable land 513,000 square kilometres (45%)
Irrigated land 34,200 square kilometres (3%)
Population Over 80.9 million (2010/11)
Population density 70.96 per sq. km(2010/ll)
GDP per capita USD 382.20(2010/11)
Location Climate
Ethiopia is situated in the north-eastern part of Africa. It is bordered by the There are two major seasons encompassing dry and wet seasons. The dry
Sudan and South Sudan to the west, Eritrea to the north, Djibouti and season prevails from October tlirough May. The wet season runs from
Somalia to the east and Kenya to the south, extending 3° to 15° north of June to
the equator and 33° to 48° east of the Greenwich Meridian. September. Much of Ethiopia has a surprisingly temperate climate by
African standards, because of its elevation.
Government Topography
The Ethiopian constitution was adopted in 1995. The constitution provides Ethiopia has an elevated central plateau varying in height from 2,000 to
for federal system, which is structurally based on the federal government 3,000 meters above sea level. In the north and centre of the country, there
with nine autonomous regional states and two chartered city are some 25 mountains whose peaks reach over 4,000 meters.
administrations.
The FDRE has a parliamentarian form of government with a bicameral The most famous Ethiopian river is the Blue Nile or Abbay, which flows a
parliament which comprises the House of the Peoples' Representatives and distance of 1,450 kilometres from its source to join the White Nile at
the House of the Federation. The House of the Peoples' Representatives is Khartoum.
the highest authority of the Federal Government.
Religion
Major religions in the country are Christianity and Islam. But there are a
number of traditional religions as well. One prominent feature of Ethiopia
is religious tolerance that exists among different groups.
Language
Ethiopia is a multi-ethnic state with a great variety of languages spoken;

out of which 83 have over 200 dialects. Amharic is the working language
of the Federal Government. Oromiffa and Tigrigna are
other major languages widely spoken in the country. English is a medium Working hours
of instruction at junior and secondary schools, and higher educational Ethiopia is in the GMT+3 time zone. The government office hours are 8:30
institutions; and widely spoken particularly in business transactions. am to 12:30 am and 1:30 pm to 5:30 pm from Monday through Thursday.
Working hours on Fridays are 8:30 am to 11:30 am and 1:30 pm to 5:30
Calendar pm.
Currency
Ethiopia uses the Julian calendar which divides the year into 12 months of
30 days each. The remaining five or six days in a leap year constitute the The currency of Ethiopia is based on the decimal system. The units of
short 13" month of 'Tagume". The calendar is seven years behind the currency are the Birr and cents. The Birr is divided into 100 cents.
Western or Gregorian Calendar, with the Ethiopian New Year falling in
the month of September.
Arabet Dahlak Farasm
[harto Vj ' Archipelago
um .Kassala ERITREA
N — Asmara
Shabwah aydah 1 Sh Ijr

Omhajer
.Dhamar
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MetemaX Shaykh
ADebark' Assab 'Uthman
idan (Aden)
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, Bali J 3 ■ or
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SOMALIA
'
JfJ JSamure
kacyo j
p-^WarGalot/ j
Hzrel Laascaano
(Adama) od
Shilab ETHIOPIA
o O National capital ® Regional capital o Town, village -f Airport
---------International boundary
---------Indeterminate boundary
--------- Main road
jWer
der
---------Track
—'—" Railroad
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Jamaame
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S°Kapoeta
Jefecfweyne
Todenyar
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BiAilobarde-
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\Takaba
Baydhabo
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/ Garbafiaarrey
Jawhar,
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UGANDAJ;
Mark
a
Baraawe
II The Operating
Environment
Political Environment
Ethiopia is considered as one of the most vested in the Prime Minister, elected from among the members
stable countries in Africa; of the HPR for a five-year term;
The Constitution of the country, adopted The FDRE has a parliamentarian form of government with a
in 1995, provides for a multi-party political bicameral parliament which comprises the House of the Peoples'
system; Representatives (HPR) and the House of the Federation (HoF).
Elections for power are held by universal adult suffrage every The House of the Peoples' Representatives is the highest
five years; Power of government is assumed by the political party authority of the Federal Government;
or a coalition of political parties that constitutes a majority in the Crime is uncommon in the country and the level of security of
House of the Peoples' Representatives (HPR); Executive power is person and property is high; and
Ethiopian Investment Guide 2013 |

ii
Among least developed countries, Ethiopia may well be the
country with the lowest levels of corruption.
Ethiopian Investment Guide 2013 |

ii
Economic Environment
E normous efforts have been

implemented in major key
sectors to achieve
Millennium Development Goals
(MDGs). As the result, Ethiopian
average of 9, 15 and 12.5
percent, respectively during
the indicated period. The
absolute growth and
contributions of the three
economy witnessed sustainable sectors to the GDP in
Agriculture Industry Services and allied

activties
2010/11 are
shown
below.
Figure II.1: Absolute Growth and

double digit broad based growth. In Sectorial Contribution (2010/11)
2010/11, real GDP growth was 11.4
percent moderately higher than the
year earlier.
relatively
high
economic
growth.
Accordingly,
Source: NBE, Annual Report 2010/11
agriculture, I Absolute growth in% I
industry and
Contribution in %
services grew
by an annual
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Ethiopia's economy is based on agriculture, foreign exchange market was Birr 16.53 to
which accounts, in 2010/11, for about US$ 1 as compared to Birr 13.68 to US$1
41.10 percent of the gross domestic product in 2009/10.
(GDP), 90 percent of foreign currency
earnings, and 85% of employment.
Generally, the overall economic growth of
the country has been highly associated with
the performance of the agriculture sector.
Coffee is critical to the Ethiopian economy.

It earned US$ 841.8 million in exports in
2010/11. Other important export products
(2010/11) include gold, oil seeds, chat,
flowers, live animals, pulses, leather and
leather products, meat and meat products,
fruits and vegetables.
The industrial sector, which mainly

comprises small and medium enterprises
accounts for about 13 percent of GDP.
Similarly, the service sector comprised of
social services, trade, hotels and
restaurants, finance, real estate, and
transport and communication etc. accounts
for about 46 percent of GDP.
Real GDP grew by an average of 10.4

percent in year 2010/11, which places
Ethiopia among the top performing
economies in Sub-Saharan Africa despite
world economic melt down and global
financial crisis. All sectors contributed to
this
During, 2008/09, 2009/10 and 2010/11, the
general annual inflation was 36.4, 2.8, and
18.1 percent respectively. It was
predominantly due to the hike in price of
food items.
At the end of 2010/11, the average

marginal exchange rate in the inter-bank
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coffee. Some varieties like the
I
Yeirgacheffe and Sidama command
n order to enhance the export sector,
considerable premium in the international
the Government has established the
market. Export receipts were US$ 841.8
Ethiopia Commodity Exchange
million in 2010/11.
(ECX). ECX is a marketplace where buyers
and sellers come together to trade, assured Figure II.2 :Value of major
of quality, delivery and payment. ECX export items in 2010/11 (million
assures all commodity market players the USD)
Trade Date: 24-01-2012 10:51:31AM Trade Date: 24-01-2012 10
security they need in the market through Traded Today Reference Markets Pel Pri
providing a secure and reliable end-to-end Commoditv Price C Comm Contract

h
system for handling, grading, and storing Pea Beans -RD RWPA5 865 -5 Coffee New York "C" Mar
219,45
commodities, matching offers and bids for Pea Beans -RD RWPALG 830 7
0
Niaeria CIF
La...
Mar
325.00
commodity transactions, and a risk- free Whitish
Humera/Gondar ..
WHGS2 1900 0 India CIF
Eur...
Jun
«5.00
payment and goods delivery system to Whitish Humera/Gondar
,
WHGS2 1930 3
0
Sudan CIF
Eu...
Mar
«0.00
settle transactions, while serving all fairly Whitish Humera/Gondar WHGS2 1890 1 CME-WAP
II
Dec 58*
, 0
and efficiently. Whitish Humera/Gondar WHGS3 1910 1 CME -WAP Mar
, 0 187.3$
Whitish Humera/Gondar WHGS3 1890 1 Pea Pea Beans Mar
During 2010/11, total export earnings .
Whitish Humera/Gondar WHGSUG 1845
0 Be,.
2
(US.. 550.00
amounted US$ 2.75 billion which is an , 5
increase of US$ 744 million (37.1 percent)

compared to 2009/10. The increase in
earnings over the period was due to both
increase in value and volume of coffee, Export earnings from gold, the second
gold, live animals, leather and leather largest export commodity went up from
products, meat and meat products, chat,
Trade and Investment

Trade
pulses and flower. The significant growth US$ 281.4 million in 2009/10 to US$ 461.7
in total exports was driven by the rise in million in 2010/11 due to the increase in
global commodity prices and expansion in volume of export and the international
volume of exports. market gold price.
The coffee-dominated export sector of the In 2010/11, the receipts from the export oil
country has exhibited high price variations seeds, chat, and flower were US$ 326.6
from season to season. These variations are million, US$ 238.3 million and US$ 175.3
a combined effect of the factors affecting million respectively.
domestic supply and the periodic trends of
the global coffee demand and supply Earnings from live animals' exports rose to
situations. Also, the variation can be seen US$ 147.9 million in 2010/11 from US$
between different varieties and grades of 90.7 million in 2009/10 due to higher
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exports to the Middle East. There was also
an increase in earnings from the export of
pulses, which reached US$ 137.9 million in
2010/11 due to better international prices.
Similarly, the receipt obtained from the
export of leather and leather products, meat
and meat products and fruits and vegetables
were US$ 103.8 million, US$ 63.3 million
and US$ 31.50 million in 2010/11
respectively. The value of major exports in
2010/11 is shown in the following figure.
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As a result of the implementation of the
I
above mentioned policies and strategies,
t is an undeniable fact that Ethiopia
agricultural and industrial production,
has made a considerable progress in
investment and export trade are growing
economic and social development
steadily from year to year both in terms of
since 1992 as a result of the
variety and volume. Export earnings from
implementation of favourable policies and
gold (64.1 percent), fruits and vegetables
strategies that are instrumental in
(0.1 percent), live animals (63.0 percent),
improving the national economy. The Rural
chat (13.7 percent), pulses (6.0 percent),
Development Policy and Strategy, the
coffee (59.3 percent), flower (3.0 percent),
Industrial Development Strategy, and other
meat (86.2 percent), oil seeds (-8.9 percent)
sectoral policies and strategies have
, leather and leather products (84.1 percent)
initiated a new push towards creating
and other (94.7 percent) have been
frameworks conducive to economic and
increased in 2010/11. The World Bank has
social development.
also witnessed the double-digit economic
The Rural Development Policy and growth registered in the last several years.
Strategy, which is under implementation in This achievement is the highest among the
the country, underlines that agriculture- non-oil producing economies of Africa.
centered development will bring about fast
Due to the investment-friendly
economic growth, enable its people become
environment created in the country, the
beneficiary of economic growth, and lay
inflow of foreign direct investment (FDI)
solid foundation for industrial
has been increasing over the last twenty
development.
one years. Accordingly, out of the total
The Industrial Development Strategy investment projects licensed between 1992-
focuses on export manufacturing with 2012, FDI's share is about 15.80 percent.
priority given to textile and garments, However, the overall trend of investment in
leather and leather products, agro- 2012 both the total number of projects and
processing, and small and micro- capital invested have shown slight increase.
enterprises.
Ethiopia remains an untapped and
The Government of Ethiopia in recognition unexploited market for investors. China,
of the role of the private sector in the India, Sudan, Germany, Italy, Turkey,
economy has revised over four times the Saudi Arabia, Yemen, the United
Investment Code over the last twenty one Kingdom, Israel, Canada and the United
years (1992-2013) to make it more States are the major sources of FDI.
transparent, attractive and competitive.
Major positive changes regarding foreign
investments have been introduced through
Investment Proclamation No.769/2012.
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Foreign Direct
Investment
The Ethiopian government has formulated
the five year Growth and Transformation
Plan (GTP) to carry forward the important
strategic directions in maintaining a fast
growing economy in all sectors.
Accordingly, Ethiopia's economy is
projected to grow at an average growth rate
of 11.2 percent.
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international telecommunication services
E
using Satellite, Micro-wave Digital Radio
thiopia has enormous potential for
Multi Access System (DRMAS), VSAT,
hydropower and geothermal energy
UHF, VHF, Long Line and HF Radio.
generation. Several studies have so
The number of waiting list for fixed
far been carried out to identify Ethiopia's
telephone and internet subscribers were
energy potential and to develop short,
4,982 and 128,764, respectively, in
medium and long-term investment plans for
2010/11. At present, the mobile telephone
the power sector.
subscribers per 100 inhabitants increased
to 13.9 in 2010/11.
The country's hydropower potential is
estimated at 45,000 MW and the potential All regional cities and towns are connected
for generating electricity from geothermal by direct microwave links, and have
is about 5,000 MW. The country is also automatic telephone and cellular phone
endowed with enormous potentials of other services. International links are maintained
renewable energy sources like solar and via satellite earth stations and fiber optics,
wind, particularly in rural areas. Despite providing telephone, telex, fax, internet,
such huge resources, the country has so far television, digital data transmission, pre-
managed to utilize merely 2,000 MW of its and postpaid cellular phones and coin box
power generating potential and only about services.
33 percent of the population has access to
Furthermore, the Telecom is currently
electricity. Since the formulation of the last
engaged in a major transformation work of
comprehensive power system expansion
Next Generation Network (NGN) projects
master plan, the fundamental and
to create a world class telecom service
unprecedented structural change that have
provider.
taken place in the economy are now finding
their driving force in the power sector.
Currently, Ethiopia has around 2,000 MW

