Group 3:

Nguyễn Ngọc Hoàng Dung: 31221022964

Nguyễn Thị Yến Nhi: 31221025715
Nguyễn Thị Khánh Linh: 31221022756
Dương Huệ Mẫn: 31221023155
Quách Trần Gia Lạc: 31221022993
Đỗ Quang Huy: 31221023995

Question: Identify and explain the opportunities and challenges for firms
when entering Ethiopia market.

● Opportunities:
- Large and growing domestic market: Ethiopia is the second most populous country in
Africa, with over 70% of the population under the age of 30. The country experienced
a sustained period of economic growth that helped to expand the purchasing power of
its growing middle-classer of its growing middle-class market.
- Low production costs: Land, labor, and energy costs are low relative to other African
and global markets.
- Economic Reforms: Ethiopia is the early stages of market liberalization and
privatization of SOEs. This is creating new opportunities for international firms in
areas previously closed to international participation.
- The Africa Continental Free Trade Agreement (AfCFTA), which entered into force in
January 2021, unites the 55 African countries that have signed the agreement into one
common trade area. Ethiopia has ratified the AfCFTA, facilitating trade across the
continent between Ethiopia. The AfCFTA creates an opportunity for international
companies to use Ethiopia as a regional trade hub to reach neighboring markets.
- Political environment and industrial policy:
+ Since 1990, politics has been stable under the leadership of EPRDF.
+ Inviting private companies to compete in fields controlled by the state, state-owned
enterprises are equitized, attracting domestic and foreign investors => privatization of
state-owned enterprises, expansion of foreign investment
+ Large public investment in transport, electricity and telecommunications
infrastructure => aiming to serve long-term economic growth.
+ Exemption from customs duties , favorable regulations for foreign investors to
convert foreign currencies. The attractiveness of the market increases.
+ Ethiopia's history has proven that it is a difficult country to invade, which ensures
investors a politically stable business country, and can develop in the long term.
- Human resource : Low - wage can create a significant cost advantage for labor
intensive business. Also, produced more than 10,000 university graduates each year,
creating a supply of skilled, affordable employees
- Market Access: Businesses with greater marketing resources or superior products can
capture market share more easily.
- Competition: Very little competition, there aren't many competitors yet, the consumer
market for goods is growing.
- Market opportunity: 94 million people, ranked 6th in Africa in the market
opportunities for 54 countries. Fasting growing company in Africa over the last
decade . Fast growth GDP per capita increasing the purchasing power (its GDP
increased from $8.6 billion to $47.5 billion).

● Challenges:
- Political environment and industrial policy:
+ The government also has a presence in key sectors such as:
telecommunications, energy, financial services, air transport and shipping, the
government still retains significant control over the economy.
+ Unfair competition when working with state-owned enterprises and
party-affiliated enterprises.
- Cross-border trade between regions has performed relatively poorly.
- Infrastructure Development:
+ Ethiopia was near the bottom of the World Bank's ranking of countries for
facilitation of cross-border trade and logistics performance.
+ Despite significant progress in recent years, Ethiopia still faces challenges in
infrastructure development, including transportation, energy, and
telecommunications.
- Intellectual property: Enforcement or protection for intellectual property was unreliable.
+ Ethiopia had not signed all of the major international intellectual-property treaties,
and the Ethiopian Intellectual Property Office focused on protecting Ethiopian
materials and copyrights.
+ Its capacity for law enforcement was limited, and numerous businesses used
well-known names and trademarks without permission.
+ Counterfeit and pirated products were also common.
- Human Resources:
+ There is still a gap between foreign employees and local employees in terms of
working culture, management style and communication.
+ Difficult and expensive in recruiting talented human resources.
- Limited competition:
+ The limited competition could negate the advantages of an established
multinational. Because Ethiopia had long been closed to foreign influence,
global brands did not enjoy the same awareness among consumers.
- Cross-cultural adaptation and customer relations:
+ The business needs to understand local customs, norms and expectations.
+ In consumer marketing, for example, companies could inadvertently offend a
particular group with the wrong choice of music or spokesperson.
- Fragmented distribution channels: The challenges faced by international investors
in Ethiopia's fragmented distribution channels:
+ Reaching a wide range of customers: The distribution channels are
fragmented, relying on many small sub-distributors to serve retailers outside
 of Addis Ababa. This makes it difficult and expensive for international
investors to reach a wide range of customers, especially those in rural areas,
where over 75% of Ethiopians live.
+ High Cost of Serving Small Players: Wholesalers find it expensive to service
the many small retailers and kiosks that dominate the market. International
investors may also find it costly to deal with so many small players.
+ Limited Control and Visibility: Companies may have limited control over how
their products are distributed and marketed through a network of independent
distributors.
- Corruption: Corruption remains a significant challenge in Ethiopia, affecting various
sectors including government administration, business operations, and investment.
+ Public-sector corruption was suspected to be high. In 2013, Transparency
International ranked Ethiopia 111th of 177 rated countries in perceived
public-sector corruption.
+ Foreign investors had complained about the lack of transparency in
government tenders. Many believed that select firms received preferential
treatment.