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Foreign and Domestic Investment has been steadily growing in Ethiopia. The Federal and Regional Governments encourage investment; they provide land, incentives such as tax holidays, an improved bureaucracy at the Federal and Regional Investment offices, etc. The Government itself has been investing heavily to improve the country's infrastructures and as a result the road network has improved greatly in the last few years and this helps investment. The Government is also focusing on the housing sector and low cost condominiums are being built in the capital and regional cities. Private investors, both Ethiopian and Non-Ethiopian Nationals, undertake investment activities in the agriculture, construction and manufacturing sectors. Flower farms, cement factories, steel smelting and rolling mills are becoming more and more common in Ethiopia.

One of the things potential investors need before they start investing is information. They want to find ways to invest in Ethiopia and know how things work. This is the right place to find info on Investment in Ethiopia.

One can find Frequently Asked Questions About Investment in Ethiopia below.

Under Investment Regulations, you can find the different proclamations and regulations and their amendments (if any) and the highlights of these documents.

On Investment Procedures page, you can see who needs investment permit to invest in Ethiopia and how to apply for the permit and the procedures to follow and the documents needed to secure the permit for domestic and foreign investors.

The Ethiopian Government provides these investment incentives:

A. Exemption from Income Tax
B. Exemption from The payment of customs duty

The details of these incentives are found on the Investment Incentives page.

The page on major investment areas in Ethiopia informs potential investors where and what to invest.

The Ethiopian Investment Commission has been set up by the government as the responsible organ to facilitate investment in Ethiopia. The head office is located on Bole Road, very near to Dembel City Center and adjacent to the Oromia Regional Government Building.

Its full address is:

Ethiopian Investment Commission
P.O Box: 2313, Addis Ababa, Ethiopia
Telephone:+251 11 5539474/+251 11 5510033
Fax: +251 11 5514396
E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Website: http//www.investinethiopia.org

FREQUENTLY ASKED QUESTIONS ABOUT INVESTMENT IN ETHIOPIA

Who can be regarded as a domestic investor, a foreign investor?

According to investment Proclamation, a Domestic investor is an Ethiopian or a foreign national permanently residing in Ethiopia having made an investment, and includes the Government, public enterprises as well as a foreign national, Ethiopian by birth and preferring treatment as a domestic investor. A Foreign investor is a foreigner or an enterprise owned by foreign nationals, having invested foreign capital in Ethiopia, and includes an Ethiopian permanently residing abroad and preferring treatment as a foreign investor.

If a foreigner is in JV with an Ethiopian, how is profit repatriation achieved?

The following types of partnerships are recognized under Ethiopian Commercial Code: Ordinary partnership; General partnership; Limited partnership and Joint Venture. Partnerships are formed by a contract between two or more persons bringing together contributions intending to join together to undertake a business activity. Liabilities of members of partnership are unlimited. The partners are personally, jointly, severally and fully liable as between themselves and for the partnership’s undertakings. However, in limited partnership, limited partners who do not participate in management have limited liability. The liability of the general partners or managing partners remains unlimited. The death, incapacity, withdrawal or disagreement of any partner will dissolve the partnership.

A foreign investor can engage in investment activity jointly with a domestic investor.

Foreign exchange regulations of the country allow a foreign investor to repatriate a reasonable share of his profits and dividends accruing from such investments out of Ethiopia in convertible foreign currency at the prevailing exchange rate on the date of remittance.

The following documents are required to be submitted to the National Bank of Ethiopia:

• Minutes of the Board of Directors or an equivalent body distributing the profit or declaring dividend duly signed by the chairman or secretary of the Board to authenticate the decision.
• Copy of the usual closing financial documents duly audited by an independent third party auditing institution permitted to operate in Ethiopia.
• Photo-copy of Exchange Controller’s letter recognizing the foreign investment;
• Photo-copies of tax receipts evidencing the payment of all taxes due to the government;
• and Any other document of evidence that the Exchange Controller may require.

Can foreigners in investment (both domestic and foreign investors) own property such as buildings in Ethiopia?