of installed power generating capacity, out
of which 1,980 MW (99%) is generated
from hydropower plants. The remaining 12
MW (0.6%) and 8 MW (0.4%) comes from
thermal and geothermal sources
respectively. According to the five year
Growth and Transformation Plan (GTP),
the country's installed electricity generating
capacity is expected to reach 10,000 MW
by the end of 2014/15 from the current
level of 2000 MW. In the same year, the
electricity coverage of the country will be
75 percent.
Telecommunication
s
Ethio-Telecom, the former Ethiopian
Telecommunications Corporation (ETC),
which is state owned, is the sole telecom
service provider in the country. The
Telecom provides national and
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Infrastructure
Electricity Supply
According to the Growth and

Transformation Plan (GTP), the country's
subscribers for fixed line, mobile telephone
and internet users will be 3.05 million, 40
million and 3.69 million respectively by
the end of 2014/15
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Road transport Based on the classification of the road
network, about 22,431km are in the Federal
Road plays a vital role in transporting network,
people and goods in Ethiopia. Cognizant of asphalt
its cardinal role, the Government has road
identified the road sector as top priority for constituted
public investment and remarkable progress 37 percent
has been made in the expansion of the road and gravel
network in the country. road 63
percent.
Addis Ababa, the capital city, is an
All-weather
important regional and international
rural road
transport hub. The road network radiates
grew by 14
from Addis Ababa to regions linking it with
percent per
important cities, towns, and other
annum
economically active centres of the country.
constituting
International highways also link Addis
30,712 km
Ababa and other cities and towns with
of the total road net work in 2010/11. In the
neighbouring countries such as Kenya,
same year, the community road, non
Djibouti, Eritrea, Somalia and the Sudan.
engineered road, was 854 km.
Water supply
Ethiopia has huge run-off and ground water potential.
However, it utilizes a small portion of these resources.
Access to safe potable water in urban areas was 92.5
percent in 2010/11. Access to safe potable water in rural
areas was about 71.3 percent in the same year. The
overall national average of access to potable water
supply was to 73.3 percent.
A huge project deemed to satisfy safe water demand in

the towns and rural areas was launched by the country's
first five year development plan. Accordingly, the
national access to potable water supply is expected to be
98.5 percent by the end of 2014/15.
In 2010/11, the total road network, In line with the five year Growth and
excluding community roads, had reached Transformation Plan (GTP), the
53,143 km, out of which 42.2 percent are Government has targeted to increase the
Federal roads and the remaining 57.8 total road net work to 64,500 km in
percent are rural roads with annual growth 2014/15.
rate of 10.7 percent.
Railway transport
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The rapid and sustainable economic growth in the
country requires construction of a national railway
network Therefore, the Ethiopian Government has
formulated a strategic plan to construct a total of 2,395
km of national railway network. One of the rail
corridors, creating a crucial trade route, is to
neighboring Red Seaport of Djibouti and, the old
railway that connects Addis Ababa, the capital, to such
port is now being replaced by an electrified railway, a
project expected to boost Ethiopia's import-export
trade.
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Air Transport
Air transport is an important part of Ethiopia's transport hangar have also become operational since 2006. This
network. Ethiopian Airline, Africa's World Class Airline, new and modern terminal has the capacity to handle
which has gained a very good reputation internationally 350,000 tons of cargo per annum. Anticipating the future
in its 68 years of active services, provides both domestic growth of perishable cargo, Ethiopian has pro- actively
and international air transport services. It has an launched an expansion project to construct a new
outstanding safety records and is one of the few perishable cargo terminal that will be operational within
profitable African airlines. the foreseeable future.
Ethiopian, a star alliance member, services include both
The Ethiopian Government has taken the policy
passenger and cargo transport in its international flights
initiatives for the development of the aviation sector in
and domestic routes. It also provides training and
the country. The most significant initiative undertaken by
maintenance services to more than a dozen other African
the government is the opening up of air cargo service to
and Middle Eastern airlines. Domestic flight services are
foreign investors without any capacity limit and allowing
provided through 17 destinations across the country.
Ethiopian nationals to provide chartered services using
Ethiopian links the country with over 63 destinations aircraft with a seating capacity of up to 50 passengers.
worldwide including Brussels, Frankfurt, London, Paris,
Rome, Stockholm, Washington DC, Bahrain, Bangkok,
Beijing, Beirut, Dubai, Guangzhou, Hong Kong, Jeddah, Seaport
Kuwait, Mumbai, Delhi, Riyadh, Sana a, Tel Aviv ,
In order to ensure efficient, cost effective and reliable
Johannesburg, Nairobi, Lagos, Lusaka, Accra, Dakar and
import and export movement of cargo to and from the sea
many more big cities in Africa. It is also expanding its
ports of neighbouring countries, the government has
international services.
established the Ethiopian Shipping and Logistics
Regarding Ethiopian cargo services, it operates over 40 Services Enterprise. The Enterprise is currently operating
cargo destinations spread across Africa, Europe, Asia two dry ports which are located at Modjo and Semera, 73
and the Middle East via its hub - Addis Ababa, and km and 588 km, from the capital respectively.
another cargo hub at Liege.
Addis Ababa, the capital city, is linked by road to the
In addition to Ethiopian, other airlines have flight port of Djibouti, 910 km at the Gulf of Aden. The port of
schedules from and to Addis Ababa and these include Barbara, 964 km in Somaliland and Port Sudan, 1881
such airlines as Emirates, KLM, Lufthansa, Kenyan and km, in Sudan are other external trade routes that provide
others. services for export-import trades of the country. Another
The passenger terminal at Bole International Airport in potential port accessible to Ethiopia is Mombassa, 2077
Addis Ababa has new and modern facilities providing km in Kenya.
efficient services to passengers. Ultra-modern cargo
terminal catering to fresh products and a maintenance
Ethiopian
Investment
Guide 2013 | ii
The National Bank of Ethiopia (NBE) is the central bank schools, clinics, hospitals, and real estate development.
of the country. Commercial banking functions are Private Banks operating in the capital and other major
performed by the state-owned Commercial Bank of cities are: Awash, Dashen, Abyssinya, Wegagen, United,
Ethiopia (CBE) and a number of private banks. The CBE Nib, Cooperative
and private commercial banks offer savings and checking
accounts, short-term loans, foreign-exchange transactions Bank of Oromiya, Lion, Oromiya International, Buna,
and mail and cable money transfer services. They also Zemen, Birhan, Abay, Addis, Debub Global and Enat.
participate in equity investments, provide guarantees and
perform other commercial banking activities. The number of insurance companies is fourteen (one is
government-owned and the rest private). Private
Financial Services
insurance companies existing in the country are Africa,
The number of banks operating in the country reached Awash, Nice, United, Global, Nile, Nyala, Nib, Lion,
nineteen (three of them government- owned and the rest National, Ethio -Life, Oromiya and Abay.
private) in 2010/11. These include the two specialized
state-owned banks, i.e. the Development Bank of In addition to banks and insurance companies, micro-
Ethiopia (DBE) and the Construction and Business Bank finance institutions play an important role in providing
(CBB). credit and saving facilities for micro- enterprises.
The DBE, with its 32 branches, extends short-, medium-
and long-term loans to viable development projects
including industrial and agricultural projects.
The CBB, with its 34 branches, provides long-term loans

