An Investment Guide to Ethiopia At a Glance

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Official Name: Federal Democratic Republic of Ethiopia

Political system: Federal State with a multi-party system

Capital City: Addis Ababa, seat of the African Union (AU) and

United Nations Economic Commission for Africa (UNECA)

Location: Horn of Africa, at the crossroads between Africa, the

Middle East and Asia

Area: 1.1 million square kilometres

Population: 2nd most populous country in Africa with a population size of over 100 million

Language: Working Federal language – Amharic,

English is widely spoken

Exports: Leading exports: coffee, oilseeds, gold, pulses,

horticulture, live animals, growing manufacturing export (textile and apparel, leather and leather products etc)

Climate: Temperate in the highlands: 20°C – 30°C, low in the

lowlands: up to 45°C Rainfall ranges from 200 mm to 2000 mm and highly suitable for production.

Currency: Ethiopian Birr (ETB)

Geo-specific information:

Country Code: +251

Time Zone: GMT+3.

 

Why invest in Ethiopia?

Ethiopia has become a preferred destination for foreign direct investment and emerging hub for manufacturing in Africa due to its: Political stability and committed government

  • Stable socio-economic governance with sustained peace and security.
  • High level political commitment for investment promotion and protection; investment policy making is led by the Ethiopian Investment Board chaired by the Prime Minister
  • Ranked 34th /138 economies for impartial public decision making (Global Competitiveness Report, 2016).
  • Wide-ranging incentive packages for priority sectors and export-oriented investments.
  • Bold initiative in the development of state-of-the art industrial parks, electric-powered railway connecting the capital and other economic corridors to the port of Djibouti.

Conducive economic factors

  • An average of about 11% annual GDP growth for the last 14 years, one of the fastest growing economies in the world during the same period (World Bank Global

Economic Prospects).

  • Stable and conducive macroeconomic environment.
  • Implementing phase II of its Growth and Transformation Plan (GTP II) which aims to realize a structural transformation of the economy.
  • 46% growth in FDI inflow– one of the most dynamic and largest FDI recipients in Africa (UNCTAD World Investment Report 2017)

 

Favourable market factors

  • Africa’s second most populous nation with a population size close to 100 million.
  • 54 million active labour force, trainable and available at competitive wage rate.
  • Duty-free, quota-free access to the USA and EU markets through AGOA and EBA, respectively
  • Duty-free, quota-free access to Japan, Canada, China, Turkey, Australia and New Zealand – covering substantially all export goods from Ethiopia. Preferential market access to India.
  • Member of COMESA with preferential market access to a regional market of 400 million people.
  • Strategic location with proximity to the Middle East, Europe and Asia. Well developed infrastructure
  • Newly built Addis-Djibouti electric-powered railway
  • Africa’s world-class and Star Alliance member Ethiopian Airlines flying to about 100 international passenger and 36 dedicated cargo destinations; also flies to over 20 domestic passenger destinations
  • Huge investment potential in renewable energy including hyrdo, wind and geotermal;

Grand Ethiopian Renaissance Dam – the largest hydroelectric power dam in Africa – under construction (close to 60% completed), expected to generate additional 6,000MW electricity.

  • Expanding telecommunication services.
  • Expansive road networks connecting national and regional markets.
  • Two operational and seven upcoming government industrial parks; eight private industrial parks in the pipeline.

 

Areas of investment opportunities and incentives

 

Manufacturing

  • Vision: To become the leading manufacturing hub in Africa.
  • Ethiopia offers a remarkable competitive advantage for manufacturing industries dueto:- government facilitation of efficiency-enhancing investment solutions including industrial parks that are ready for ‘plug and play’;

– large pool of trainable work force available at competitive wages;

– cheapest energy rate on a global standard;

– geographic proximity and preferential access to key markets; and- abundance of high-quality industrial raw materials;

  • Ethiopia is Africa’s largest raw material supplier for the leather industry.
  • Priority areas for investment: Textile & apparel, leather & leather products, agroprocessing, pharmaceuticals, chemical products, metal & engineering industry, electronics & electrical products, paper & paper products, and construction materials.

  • Income tax exemption incentive:

– Up to 10 years corporate income tax exemption

  1. Up to 6 years exemption depending on sector of engagement;
  2. Additional 2-4 years exemption for industrial park enterprises with at least 80% export or input supply to exporters;
  3. Additional 2 years exemption for 60% exporters or input suppliers to exporters within or outside of industrial parks;
  4. Additional 30% deduction for 3 consecutive years if investment inunderdeveloped regions).

– Up to 14 years corporate income tax exemption for pharmaceutical manufacturers located in industrial parks:

  1. Up to 14 years exemption for manufactures of active pharmaceutical ingredients (varying based on export levels)
  2. Up to 12 years exemption for manufactures of formulation and final medicine (varying based on export levels)
  3. Up to 8 years exemption for manufactures of pharmaceutical packaging materials (varying based on export levels)

– Up to 5 years personal income tax exemption for expatriate employees of industrial park enterprises (tenants) following issuance of business license.

See here complete info An Investment Guide to Ethiopia PDF

http://www.investethiopia.gov.et/images/pdf/An%20Investment%20Guide%20to%20Ethiopia,%202017.pdf

 
 
Ethiopia Investment Commision 
 

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