Although the Ethiopian Civil Code prohibits a foreign national from ownership of immovable property, Investment Proclamation No. 280/2002 allows foreign national taken for a domestic investor or a foreign investor to own a dwelling house and other immovable property necessary for his investment. The land on which the building is built cannot be owned. In Ethiopia, land is property of the state and the people. Land is provided on a leasehold basis for both citizens and foreign investor. Leasehold right for residential housing is 99 years, 70 years for manufacturing and 60 years for commerce. Ethiopian law provides for guarantees and protections of investments and property interest of foreign investors. In case of expropriation and nationalization, adequate compensation corresponding to the prevailing market value is paid in advance and such payment can be remitted out of Ethiopia in convertible foreign currency.

Can a foreign investor become shareholder of a company doing businesses reserved for domestic investors?

Foreign nationals investing in Ethiopia are restricted from certain investment activities, which are reserved for domestic investors.

Investment areas reserved for domestic investors are:

• retail trade and brokerage;
• wholesale trade (excluding supply of petroleum and its by-products as well as wholesale by foreign investors of their products locally produced);
• import trade (excluding LPG, bitumen and upon approval from the Council of Ministers, material inputs for export products);
• export trade of raw coffee, chat, oil seeds, pulses, hides and skins bought from the market and live sheep, goats and cattle not raised or fattened by the investor; construction companies excluding those designated as grade 1;
• tanning of hides and skins up to crust level;
• hotels (excluding star-designated hotels), motels, pensions, tea rooms, coffee shops, bars, night clubs and restaurants excluding international and specialized restaurants, travel agency, trade auxiliary and ticket selling services;
• car-hire and taxi-cabs transport services;
• commercial road transport and inland water transport services;
• bakery products and pastries for the domestic market;
• grinding mills;
• barber shops, beauty salons, and provision of smith, workshops and tailoring services except by garment factories;
• building maintenance and repair and maintenance of vehicles;
• saw milling and timber making; customs clearance services;
• museums, theatres and cinema hall operations;
• printing industries.

A foreign investor is not allowed to acquire shares in a company engaged in a business activity reserved for domestic investors. However, a foreign national permanently residing in Ethiopia and having made an investment can apply for investment permit as a domestic investor.

A foreign national who is a domestic investor is not restricted from investing in areas reserved for domestic investor and is able to invest in a company engaged in a business activity reserved for domestic investor, except areas of investment exclusively reserved for Ethiopian nationals.

• banking, insurance and microcredit and saving services;
• forwarding and shipping agency services;
• broadcasting services;
• and air transport services using aircraft with a seating capacity of up to 20 passengers.

If I’m given a license for a certain activity, is it possible to change it to another one?

Yes. An investor can submit his application for change of investment activity to the Investment Agency and such change in the investment permit can be amended accordingly.

The Investment permit is valid for one year and can be renewed, what is the procedure for renewal? Do I need to give justifications for the delay?

An investment permit is renewed annually until the investor commences the marketing of his output or services. The investor is required to submit progress reports on the implementation of the project to the Investment Agency. The investment permit will be revoked, if the investor failed to renew the permit duly without a good cause. For the procedures, one may check our investment procedures pages.

If I’m issued an Investment Permit and a Principal registration, but not business license, am I allowed to advertise and do marketing? Is it possible to employ people even before getting the business license?

Article 14 of the Investment Proclamation No. 280/2002 reads “A holder of an investment permit shall not be required to obtain a business license until completion of project implementation and the commencement of production or of rendering of service.” From the reading of this Article, it can be gathered that an investor can employe people and do other necessary preliminary activities to begin production or giving of service.

To show the minimum capital requirements, we have to open a hard currency account and transfer the amount so it can be registered by National Bank of Ethiopia. Is it a must that the transfer should be from one of the shareholders account or anyone can do it?

The information we got from the responsible people at the Ethiopian Investment Agency is that the transfer should be from one of the shareholders account or from the company account in case of a branch office opened here.

Suppose I’m given permit as engineering consultancy services. How does this differ from "Technical Services"? What is allowed and not allowed for those who are licensed as “engineering consultancy services"?

Investment permit is issued for a specific activity, according to the responsible person at the Ethiopian Investment Agency. In this case, "Technical Services" is a general term and the activity has to be mentioned specifically.