for the construction of plants producing housing
construction materials and the construction of private
Ethiopian
Investment
Guide 2013 | ii
Direct Taxes the transfer of buildings used for business, factory, or
office purposes at 15 percent and shares of companies at
Incomes taxable under Income Tax Proclamation No. 30 percent.
286/2002 (Article 6) include: incomes from
An individual foreigner, who lives in Ethiopia for more
employment, business activities, personal activities,
than 183 days in a period of twelve calendar months,
entrepreneurial activities by non-residents, movable
whether continuously or intermittently, is regarded as
property, immovable property, alienation property,
being resident for the entire tax period and is taxed in
dividends distributed by resident company, profit shares
accordance with the provisions of Income Tax
paid by registered partnerships, interest paid by the
Proclamation No. 286/2002 (Article 5.2).
national, regional or local governments, and license
fees. Personal income tax rates applicable at present are However, the following are excluded from the
given in Box n.l. computation of taxable income in accordance with
Article 13 of the Income Tax Proclamation No. 286/2002
Box II. 1. Personal Income Tax Rates and Article 13 of the Regulations No. 78/2002:
N Employment Income per Tax rate • medical treatment;
o. Month • transportation allowance;
• hardship allowance;
Over Birr To Birr • reimbursement of travelling expenses
1 0 150 Exempt in curred on duty;
Threshol • per diem and travelling expenses on
d join ing and completion of employment,
2 151 650 10 provided that such payments are made
pursuant to specific provisions of the
3 651 1400 15 contract;
4 1401 2350 20 • board members' and board
5 2351 3550 25 secretaries' allowances; the income of
persons employed for domestic duties;
6 3551 5000 30 • the contribution of the employer and the
7 Over 5000 35 employee to the retirement or
Source: Income Tax Proclamation No. 286/2002 provident fund and all forms of benefits
contributed by employers that do not
exceed 15% of monthly salary; and
Taxable business income of companies is taxed at the • payments made to a person as
rate of 30%. Other business taxpayers with business compensation in relation to injuries
Taxation
The Ethiopian tax law outlines regulations for the imposition of direct and indirect taxes. The direct taxes are
dividedBox
in to five categories:
II.2.Taxable personal
Business income
Income tax, rental tax, with holding tax, business profit tax and other taxes.
Tax Rates
The N
main types ofBusiness
Taxable indirect taxes applicable
Income Tax Taxare rate
VAT, custom duty, excise and turn over taxes
o. Rates suffered by that person or the death of
another person.
Over Birr To Birr
Other direct taxes applicable are royalties (5%), income
1 0 1,800 Exempt
paid for services rendered outside of Ethiopia (10%),
Threshol
income from games of chance (15%), dividends (10%),
d
income from rental of property (15%), and interest
2 1,801 7,800 10
income (5%) and are payable at flat rates in accordance
3 7,801 16,800 15 with Article 31- 36 of the Income Tax Proclamation.
4 16,801 28,200 20
5 28,201 42,600 25
6 42,601 60,000 30
7 Over 60,000 35
Source: Income Tax Proclamation No. 286/2002
income ranging from ETB 1,801 to ETB 60,000 pay
between 10 and 30%. Business income beyond ETB
60,000 is charged 35 %.( Box II.2)
Capital gains tax under Income Tax Proclamation No.

286/2002 (Article 37) is payable on gains obtained from
Ethiopian
Investment
Guide 2013 | ii
The value added tax (VAT) system, which came into 3. Computers, information systems,
effect on 4" July 2002, largely replaced the old business soft ware products and data storage
tax system of commodity and service taxes including the equipment 25%; and
sales tax and the withholding tax. The VAT rate is 15% 4. All other business assets including
of the value of every taxable transaction by a registered automobiles, buses and minibuses 20%.
person and all imports of goods and services other than
those exempted. Taxable transactions which shall be Every investor has a tax obligation and is required to
charged with zero percent are: export of goods or obtain a tax payer identification number ("TIN"). An
services to the extent provided in the regulations. The investor that will involve in taxable activity has also an
rendering of transportation or other services directly obligation to register for VAT.
connected with international transport of goods or
passengers as well as the supply of lubricants and other
consumable technical supplies taken on board for
consumption during international flights.
Excise tax is payable on a range of consumer goods,

whether locally produced or imported, e.g., alcohol,
tobacco, salt, fuel, television sets, cars, carpets and toys.
Its rates vary from 10% on receivers, garments and
textiles of any type and fabrics to 100% on perfumes,
vehicles above 1,800 cc and alcoholic drinks. It is
payable in addition to VAT.
Turn over tax, under the total value of 500,000 Birr, is
Indirect Taxes
applicable to pay 2 or 10 percent from annual taxable
transactions on goods sold or service rendered locally.
All income from domestic or foreign sources is taxed
whether it is obtained as remuneration, profit or gains,
from employment, business activities or any activity
which brings income to the beneficiary.
For depreciation allowance, assets are categorized into

different classes. The categories and rates of depreciation
are:
1. Buildings and structures 5%;
2. Intangible assets 10%;
Ethiopian
Investment
Guide 2013 | ii
In conformity with the international conventions and and the employee. Generally, the cost of labor in Ethiopia
Human Resource
other legal commitments, Ethiopia has issued its labour is low by African standard.
law to ensure the worker-employer relations be governed
by the basic principles of rights and obligations with a Labor disputes in Ethiopia are resolved through the
view to enabling workers and employers maintain application of the law, collective agreements, work rules,
industrial peace and work in spirit of harmony and and employment contracts.
cooperation.
The labor law is believed to be consistent with the

investment policy of the country. Foreign investors
obtain work permits for their expatriate employees
directly from the Ethiopian Investment Agency (EIA).
The EIA processes applications of work permits in two
hours. (Appendix 7)
The labor law has fixed nominal hours of work as eight

hours a day and thirty-nine hours a week. Work done in
excess of these hours is deemed to be overtime. The
maximum number of office closure days in a year is 12.
(Appendix 6)
The government has strategic intervention to ensure
linkage between economic growth and employment.
Accordingly, most of the urban dwellers benefited from
the economic growth achieved in the past years.
Ethiopia has abundant supply of skilled workers in

various fields at internationally competitive rates.
Wages and salaries vary depending on the size of

enterprise, type of profession and level of skill required.
They are determined by agreement between the employer
Ethiopian
Investment
Guide 2013 | ii
Ethiopia has a large population and thus potentially one The country also qualifies for preferential access to
of the largest domestic markets in Africa. Beyond the European Union market under the EU's Everything- But-
domestic market, by virtue of its membership of the Arms (EBA) initiative and to USA markets under the
Common Market for Eastern and Southern Africa African Growth and Opportunities Act (AGOA) and the
(COMESA) embracing 19 countries with a population of Generalized System of Preference (GSP). Thus, most
400 million, Ethiopia enjoys preferential market access to Ethiopian products can enter into these markets quota
these countries. Ethiopia's proximity to the Middle East and duty free. Furthermore, a broad range of
also offers potential market opportunities. manufactured goods from Ethiopia are entitled to
preferential access under the Generalized System of
Preference (GSP) in USA, most countries of the EU and
Market other developed countries. No quota restrictions are

placed on Ethiopian exports falling under the 4800
products currently eligible for GSP treatment.
Ethiopian
Investment
Guide 2013 | ii
Ethiopian
Investment
Guide 2013 | ii
Ethiopian Investment Guide 2013 | ii
Ill Areas of
Opportunity

Ethiopia's economy is still young with a vast untapped
resources and a range of investment opportunities. The Ethiopia is one of Africa's leading producers of Coffee
country has comparative advantages in agriculture, Arabica. The word "coffee" is said to come from Kaffa,
agro-processing, leather and leather products and textile a region where coffee has long been a wild crop. The
and garments. The Council of Ministers Regulations country produces some of the best Arabica coffee in the
No.270/2012 specifies the areas of investment open for world.
foreign investors. (Appendix 2)
The areas, with most promising potential for investment Coffee remains the most important export crop, utilizing
in the country today are agriculture, agro-processing, over 600,000 hectares under cultivation. In 2010, the
textile and garment, leather and leather products, sugar, country could produce 341,000 tons of coffee which
cement, chemical and pharmaceutical industry, tourism, was 81.3 percent of the target. The largest of these areas
mining and hydropower. The ongoing privatization lie in south and western highlands of the country.
program also presents enormous investment Ethiopia has more genetic diversity among its coffee
opportunities to private investors particularly in the varieties than any other country.
agricultural, manufacturing, hotel and tourism sectors.
In Ethiopia, coffee grows in almost all regional states.
Thus, this chapter briefly describes the main areas of The suitable climatic condition varies from the semi-
investment opportunities in the country. savanna climate of the Gambela plain (500 m.a.s.l) to
the continuously wet highland forest zone of the south
west (2200 m.a.s.l). Coffee grows in the Ethiopian
highlands ranging from 1500 to 2100 meters above sea
level. The ideal soil for the crop is slightly acidic with a
PH of 4.5-6.5. It requires annual rainfall ranging from
1500-2500mm with balanced
Agriculture Coffee Farming

distribution.
Tea Farming
E thiopia is endowed with abundant agricultural

resources. With altitudes ranging from 148
meters below sea level to 4,620 meters above it,
the country has 18 major and 49 sub agro-ecological
zones, each with its own agricultural and biological
potential. Thus the country possesses one of the largest
and most diverse genetic resources in the world.
Ethiopia has the soils and climate required for the

production of a variety of food crops. The major food
crops grown are cereals, pulses and oil seeds. A broad
range of fruits and vegetables and cut flowers are fast-
growing exports. Coffee, cotton, tobacco, sugar cane,
tea and spices are the main commercial cash crops
grown in Ethiopia.
Ethiopian
Ethiopian tea is some of the best quality tea in the
Investment
world. In fact, tea from Ethiopia has won acclaim for its
Guide
taste and aroma. The total area covered 2013 | ii
by tea
plantation in Ethiopia is 2700 ha. Ethiopia produces opportunities for production of wheat under irrigation in
only black tea type. But it has a potential to grow for all the Afar, Gambella, SNNPR and Somali Regions.
types of tea. Currently, it has a capacity to produce 7000
tons of black tea per annum. The annual tea Rice Farming
consumption of the country is about 5000 tones.
The quality of tea mainly depends on climatic

conditions, the type of soil upon which the plant grows
and the method of processing. In Ethiopia, tea is mostly
grown in the highland dense forest regions.
Maize Farming
Rice could suitably grow in many parts of the country.

The predominant potential areas are:-
• West central highlands of Amhara

Region (Fogera, Gonder Zuria,Dembia,
Takusa and Achefer);
• North West lowland areas of
Amhara and Benshangul Regions
(Jawi, Pawi, Metema and Dangur);
• Gameblla regional state (Abobo and
Etang Woredas)
Maize is an important crop in Ethiopia. It is grown in • South and South West Lowlands of SNNPR
the mid highland areas of the country. There are huge (Beralee, Weyito, Omorate, Gura Ferda and
tracts of land in all regions suitable for maize farming. Menit);
Maize is mainly produced in SNNPR and Oromia • Somali Region (Gode); and
regions where there are about 1.77 million hectares • South Western Highlands of
under cultivation. Oromia Region (Illuababora, East and
West Wellega and Jimma Zones).
Wheat and Barley Farming
Oil Seeds Farming
A variety of oil seeds are grown in Ethiopia. The oil

seeds produced are supplied both for the local and
international markets. Rapeseed, linseed, groundnut,
sunflower, Niger seed and cotton seed serve as raw
materials for the domestic edible oil industry. Some oil
seeds, including peanuts and sesame, are important
export crops. Favourable agro-ecological
Wheat and barley are mostly grown in the highlands and

mid highland areas of the country mainly in Oromia
(Bale and Arsi Zones) and some parts of Amhara (North
Gondar and North Shewa) Regions.
Wheat and barley are the main cereal crops in the

country with about 1,095,436 and 1,398,215 hectares
conditions exist for the production and processing of oil
under cultivation, respectively. This land is owned by
seeds in Humera, Metema, Jawi, Chewaqa and
small holder farmers. The potential for the private sector
Mankush.
in agro-processing and out growers' scheme of
development is significant. It offers excellent
Ethiopian
Investment
Guide 2013 | ii
Horticulture Farming Pulses Farming
With diverse agro-climatic zones, the long growing Cultivation of pulses like beans, peas, chickpeas, lentils,
season and the availability of water for irrigation, most soy-beans, etc. is also common in Ethiopia. Cultivation
fruits and vegetables can grow well in Ethiopia. The is carried out in both the highland and lowland areas of
Ethiopian Government encourages companies with the country mainly by peasant fanners. Currently, the
experience in agro-processing to invest in this sector. country exports a large quantity of pulses to the
international market. There are also a number of
Currently, fruits and vegetables cultivation is carried on factories that process pulses in the country.
about 152,600 hectares. The country could only produce
12.8 million quintals. Among the major fruits mango,
banana, papaya, avocado, citrus, grape, and pineapple Rubber and Palm Tree Plantation
are the most common tropical and sub-tropical types
Ethiopia has the potential for the production of rubber
cultivated. While pear and plum are emerging temperate
and palm oil.
fruits in the country.
Rubber is grown under large scale commercial
Commercial floriculture is still a relatively new industry production in hot tropical and sub tropical humid
in Ethiopia but it has emerged as a major non-traditional climatic zones. Moderate acidic or acidic soil is suitable
export sector. The rose industry has undergone to grow rubber. Therefore, these agro- climatic
successful development over the period 1998-2009. conditions exist for the production of rubber at
commercial scale in south-western part of Ethiopia.
Ethiopia is now the second largest flower exporting
country in Africa. It is also an ideal location for Palm tree is a perennial tree. It gives a higher yield of oil
highland and low land world class flowers. The flower per unit area than any other oil seed crops. The plant can
industry is one of the fastest growing sub sectors in the be grown in tropical and sub- tropical hot and humid
country. climatic conditions. It can also grow in a wide range of
tropical soils. But many of the soils used for the crop
Currently, a total of about 1,200 hectares of land in should have a pH of 4-6.
Ethiopia is covered by more than 80 flower growers
Cultivation of palm tree can either be carried out under
who came from Netherlands, India and Israel including
irrigation or using natural rainfall. Many areas in the
local investors. Ethiopia exports its cut flower to
south-western part of Ethiopia have both the required
Netherlands, France, Germany, Italy, Canada, Norway,
soil and climatic conditions to grow palm oil in large
Sweden, UK, Middle East, and other EU countries.
scale.
Spices Farming Other Agricultural Products
The major spices cultivated in Ethiopia are ginger, hot A huge opportunity exists for the production of sugar,
pepper, fenugreek, turmeric, coriander, cummins, jatropha, castor bean for the domestic as well as the
cardamoms, corianders and black pepper. Currently, export market.
there are nearly 122,700 ha under spice fanning. Spice
The country has also huge potential for large- scale
production reached 244,000 tonnes per year. The
plantation to produce jatropha and castor bean in
potential areas for the cultivation of spice are Amhara,
Oromiya, SNNP and Gambella regions. The total marginal soil.
potential for low land spice fanning is estimated to be
200,000ha.
Cotton Farming
Cotton is an important crop in Ethiopia. There is a huge

potential for cotton cultivation in the country especially
in Awash valley where large- scale cultivation under
irrigation is found. Other potential areas for cotton
cultivation are found in South Omo (Omorate), north
western part of the country (Humera, Metema, Quara,
Belles Valley), Gambella, Tekezze valley, Dabus Valley
and Wabeshebelle watershed area. Cotton production is
well integrated into the rest of the economy with a large
number of textile and garment factories relying on
domestically produced cotton. Opportunities for the
production and processing of cotton in Ethiopia are thus
significant.
Ethiopian
Investment
Guide 2013 | ii
Livestock Farming, Fishery and Apiculture rapidly providing an additional opportunity for
investment.
Considerable opportunities exist for investments in Forestry and Related Activities

rearing, breeding and fattening of livestock as well as in
fresh water fishery development and the production of
honey and beeswax.
Potential activities for private investors in commercial
The livestock population of Ethiopia is first in Africa forestry include the production and marketing of gum
and tenth in the world. The sub-sector has large and incense, large-scale plantations for timber, the
resources, which include 50.88 million cattle, 25.98 establishment of integrated forest-based industries such
million sheep, 21.80million goats and 42.05 million as pulp, and paper and chipboard.
poultry. Opportunities are also available in ostrich, civet
cat and crocodile fanning.
Ethiopia's potential for fishery development is limited to

its freshwaters of most of the lakes that are located close
to urban areas. The total fish catch potential from these
waters is estimated at 40,000 tonnes per year. However,
there is also an opportunity for investment in the
construction of aquaculture to produce fresh water fish
for local and international markets.
The estimated potential areas for the cultivation of the
above mentioned agricultural products in all regional
states of the country are presented in the following table.
Box III.l. Potential Areas for Farming

N Type of Farming Area (ha) Region
o.
1 Rice 280,000 SNNP, Oromiya, Amhara, Benshangul Gumuz, and Somali
2 Maize 1,400,000 SNNP, Oromiya, Amhara, Benshangul Gumuz, Gambella

and Somali
3 Horticulture 763,000 SNNP, Oromiya, Amhara and Dire Dawa
4 Coffee 426,000 SNNP, Oromiya, Amhara and Gambella
5 Tea 150,000 SNNP, Oromiya, Amhara and Gambella
6 Cotton 3,000,810 Tigray, SNNP, Oromiya, Amhara, Benshangul Gumuz,
Gambella, Afar and Somali
7 Oil crops 1,601,323 Tigray, SNNP, Oromiya, Amhara, Benshangul Gumuz,
Gambella, Afar and Somali
8 Pulse 3,274,469 Tigray, SNNP, Oromiya, Amhara, and Benshangul Gumuz
9 Rubber 200,000 SNNP and Gambella

10 Palm oil 450,000 SNNP, Oromiya and Gambella
Total 11,545,902
Source: Ministry of Agriculture
The current annual production of honey and beeswax of

the country is estimated at 43.7 thousand tonnes and
3,600 tonnes, respectively. This provides a high
investment opportunity in all aspects of the development
of this untapped sub-sector in the production, collection,
processing and marketing of honey and beeswax. In
relation to this, the demand for the bee queen is growing
Ethiopian
Investment
Guide 2013 | ii
Glass and ceramic:
Tableware and sanitary ware, sheet glass and

containers;
Chemicals and chemical products:
Manufacture of basic chemicals based on local raw

materials, including fertilizer, soda ash, rubber, PVC
granules from ethyl alcohol; manufacture of caustic
soda and chlorine-based chemicals; carbon and
activated carbon; precipitated calcium carbonate;
ballpoint ink; and tallow for soap;
Drugs and pharmaceuticals:
Manufacture of pharmaceutical, medicinal, chemical

and botanical products in the form of tablets, capsules,
syrups and injectable;
T he manufacturing sector contributed about 13.4

percent to GDP growth in 2010/11. The major
manufacturing activities are in the production
of food, beverages, tobacco, textiles and garments,
leather goods, paper, metallic and non- metallic mineral
Paper and paper products:
Pulp from indigenous raw materials, paper and paper

products;
products, cement and chemicals. Under Growth and
Transformation Plan (2010/11- 2014/15) of the country,
Plastic products:
production of textile and garments, leather products,
cement industry, metal and engineering, chemical, High-pressure pipes, pipe fittings, shower hoods, wash
pharmaceuticals and agro-processing are priority areas basins, insulating fittings, light fittings, office and
for investment. Thus, there are ample manufacturing school supplies, and fittings for furniture;
opportunities for prospective investors in the following
areas:
Building materials:
Textiles and clothing: Manufacture of lime, gypsum, marble, granite,

limestone, ceramics, roofing tiles (not from cement),
Spinning, weaving and finishing of textile fabrics from corrugated sheets, tubes, pipes and fittings.
the beginning and the production of garments;
Food and beverage products:
Processing and preserving of meat products, fish and

fish products, and fruits and vegetables; integrated
production and processing of dairy products;
manufacture of starch and starch products; processing of
animal feed and processing and bottling of mineral
water; sugar production; brewing and wine-making,
etc.;
Tannery and leather goods:
Manufacturing
Tanning of hides and skins up to finished level;
manufacture of luggage items, handbags, saddle and
harness items, footwear and garments, and integrated
tanning and manufacturing;
Ethiopian
Investment
Guide 2013 | ii
Tourism
Ethiopia has much to offer to international tourists. It
has a unique historical and cultural heritage,
magnificent scenery, a surprisingly cool climate, rich
flora and fauna, important archaeological sites and
hospitable people. The northern tourist circuit known as
the "Historic Route" comprises the most important
tourist sites in country.
Ethiopia's wealth of tourism attractions gives it great

potential for cultural and educational tourism, photo
safaris, hunting safaris, bird watching, water sports
including river rafting, desert trekking, mountain
climbing and ecotourism. Health tourism, on the
account of the cool climate and numerous hot springs, is
an additional type of tourism with great potential. Tour
operators have shown considerable growth in recent
years.
Conference tourism is long aided by the presence of a

number of international organizations in Addis Ababa
including the African Union(AU) and the Economic
Commission for Africa(ECA).
The stock of hotel rooms in the country has increased

sharply over the last few years. While some tourist
accommodation is already available at all the major
attractions, improvement as well as new construction is
taking place.
The tourism industry is growing as a result of

Government commitment to provide an enabling
environment. Enormous opportunities exist for tourism
investment in star-designated eco-tourism, specialized
international restaurants and tour operation grade one.
Potential foreign investors can take full advantage of

these opportunities through direct investments or joint-
ventures with Ethiopians. Opportunities also exist in
this sector in the construction of star- designated hotels
and resort hotels all over the country.
Ethiopia is truly a land of contrasts and extremes; a land

of remote and wild places with a wide range of potential
tourist attractions, which have not yet been fully
exploited.
Ethiopian Investment Guide

2013 | ii
Mining
Ethiopia offers basins, namely
excellent the Ogden, the
opportunities Gambella, the
for mineral Blue Nile and
prospecting the Southern
and Rift Valley.
development.
Geological
studies have
identified a
favourable
geological
environment
hosting a wide
variety of
mineral
resources.
According to
the Ministry of
Mines,
Ethiopia has a
substantial
deposit of gold,
tantalum,
platinum,
nickel, potash
and soda ash.
Among
construction
and industrial
minerals are
marble,
granite,
limestone,
clay, gypsum,
gemstone, iron
ore, coal,
copper, silica,
diatomite, etc.
Geothermal
energy
resource also
exists in good
quantity. With
regard to fossil
energy
resources, there
are significant
opportunities
for oil and
natural gas
exploration and
development in
the major
sedimentary

Steps are being Prospecting,
taken to exploration and
improve the mining licenses
situation, have been
including the issued to
creation of an foreign mining
environment companies
conducive to with an
private, local aggregate
and foreign capital of ETB
investment. 11.7 billion in
While there is 2008/09. Of
no restriction the total
on private capital. Birr
investors in 509.6 million
developing any was injected
type of mineral into the
resource, the petroleum
greatest project alone.
potential is in Regarding
gold and rare percentage
metals, share of
petroleum, exported
precious and minerals by
base metals, type, tantalite
industrial concentrate
minerals and accounts (98
dimension %), followed
stones (marble by gold (1.7%)
and granite). and rough

gemstones
(0.3%)
2008/09.
in Hyd
The Ministry
of Mines is
ropo
responsible for
the processing wer
of license
The potential
application,
of Ethiopia's
regulation of
renewable and
the mineral
nonrenewable
operations and
energy
the promotion
resources is
of investment
large, with the
opportunities
economically
in the mining
feasible
sector. The
hydropower
Mineral
potential
Operations
estimated at
Department is
45,000 MW. It
the focal point
has large
in the Ministry
potential for
for the receipt
geothermal
of mining
energy
license
generation.
application of a
Nine of its
foreign
major rivers
investor. The
are suitable for
regional
hydroelectric
governments
power
are authorized
generation.
to issue mining
license for
The private
local investors.
sector can
participate in
electricity
generation
from any
source and
without any
capacity limit.
Transmission
and supply of
electrical
energy through
the Integrated
National Grid
System is,
however,
exclusively
reserved for
the
Government.
But, private
investors, both
foreign and
domestic, are
allowed to
operate an off-

grid Health
transmission Services
and
distribution of Health services
electricity. are areas
where
Moreover, investment
private opportunities
investors are exist for
highly foreign
encouraged to investors.
engage in Accordingly,
generating opportunities
electricity in for investment
bulk and reach are in the
an agreement following
of power areas by
purchase with constructing
the Ethiopian own building:
Electric Power • General
Corporation hospitals and
(EEPCO), a • Specializ
public ed hospitals.
enterprise, for
transmission Health services
and supply of coverage,
electricity which is an
through the indicator of
grid system. access of the
population to
health
Soci facilities, has

increased.
al
However,
health service
facilities in the
Serv country,
general,
in
are
ices
not yet
adequate as
compared to an
Social services international
are other standard.
potential areas
for FDI in Educational
Ethiopia. Services
Potential
foreign or local Ethiopia
investors can aspires to
take full attract
advantage of internationally
these reputable
opportunities educational
through direct institutions,
investments or universities
joint-ventures and training
with Ethiopi- centres. The
ans. following
areas are some
of the oppor-

tunities for lucrative
foreign information
investors by and
constructing communicatio
own building n technology
(except development
vocational and (ITC) that can
training deliver great
centers): returns.
• Secondar
y schools; Construction
• Science Services
and technology
colleges/
Ethiopia has
universities;
extensive
• Colleges
opportunities
for business
in the con-
and marketing;
struction
• Schools
industry,
for medical
particularly in
science;
the
• ICT
construction
institutions;
of roads,
• Vocation
residential,
al and
commercial
technical
and industrial
training
buildings,
centers; and
including
• Training
low-cost
centre for
housing.
hospitality
Aware of the
industry.
crucial role
The the road
Government sector plays
designed in the
quality development
improvement of the
package and national
is under the economy, the
process of Government
implementati has given
on with a special
view to attention to
enhancing the the
quality of development
education in of the
the country. country's road
network. A
Information wide range of
technology opportunities
and exist for
communicati foreign
on investors in
technology the following
areas:
Investors are
also • General
encouraged to Contractor
invest in Grade One
(GC1);

• Building
Contractor
Grade One
(BC1);
• Road
Contractor
Grade One
(RC1);
• Specializ
ed Contractor
Grade One
(Gl);
• Water
well drilling
(Gl); and
• Mineral
exploration
drilling (Gl).

I
V
T
h
e
L
e
g

a
l
F
r
a
m
e
w
o

r
k
All
Leg proclaimed
laws are
published in
al official
gazettes
(Negarit
and Gazeta).
administering
In
justice, courts
Juri are directed by

internationally
accepted
dical principles of
justice as well
as by the laws
Syst of the FDRE.

The practice
of law is
em reserved for
Ethiopians.
However,
The
foreign
constitution is
nationals have
the supreme
the right to
law,
appear in
overriding all
courts as
other
witnesses. In
legislation in
such cases, the
the country.
foreigner is
The legal
allowed to
system
communicate
depends on
through a
codified laws,
court-
including
appointed
civil, penal,
translator.
civil
procedure, The
penal Commercial
procedure, Code of 1960
commercial provides the
and maritime legal
codes. framework for

undertaking payment of
business compensation
activities in "correspondin
Ethiopia. The g to the
constitution, prevailing
in accordance market value"
with Article of a private
40, ensures the property
right of every earmarked for
citizen to the expropriation
ownership of or
private nationalization
property, for public
including the interest.
right to
acquire, use Ethiopia is a
and dispose of member of the
such property. World
The Intellectual
Investment Property
Proclamation Organization
(769/2012) (WIPO) and
gives also a the
foreign Multilateral
investor the Investment
right to own a Guarantee
dwelling Agency
house and (MIGA).
other Furthermore,
immovable Ethiopia has
property concluded
necessary for bilateral
his investment
investment. treaties (BITs)
and double
The taxation
government treaties
may (DTTs) with a
expropriate number of
property for countries.
public interest, (Appendix 5)
strictly
according to
the law and
only after
making
adequate
compensation.
The
Investment
Proclamation
(769/2012)
guarantees
investors
against
measures of
expropriation
or
nationalization
, and specifies
advance

I w
n o
s r
t k
i
The
t Investment
Proclamation
u
of 2012 and
the
Regulations
t
on Investment
Incentives and
Investment
i
Areas
Reserved for
Domestic
o
Investors of
2012 are the
main legal
n
framework for
both foreign
and domestic
a
investment in
Ethiopia.
l
The Ethiopian
Investment
Agency (EIA)
is an
autonomous
government
F
institution
accountable to
the Investment
Board. The
r Board
chaired by the
is
Minister of
a Industry. The
EIA is headed
by a director
m general who is
also member
of the Board.
e The EIA has

restructured
itself recently
with a view to

promoting s
more FDI and to
improving the f
services it o
renders to re
investors. ig
n
The major a
activities of n
the EIA and d
the one-stop d
shop services o
it renders to m
foreign e
investors are st
the following: ic
• in
p v
r e
o st
m o
ot rs
in ;
g •
th is
e s
c ui
o n
u g
nt ta
r x
y' id
s e
in nt
v if
e ic
st at
m io
e n
nt n
o u
p m
p b
o er
rt (
u T
ni I
ti N
e ),
s in
a v
n e
d st
c m
o e
n nt
di p
ti er
o m
n it

s, ci
b at
u io
si n
n a
e n
ss d
'li a
c m
e e
n n
s d
e m
s e
a nt
n ;
d •
c i
o s
n s
st u
r i
u n
ct g
io
n c
p o
er m
m m
it e
s; r
• c
n i
ot a
ar l
iz
in r
g e
m g
e i
m s
o t
ra r
n a
d t
u i
m o
a n
n
d c
ar e
ti r
cl t
e i
s f
o i
f c
a a
ss t
o e

s i
o
a n
n ;
d •
ef
e fe
f ct
f in
e g
c re
t gi
i st
n ra
g ti
o
r n
e o
n f
e tr
w a
a d
l e
, o
r
a fi
m r
e m
n n
d a
m m
e e
n a
t n
, d
a
r m
e e
p n
l d
a m
c e
e nt
m ,
e re
n pl
t a
c
o e
r m
e
c nt
a o
n r
c c
e a
l n
l c
a el
t la

ti er
o in
n; g
• te
is c
s h
ui n
n ol
g o
w g
o y
r tr
k a
p n
er sf
m er
it a
, g
re re
n e
e m
w e
al nt
, s
re a
pl n
a d
c e
e x
m p
e o
nt rt
, -
s o
u ri
s e
p nt
e e
n d
si n
o o
n n
o -
r e
c q
a ui
n ty
c -
el b
la a
ti s
o e
n; d
• grading f
construction o
contractors; re
• ig
re n
gi e
st nt

er v
p al
ri ,
s si
e g
c ni
ol n
la g
b bi
o la
ra te
ti ra
o l
n in
s v
w e
it st
h m
d e
o nt
m p
e r
st o
ic m
in ot
v io
e n
st a
o n
rs d
; p
• r
n ot
e e
g ct
ot io
ia n
ti tr
n e
g at
a ie
n s
d, w
u it
p h
o ot
n h
g er
o c
v o
er u
n nt
m ri
e e
nt s;
a a
p n
p d
r
o

• e
a f
d o
vi r
si in
n v
g e
th st
e o
G rs
o .
v
er The EIA also
n provides
m additional
e services on
nt behalf of
o investors'
n request to
p process
ol acquisition of
ic land and
y utilities (water,
m electrical
e power and
a Telecom
s services), loan,
u residence
re permit,
s approval of
n Environmental
e Impact
e Assessment
d (EIA) studies
e for their
d investment
to projects.
cr
e Registration
at
e The minimum
a capital
n required of a
at foreign
tr investor is
a US$ 200
ct thousand per
iv project.
e However, if a
in foreign
v investor
e invests in
st partnership
m with domestic
e investor(s), the
nt minimum
cl capital
i required of
m him is US$
at

150 thousand manufacture
per project. of weapons
The minimum and
entry capital ammunition
required of a and
foreign telecommunic
investor ation services.
investing in Otherwise, the
areas of law
architectural, encourages
engineering joint ventures
works or with Ethiopian
related individuals
technical and
consultancy companies.
services, Investment
technical can also be
testing and effected
analysis and through
publishing business
work is US$ organization
100 thousand incorporated
where the in Ethiopia or
ownership locally
fully foreign registered
owned, and branch
US$ 50 companies,
thousand public
where the enterprises
investment is and
made jointly cooperatives
with domestic established in
partner(s). A accordance
foreign with the
investor relevant laws.
reinvesting his (Investment
profits or areas reserved
dividends for the
generated government
from existing and Ethiopian
enterprise is investors are
not required to listed in
allocate a Appendix 1.)
minimum
capital. As the
requirement, a
An individual foreign
investor may investor
also invest as should obtain
a sole investment
proprietor, permit first by
with full submitting a
equity properly filled
ownership. application
Areas open for form with the
joint-venture required
investment documents.
with the (All services
Government of EIA,
are the delivery time

and required a new local
fee for each viable venture
service are in Ethiopia,
listed in the foreign
Appendix 7) investor
applicant is
An required to
investme submit the
nt is to be following
made by documents.
an
individual •
person A
n
• An
application a
form signed by p
an agent; p
• A l
photocopy of i
agent's power c
of attorney; a
• A t
photoco i
py of o
relevant n
pages of
a valid f
passport o
showing r
his/her
m
identity
or a
s
certificat
i
e
g
evidenci
n
ng a
e
domesti
c d
investor
status; b
and y
• T
wo a
recent g
passport e
size n
photogra t
phs of
general o
manager f
.
t
h
Commercial e
registration of
company
c
Where the o
application is m
to establish as p

a a
n n
y d
; u
• m
A
a
p n
h d
o
t a
o r
c t
o i
p c
y l
e
o s
f
o
a f
g
e a
n s
t s
' o
s c
i
p a
o t
w i
e o
r n
s
o ;
f •
C
a o
t p
t y
o
r o
n f
e
y e
; a
• c
A h
d s
r h
a a
f r
t e
m h
e o
m l
o d
r e

r c
s a
t
v e
a
l e
i v
d i
d
p e
a n
s c
s i
p n
o g
r
t a
o d
r o
m
i e
d s
e t
n i
t c
i investor
t status
y and two
recent
c passport
a size
r photogra
d phs of
general
o manager
r ;
• a
p docume
h nt
o evidenci
t ng the
o financial
c position
o or
p identity
y or
profile
o of the
f investor
as
a required
by
c Ethiopia
e n
r Investm
t ent
i Agency;
f
i

• '
I s
n c
c a
a p
s i
e t
o a
f l
n t
o o
n b
s e
h c
a o
r n
e t
c r
o i
m b
p u
a t
n e
y d
, in cash
a is
b deposite
a d in a
n blocked
k account
s and
t proper
a docume
t nts
e related
m to
e contribu
n tion in
t kind
s (Procla
h mation
o No.
w 686/201
i 0); and
n • In
g case of
t share
h Compan
a y, a
t bank
t statemen
h t
e showing
c that at
o least one
m fourth of
p par
a value of
n the
y subscrib

ed intent to
shares of invest in
the Ethiopia
compan ,
y is together
deposite with the
d in a amount
blocked of
account capital
(Procla allocate
mation d for the
No. purpose;
686/201 • po
0). wer of
attorney
Comme to the
rcial appointe
registrat d agent
ion of a in
branch
compan Ethiopia
y and his
two
passport
Where the size
application is photogra
to establish as phs; and
a branch • a
company in docume
Ethiopia, the nt
applicant is evidenci
required to ng the
submit the financial
following position
documents. or
• leg identity
al or
certificat profile
e of of the
incorpor investor
ation in as
required
the
by
country
Ethiopia
of
n
origin;
Investm
• not
ent
arized
Agency.
docume
nt of the Upon
memora receiving in
ndum full the
and authenticated
article of documents
associati listed above
on; together with
• a properly filled
decision investment
stating application
the form, the
organiza investment
tion's permit and

company
registration m
certificate will e
be issued m
within 3 hours. o
r
Investment to a
be made by n
business d
organization u
incorporated m
in Ethiopia
Where the a
application is n
to be made by d
a business
organization a
incorporated in r
Ethiopia, the t
foreign i
investor c
applicant is l
required to e
submit the s
following
documents. o
f
• An
a
applicati
s
on form
s
signed
o
by agent
c
of the
i
compan
a
y;
t
• A
i
photoco
o
py of
n
agent's
s
power of
;
attorney;
•
•
C
A
o
p
p
y
h
o
o
t
f
o
c
e
o
a
p
c
y
h
o
s
f
h
a
i
r
t
e
s

e
h r
o t
l i
d f
e i
r c
s a
t
v e
a
l e
i v
d i
d
p e
a n
s c
s i
p n
o g
r
t a
o d
r o
m
i e
d s
e t
n i
t c
i
t i
y n
v
c e
a s
r t
d o
r
o
r s
t
p a
h t
o u
t s
o ;
c • In
o case
p there is
y a
business
o organiza
f tion in
the
a compan
y, a
c photoco

py of its •
memora A
ndum
and p
articles h
of o
associati t
ons or o
similar c
docume o
nts of p
the y
parent
compan o
y, legal f
certificat
e of a
incorpor g
ation in e
the n
country t
and a '
minute s
stating
the p
organiza o
tion's w
intent to e
invest in r
Ethiopia
should o
be f
authenti
cated. a
t
Applicat t
ion for o
expansi r
on or n
expandi
ng e
y
Where an ;
applicant to • W
expand or here an
upgrade an applican
existing t is sole
enterprise, a propriet
foreign or, a
investor is photoco
required to py of his
submit the valid
following passport
documents. or
identity
• An card or a
applicati certificat
on form e
signed evidenci
by agent; ng a
domesti

c organiza
investor tion in
status the
and his compan
two y, a
recent photoco
passport py of its
size memora
photogra ndum
phs; and
• W articles
here an of
applican associati
t is a ons or
business similar
compan docume
y, a nts of
photoco the
py of its parent
memora compan
ndum y, legal
and certificat
articles e of
of incorpor
associati ation in
ons and the
his two country
recent and a
passport minute
size stating
photogra the
phs of organiza
general tion's
manager intent to
; invest in
• Co Ethiopia
py of ;
each •
share a
holders
valid p
passport h
or o
identity t
card or o
photoco c
py of a o
certificat p
e y
evidenci
ng a o
domesti f
c
investor v
status; a
• In l
case i
there is d
a
business b

u permit to a
s foreign
i investor, upon
n the submission
e of his
s investment
s permit. A
foreign
l investor, who
i is a share
c holder of a
e company or a
n branch
s company and
e an expatriate
staff who has
o a work permit,
f are also
entitled to a
t residence
h permit.
e
Land
Allocati
e on
x
i In Ethiopia,
s land is public
t property.
i Individuals,
n companies and
g other
organizations
e have only use
n right of land.
t There are two
e broad
r classifications
p of land for
r rent or lease
i purposes: rural
s land and urban
e land.
Rural land is
a rented mainly
n for
d agriculture.
• a Currently,
photoco there are
py of nearly 11.55
project million ha of
feasibilit potential land
y study. for farming
(Box III.l).
The Main
The rental
Department
price of rural
for
land is
Immigration
generally low.
and
There is
Nationality
strong
Affairs issues
commitment
a residence

from the land in
government to industrial
avail the zones is
country's allocated to
fertile land for investors at
investment. fixed prices.
The Ministry Land for
of Agriculture export-
has given the oriented
responsibility industries is
of providing generally
technical available at
support for concessionary
private rate.
investors
investing in The Ethiopian
agriculture. Investment
The support Agency (EIA)
ranges from has the
providing land mandate to
above 5000 facilitate the
ha, allocation of
information, land for FDI
technical projects
support, and throughout the
facilitation of country.
other public Urban land for
services. other activities
is available on
an auction
Urban land is basis. The
divided into auction prices
land for vary,
industrial use depending on
and land for demand.
other
activities. The lease and
Industrial land rental prices
is given much of urban and
attention by rural land vary
the according to
government location, type
and a number of investment
of industrial and class of
zones with the land. The land
necessary cannot be
infrastructural mortgaged or
facilities sold, but the
(roads, lease or rental
electricity, value of land
water, and the fixed
telephone) are assets thereon
established in may be
the major mortgaged or
cities and transferred to
towns in order a third party.
to support the
country's drive
for rapid
industrializati
on. Industrial

I e
n s
v Fiscal
e The Council
of Ministers
s
Regulations
No.270/2012
specifies the
t
areas of
investment
eligible for
m
investment
incentives.
e A) Custom
Duty
To encourage
n private
investment
and promote
t the inflow of
foreign capital
and
technology
into Ethiopia,
the following
I customs duty
exemptions
are provided
n for investors
(both domestic
and foreign)
c engaged
eligible new
in
enterprises or
e expansion
projects such
as
n manufacturing
, agriculture,
agro-
t
industries,
generation,
transmission
i
and supply of
electrical
energy,
v
Information
and
Communicatio
n Technology
Development,

hotel and goods,
tourism, provided
construction that the
contracting, goods
education and are also
training, hotel exempt
services, from the
architectural payment
and of
engineering customs
works, duties;
technical • An
testing and investor
analysis, granted
capital goods with a
leasing and customs
importation of duty
LPG and exemptio
bitumen. n will be
(Appendix 3) allowed
to import
• 10 spare
0% parts
exemptio duty free
n from within
the five
payment years
of from the
customs date of
duties commiss
and ioning of
other a
taxes project;
levied on • An
imports investor
is entitled
granted to a
to all duty-free
capital privilege
goods, buys
such as capital
plant, goods or
machiner construct
y and ion
equipme materials
nt and from
construct local
ion manufact
materials uring
; industrie
• Sp s shall be
are parts refunded
worth up customs
to 15% duty
of the paid for
total raw
value of materials
the or
imported compone
investme nts used
nt capital

as in to
puts for establish
the a new
producti enterpris
on of e shall
goods; be
and entitled
• In to
vestment income
capital tax
goods exemptio
imported n as
without specified
the in
payment Appendi
of x 4;
custom • An
duties y
and investor
other to
taxes establish
levied on a new
imports enterpris
may be e in:
transferr 1) G
ed to am
another bel
investor la;
enjoying 2) B
similar en
privilege sh
s. an
gul
B) /
Income
Tax Gu
Exempti mu
on z;
3) A
If an investor far
engaged in (e
new xc
manufacturing, ep
agro- t
processing, the in
production of ar
agricultural ea
products , s
generation, wi
transmission thi
and supply of n
electrical 15
energy, kil
Information o
and m
Communicatio ete
n Technology rs
Development rig
(Appendix 4): ht
• An an
investor d

lef e
t ,
of
th A
e m
A a
wa r
sh o
Ri ,
ve
r); K
4) S o
om n
ali; s
5) G o
uji
an a
d n
Bo d
re
na B
Zo u
ne r
s j
(in i
Or )
o
mi A
a); r
or e
6) a
S
o P
u e
t o
h p
l
O e
m s
o
Z
Z o
o n
n e
e ,
,
B
S e
e n
g c
e h
n -
M
( a
D j
e i
r
a Z
s o
h n

e c
, i
a
S l
h
e W
k o
a r
e
Z d
o a
n s
e
, (
i
D n
a
w S
r o
o u
t
Z h
o e
n r
e n
,
N
K a
e t
f i
f o
a n
s
Z ,
o
n N
e a
, t
i
K o
o n
n a
t l
a i
t
a i
n e
d s
B a
a n
s d
k
e P
t e
o o
p
S l
p e
e s

rendering
R line at
e least by
100
g percent
i of an
o existing
n enterpris
) e is
shall be entitled
entitled to the
to an income
income tax
tax exemptio
deductio n period
n of 30% specified
for three in the in
consecut Appendi
ive years x 4; and
after the • An
expiry of investor
the who
income exports
tax 60
exemptio percent
n period his
specified products
in the in or
Appendi services,
x 4; or
• An supplies
investor to an
to exporter
expand shall be
or exempte
upgradin d for
g his additiona
existing l 2 years.
enterpris
e Non-
increasin fiscal
g in
volume The non-
at least fiscal
by 50 incentives
percent given to all
of exporters who
attainabl invest to
e produce
productio export
n or products will
service be allowed to
rendering import
capacity machinery and
or equipment
introduci necessary for
ng a new their
productio investment
n or projects
service through

suppliers
credit.
E
x
Loss
carry
forward
Business
enterprises
that suffer
p
losses during
the income tax
exemption
o
r
period can
carry forward
such losses,
t
following the
expiry of the
exemption
period, for
half of the tax
exemption
period. For the
purpose
calculating a
of
I
period of loss
carry forward,
a half year
period shall be
n
considered as
a full income
tax period.
c
Any loss
during income
tax exemption
e
period is not
allowed
carry forward
to n
such loss for
more than five
income tax
t
i
period.
v
e
s
Fiscal
The fiscal
incentives
given to all

exporters are percent
the following: at the
time of
• Wi the
th the export of
exceptio the
n of few finished
products goods;
(e.g. • Vo
Semi- ucher
processe Scheme:
d hides A
and voucher
skins- is a
150%), printed
no documen
export t having
tax is monetar
levied on y value
export which is
products used in
of lieu of
Ethiopia; duties
• Du and
ty taxes
Drawba payable
ck on
Scheme: imported
It offers raw
investors materials
an . The
exemptio beneficia
n from ries of
the the
payment voucher
of scheme
customs are also
duties exporters
and ; and
other • Bo
taxes nded
levied on Manufact
imported uring
and Warehou
locally se
purchase Scheme:
d raw Produce
materials rs not
used in eligible
the for
producti voucher
on of scheme
export but
goods. having
Duties licensed
and for
other bonded
taxes are
paid are entitled
drawn to
back 100

operate of raw
such material
warehou s are
se in allowed
importin for
g of raw enterpris
material es
s duty engaged
free. in export
processi
Non-fiscal ng; and
• Ex
The non- porters
fiscal can
incentives benefit
given to all from the
exporters are export
the following: credit
guarante
• Ex e
porters scheme
are which is
allowed presentl
to retain y in
and place in
deposit order to
in a ensure
bank an
account exporter
up to 20 receives
percent payment
of their for
foreign goods
exchang shipped
e export overseas
earnings in the
for event
future the
use in custome
the r
operatio defaults,
n of reducing
their the risk
enterpris of
es and exporter
no s'
export business
price and
control allowing
is it to
imposed keep its
by the price
National competit
Bank of ive.
Ethiopia
;
• Fr
anco
Valuta
import

• pr
Re oceeds
from the
sale or
mitt liquidati
on of an
enterpris
anc e;
e of
Cap
ital
A foreign
investor has
the right to • compens
make the ation paid to
following an investor;
remittances and
out of • pr
Ethiopia in oceeds
convertible from the
foreign sale or
currency: transfer
• profits of shares
and dividends; or
• pri partial
ncipals ownersh
and ip of an
interest enterpris
payment e to a
s on domesti
external c
loans; investor.
• pa
Priv
yments
related
to
technolo
gy
transfer
atiz
agreeme
nts; atio
•
ments
pay
related
n
to
collabora
tion
agreeme The
nts; privatization
program offers

enormous public
opportunities enterprises to
to both private the private
foreign and sector.
domestic Eligible
investors buyers are
particularly in required to fill
the out and submit
agriculture, a tender
manufacturing document to
and hotel and the Agency.
tourism The Agency
sectors. State- will notify a
owned winner and
enterprises are handover an
privatized enterprise to
through the buyer after
competitive signing a sale
bidding. The agreement.
Ethiopian With regard to
Privatization minimum
and Public capital
Enterprises requirement
Supervising and incentives
Agency in case of
(EPPESA) is expansion or
the upgrading, the
responsible investment
organ for law also
executing the applies to
privatization enterprises to
program of the
country.
Currently, the
Agency
applies
different
modalities
such as equity,
joint venture,
lease and
management
contract to
privatize state-
owned
enterprises.
All interested
investors are
invited to
participate in a
bid through
official
announcement
on radio,
television and
in newspapers be privatized.
when
transferring

Appendix I
Restrictions
The following areas are
reserved for domestic
investors.
1 Areas exclusively reserved for the Government:

• Postal services except courier services;
• Transmission and supply of electrical energy through the Integrated National Grid System; and
• Passenger air transport services using aircraft with a capacity of more than 50 passengers.
2 Areas reserved for joint-venture investment with the government:

• Production of weapons and ammunition; and
• Telecommunication services.
3 Areas exclusively reserved for domestic investors:
A. Trade
• Export of raw coffee, chat, oil seeds, pulses, precious minerals, natural forestry products, hides
and skins bought from the market, and live sheep, goats, camel, equines and cattle not raised by the investor;
• Import trade (excluding LPG and bitumen); and
• Wholesale trade (excluding supply of petroleum and its by-products as well as wholesale trade
by foreign investors of their locally produced products).
B. Others
• Manufacturing of ice creme and cakes;
• Manufacturing of plastic shopping bags
• Finishing of fabrics, yarn, warp and weft, apparel and other textile products by bleaching,
dyeing, shrinking, sanforizing, mercerizing or dressing;
• Tanning of hides and skins below finished level;
• Manufacture of cement;
• Manufacture of clay and cement products;
• Tour operation below grade 1;
• Construction, water well and mining exploration drilling companies below Grade 1;
• Kindergarten, elementary and junior secondary education by constructing own building;
• Diagnostic centre service by constructing own building;
• Clinical service by constructing own building;
• Capital goods leasing (this does not include leasing of motor vehicles); and
• Printing industries
4 Areas exclusively reserved for Ethiopian nationals:

• Banking, insurance, micro-credit and saving services;
• Broadcasting and mass media services;
• Attorney and legal consultancy services;
• Preparation of indigenous traditional medicines;
• Advertisement, promotion and translation works;
• Domestic air transport services using aircraft with a seating capacity of up to 50 passengers;
and
• Packaging, forwarding and shipping agency services.

II
stment areas open for foreign investors following areas are
g
open for foreign investors
Manufacturing
1. Food industry
2. Beverage industry
3. Textiles and textiles products industry
4. Leather and leather products industry
5. Wood products industry
6. Paper and paper products industry
7. Chemical and chemical products industry
8. Basic pharmaceutical products and pharmaceutical preparations industry
9. Rubber and plastics products industry
10. Other non-metallic mineral products industry
11. Basic metal industry (excluding mining of minerals)
12. Fabricated metal products industry (excluding machinery and equipment)
13. Computer, electronic and optical products industry
14. Electrical products industry
15. Machinery and equipment industry
16. Vehicles, trailers, and semi trailer industry
17. Manufacturing of office and household furniture ( excluding those made of ceramic)
18. Manufacturing of other equipment (jewellers and related articles, musical instruments, sports
equipment, games and toys and similar products)
19. Integrated manufacturing with agriculture
Agriculture
1. Crop production
2 2. Animal production
3. Mixed (crop and animal) farming
4. Forestry
Information Communication Technology (ICT) Generation,
transmission and supply of electrical energy Hotel and tourism
3
4 1. Star designated hotel and resort, motel, lodges and restaurant
5
2. Grade one tour operation
Construction contracting
6 1. Construction contracting, water well and mineral exploration drilling grade one Real estate
development Education and training
7 1. Secondary and higher education by constructing own building
2. Technical and vocational training service including sport
8
Health services
1. Hospital service by constructing own building Architectural and engineering works and related
9 technical services, technical testing and analysis Publishing Import trade
1. Importation of IPG and bitumen Export trade
10 1. Export trade (excluding raw coffee, chat, oil seeds, pulses, precious minerals, natural forestry
11 products, hides and skins bought from the market, and live sheep, goats, camel, equines and cattle not
12 raised by the investor.)
Whole sale trade

13 1. Supply of petroleum and its by-products as well as whole sale of own products
14
Ethiopian
Investment Guide
2013 | ii
Appendix III
Areas of investment eligible for exemption of customs duty
The following areas of investment are eligible for exemption of capital

goods and construction materials from customs duty.
1 Manufacturing
1. Food industry
2. Beverage industry
3. Textiles and textiles products industry
4. Leather and leather products industry
5. Wood products industry
6. Paper and paper products industry
7. Chemical and chemical products industry
8. Basic pharmaceutical products and pharmaceutical preparations industry
9. Rubber and plastics products industry
10. Other non-metallic mineral products industry
11. Basic metal industry (excluding mining of minerals)
12. Fabricated metal products industry (excluding machinery and equipment)
13. Computer, electronic and optical products industry
14. Electrical products industry
15. Machinery and equipment industry
16. Vehicles, trailers, and semi trailer industry
17. Manufacturing of office and household furniture
18. Manufacturing of other equipment
19. Integrated manufacturing with agriculture
2 Agriculture
1. Crop production
2. Animal production
3. Mixed (crop and animal) farming
4. Forestry
3 Information Communication Technology (ICT)
4 Generation, transmission and supply of electrical energy
5 Hotel and tourism
1. Star designated hotel and resort, motel, lodges and restaurant
2. Tour operation grade one
3. Tour operation below grade one
6 Construction contracting
1. Construction contracting, water well and mineral exploration drilling grade one
2. Construction contracting, water well and mineral exploration drilling below grade one
7 Education and training
1. Kindergarten, elementary and junior secondary education by constructing own building
2. Secondary and higher education by constructing own building
3. Technical and vocational training service including sport
8 Health services
1. Clinical service by constructing own building
2. Diagnostic service by constructing own building
3. Hospital service by constructing own building
9 Architectural and engineering works and related technical services, technical testing and analysis
10 Capital goods leasing excluding leasing of motor vehicles
11 Import trade
1. Importation of LPG and bitumen
Ethiopian
Investment Guide
2013 | ii
Appendix IV
Ethiopian
Investment Guide
2013 | ii
Ethiopian
Investment Guide
2013 | ii
Appendix V
No. Ethiopia has concluded bilateral investment and

double taxation avoidance treaties with the following
countries:
28 Bilateral Investment Treaties (BITs) 1994 - 2009

BITs BITs
Algeria Kuwait
Austria Libya
Belgium and Luxembourg Malaysia
China Netherlands
Denmark Russia
Egypt South Africa
Equatorial Guinea Spain
Finland Sudan
France Sweden
Germany Switzerland
India Tunisia
Iran Turkey
Israel United Kingdom
Italy Yemen
18 Double Taxation Avoidance Treaties (DTTs) 1996- 2008
DTTs DTTs
Algeria Romania
Check Republic Russia
China Seychelles
Egypt South African
France Sudan
India Tunisia
Israel Turkey
Italy United Kingdom
Kuwait Yemen
Appendix VI
Tips for foreign investors
Health requirements against cholera is also required for any person who has
visited or a cholera-infected area within 6 days prior to
Prior to entry, all foreign visitors should be in possession arrival in Ethiopia.
of valid health certificate for yellow fever. Vaccination
Ethiopian
Investment Guide
2013 | ii
Visa and immigration requirements Ethiopia. The list includes Argentina, Australia, Austria,
Belgium, Brazil, Canada, China, Denmark, Finland,
Visas are required for all foreign visitors to Ethiopia, with France, Germany, Greece, Ireland, Israel, Italy, Japan,
the exception of nationals of Kenya and the Sudan. Visas Republic of Korea, Kuwait, Luxembourg, Mexico, the
may be obtained at Ethiopia's diplomatic missions Netherlands, New Zealand, Norway, Poland, Portugal,
overseas. However, nationals of 33 countries are now Russian Federation, South Africa, Spain, Sweden,
allowed to receive their tourist visas on arrival in Switzerland, Taiwan, United Kingdom and United States.
Public holidays
Public holidays are celebrated according to the Ethiopian (Julian) Calendar which consists of the
following: September 2012- September 2013
Date. Public holidays Days Remarks
September 11 Ethiopian New Year National holiday

September 27 The Finding of the True Christian holiday
Cross (Meskel)
October 26 Id Al Adaha (Arafa) Muslim holiday
January 7 Ethiopian Christmas Christian holiday
January 19 Ethiopian Epiphany Christian holiday
January 24 Prophet Mohamed's Muslim holiday
Birthday(Maulid)
March 2 Victory of Adwa National holiday
May 1 International Labor Day National holiday
May 3 Ethiopian Good Friday Christian holiday
May 5 Ethiopian Patriots day National holiday
May 5 Easter Christian holiday
May 28 Downfall of the Derg National holiday
August 8 Id Al Fater (Ramadan) Muslim holiday
Ethiopian
Investment Guide
2013 | ii
The maximum number of office closure days in a year is 12 instead of 13, since Easter always falls on Sunday.
Normal business hours
Government
Government offices work 39 hours in a week. Office hours extend from 8.30 a.m. to 5.30 p.m. (lunch break from 12.30
p.m. to 1.30 p.m.) Monday through Thursday and from 11.30 a.m. to 1.30 p.m. on Friday.
Banks
Most banks are open from 8 a.m. to 4 p.m., including lunch hours, Monday through Friday. Most banks are also open
on Saturday from 8 a.m. to 12 noon.
Shops
Most shops are open up to 6 p.m., Monday through Saturday. Some shops, particularly supermarkets, are open on
Sundays and public holidays.
Appendix VII Client Chater of EIA
Ethiopian
Investment Guide
2013 | ii
No. Type of Services Delivery Time Fee/Birr
Trade or Firm Name
l. Registration of trade or firm name 4 hours 100
2. Amendment/ change of trade or firm name 4 hours 80
3. Replacement or substitution of trade or firm name 1 hour 50
4. Cancellation of trade or firm name 2 hours 50

Tax Identification Number (TIN)
5. Issuance of tax identification number 2 hours Free of charge
6. Amendment/ change of tax identification number 2 hours Free of charge
Replacement or substitution of tax identification number 2 hours Free of charge

7.
Memorandum and Articles of association
8. Notarization of memorandum and articles of association 5 hours 350
9. Amendment/ change of memorandum and articles of association 3 hours 156

Commercial Registration
10. Issuance of commercial registration 3 hours 100
11. Renewal of commercial registration 2 hours 100
12. Amendment/ change of commercial registration 3 hours 50
13. Replacement or substitution of commercial registration 1 hour 50
14. Cancellation of commercial registration 5 hours 50

Investment Permit
15. Issuance of investment permit
New investment 3 hours 600
Expansion investment 18 working days 300
16. Renewal of investment permit
New investment 2 working days 200
Expansion investment 2 working days 200
17. Amendment/ change of investment permit 3 hours 100
18. Replacement or substitution of investment permit 1 hour 100
19. Cancellation of investment permit 5 working days Free of charge

Business License
20. Issuance of business license 10 working days 100

Work Permit
21. Issuance of work permit 2 hours 600
22. Renewal of work permit 1 hour 500
23. Replacement or substitution of work permit 1 hour 400
24. Cancellation of work permit 2 hours Free of charge

Others
25. Issuance of construction permit 5 working days Free of charge
26. Registration of technology transfer agreement 3 hours 200
27. Registration of domestic investor and foreign investor export-oriented non- equity based 2 hours 100
collaboration agreements
28. Registration of capital investment brought in to the country by foreign investors 1 working day Free of charge
29. Grading of construction contractors 10 working days 30
30. Allowing exemption of capital goods and construction materials from customs duty 2working days Free of charge
1USD = 18.44 ETB (April, 2013)
Ethiopian
Investment Guide
2013 | ii
Appendix VIII
Sources of further information

Ethiopian Investment Agency
Addis Ababa
P.O. Box 2313
Tel: +251-11-551 0033
Fax: +251-11-551 4396
Email|^tliiopian.invest@ethionet.et
Websitejjwww.ethioinvest.org
Public sector
Ministry of Industry Website:

Addis Ababa P.O. Box 5641 Tel: +251-11-551 8025- www.erca.org.et
29 Fax:+ 251-11-551 4288 Ministry of Mines
Addis Ababa
Ministry of Foreign Affairs P.O. Box 486
Addis Ababa Tel: +251-11-646 3166
P.O. Box 393 Fax: +251-11-646 3364
Tel: +251-11-551 7345 E-mail:information@mom.gov.et
Fax: +251-11-551 4300/ 551 1244 Website:www.mom.gov.et
Email:mfa.addis@telecom.net.et
www.mfa.gov.et
Website: Ethiopian Privatization and Public Enterprise
Supervising Agency
Ministry of Agriculture Addis Ababa P.O. Box: 517 Tel: +251-11-552 1834
Addis Ababa P.O. Box 62347 Fax: +251-11-551 3955 E-mail:
Tel:+ 251-11-551 8040/ 551 7354 Fax:+251-11-551 pesa.et@ethionet.et Website:
vmoasc@ethionet.et
1543 E-mail: www.ppesa.gov.et
Website:www.moa.gov.et Environmental Protection Authority
Ethiopian Revenue and Customs Authority, Addis Ababa P.O. Box 12760 Tel: +251-11-646 5007
Addis Ababa P.O. Box Fax: +251-11-646 4882 E-mail:
2559 Tel: +251-11-466 esid@ethionet.et Website:
7666 Fax:+ 251-11-466 www.epa.gov.et
8244 E-mail: Ministry of Trade
erca@ethionet.et Addis Ababa P.O. Box 704 Tel: +251-11-551 8025 Fax:
+ 251-11-551 5411
National Bank of Ethiopia P.O. Box 1907

Addis Ababa P.O. Box 5550 Tel: +251- Tel:+251-11-515 6711
11-551 7430 Fax: +251-1-551 4588 E- Fax: + 251-11-551 2889
mail:nbe.excd@ethionet.et com@ethionet.et
E-mail:tour -
www.nbe.gov.et
Website: Web: www.tourismethiopia.org
Ministry of Culture and Tourism
Addis Ababa
Ministry of Finance & Economic Development Fax: +251-11-551 8396
Addis Ababa P.O. Box 1905 Tel:+251-11-155 2400 E-mail:molsa.comt@ethionet.et
Fax: +251-11-156 0124 Website: www.mlsa.gov.et
Website:
www.mofed.gov.et
Ethiopian Telecommunication Corporation
Ministry of Labor & Social Affairs Addis Ababa
Addis Ababa P.O. Box 1047
P.O. Box 2056 Tel: 251-11-551 0500
Tel: +251-11-551 7080 Fax: 251-11-551 5777
Ethiopian
Investment Guide
2013 | ii
E-mail: etc.commun@ethionet.et Ethiopian Chamber of Commerce and Sectoral
Associations
Ethiopian Electrical Power Corporation Addis Ababa P.O. Box 517 Tel: 251-11-551 8240 Fax:
Addis Ababa P.O. Box 1233 Tel: 251-11-155 0811 251-11-551 7699 E-mail:
Fax: 251-11-155 2345 E-mail: etchamb@ethionet.et
eelpa@ethionet.et Website:
www.eepco.gov.et
Addis Ababa Chamber of Commerce and Sectoral
Central Statistical Agency Associations
Addis Ababa P.O. Box P.O. Box 2458
1143 Tel: 251-11-155 Tel: 251-11-552 8120
3011 Fax: 251-11-155 Fax: 251-11-551 1479
0334 E-mail: E-mail:aachamberl@ethionet.et
csa@ethionet.et
Website: Ethiopian Horticulture Producer Exporters
www.csa.gov.et Association (EHPEA)
Private sector P.O. Box
Tel: 251-11-663 6750/663 6751 Fax: 251-11-663 6753
E-mail:ehpea@ethionet.et
Ethiopian Leather Industries Association (ELIA)

P.O. Box 12898 Tel: +251-11-515 6144 Fax: +251-11-
550 8935 E-mail:elia@elia.org.et
fK
Ethiopian
Investment Guide
2013 | ii
To be a strong institution which will make Ethiopia one of the
leading investment destinations in Africa.
Mission
To enhance investment, both foreign and local, in the country by
promoting its resource potentials and investment opportunities,
initiating policy and implementation measures to create conducive
investment climate and providing efficient services to investors so
as to bring fast and sustainable economic development in the
country.
Core Values
Provision of efficient, effective and fair services which are tailored
to the best satisfaction of our customers. Efficient and effective
utilization of our resources.
Ethiopian
Investment Guide
2013 | ii
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Ethiopian Investment Agency

II THE OPERATING ENVIRONMENT 3

III. AREAS OF OPPORTUNITY 15

IV. THE LEGAL FRAMEWORK 25

Official name Federal Democratic Republic of Ethiopia (FDRE)

Political system Federal system with multi-party system.

Ethiopia is a multi-ethnic state with a great variety of languages spoken;

Shabwah aydah 1 Sh Ijr

Ethiopian Investment Guide 2013 |

Ethiopian Investment Guide 2013 |

E normous efforts have been

Agriculture Industry Services and allied

Figure II.1: Absolute Growth and

Coffee is critical to the Ethiopian economy.

The industrial sector, which mainly

Real GDP grew by an average of 10.4

At the end of 2010/11, the average

providing a secure and reliable end-to-end Commoditv Price C Comm Contract

amounted US$ 2.75 billion which is an , 5

increase of US$ 744 million (37.1 percent)

Trade and Investment

Currently, Ethiopia has around 2,000 MW

According to the Growth and

A huge project deemed to satisfy safe water demand in

The CBB, with its 34 branches, provides long-term loans

Capital gains tax under Income Tax Proclamation No.

Excise tax is payable on a range of consumer goods,

Turn over tax, under the total value of 500,000 Birr, is

For depreciation allowance, assets are categorized into

1. Buildings and structures 5%;

2. Intangible assets 10%;

The labor law is believed to be consistent with the

The labor law has fixed nominal hours of work as eight

Ethiopia has abundant supply of skilled workers in

Wages and salaries vary depending on the size of

Market other developed countries. No quota restrictions are

Ethiopian Investment Guide 2013 | ii

Agriculture Coffee Farming

E thiopia is endowed with abundant agricultural

Ethiopia has the soils and climate required for the

The quality of tea mainly depends on climatic

Rice could suitably grow in many parts of the country.

• West central highlands of Amhara

A variety of oil seeds are grown in Ethiopia. The oil

Wheat and barley are mostly grown in the highlands and

Wheat and barley are the main cereal crops in the

Spices Farming Other Agricultural Products

Cotton is an important crop in Ethiopia. There is a huge

Considerable opportunities exist for investments in Forestry and Related Activities

Ethiopia's potential for fishery development is limited to

Box III.l. Potential Areas for Farming

1 Rice 280,000 SNNP, Oromiya, Amhara, Benshangul Gumuz, and Somali

2 Maize 1,400,000 SNNP, Oromiya, Amhara, Benshangul Gumuz, Gambella

9 Rubber 200,000 SNNP and Gambella

The current annual production of honey and beeswax of

Tableware and sanitary ware, sheet glass and

Chemicals and chemical products:

Manufacture of basic chemicals based on local raw

Drugs and pharmaceuticals:

Manufacture of pharmaceutical, medicinal, chemical

T he manufacturing sector contributed about 13.4

Pulp from indigenous raw materials, paper and paper

Textiles and clothing: Manufacture of lime, gypsum, marble, granite,

Food and beverage products: