Starting A Business

Ethiopia is ranked 132nd out of 189 countries on doing business index in 2015. Small and Medium businesses are springing up everywhere in Addis Ababa, the capital and financial city of Ethiopia and in other regions as well. We have brought together some articles that might help potential business starters in following regulations and procedures so that they could avoid any trouble later. 2merkato.com is a business gateway to Ethiopia that has more or less all the required information on regulations and procedures one needs while starting business in Ethiopia or with Ethiopians.

You can find links to the articles below.

Business Registration and Licensing Procedures in Ethiopia

By the end of the 2015/2016 fiscal year, the House of Peoples' Representative passed many laws regarding the Ethiopian business spectrum.A wave of new proclamations, regulations and directives on taxes, business registration and licensing, etc have been passed, issued or announced. We have written in this article the procedures on the commercial registration and business licensing in Ethiopia.

  1. The Ethiopian Standard Industrial Classification (Download)
  2. Commercial Registration and Business Licensing Proclamation No. 980/2016(Download)

Many businesses have been asking 2merkato.com to post the procedures for the new licensing regulation in Ethiopia based on Proclamation No. 980/2016. We have written the highlights of the regulation here. And the procedures can be found below.

According to the information we obtained from the Ministry of Trade office, the Subcity Trade offices, one can get licensed for as many businesses as possible. However, only one major group will be there on one license. As many as 9 sub-groups can be put on one license if these categories fall under the same Major Group. Some types of subcategories require certificate of professional competence given by the concerned body of the government. The Ethiopian Standard Industrial Classification contains detail references of what type of businesses should get certificates of professional competence from where. It has been a while since the standard was given and there has been many amendments. However, the core remains the same.

  1. What is new?
  2. Major Divisions of the new licensing standard
  3. Commercial Registration Procedures
  4. Business Licensing Procedures

What is new?

These are some of the new additions/requirements

  • Bank statements/ asset evaluation are no longer required to attest the registered capital of a business.
  • Certificate of competency issued by the concerned governmental body. This used to be done for a few categories only. Now the majority is required to have this certificate.
  • A title deed  for own offices or  an authenticated contract of lease (by Document Authentication and Registration Agency) if it's leased.
  • General forms of business such as General Import, General Export are not allowed. The subcategory has to be specified as per the Ethiopian Standard Industrial Classification.

Major Divisions for the Ethiopian Business Licensing Categories

According to the Ethiopian Standard Industrial Classification (ESIC), which is developed based on the International Standard Industrial Classification (ISIC), the South African Standard Industrial Classification and Ethiopia's existing economic realities, there are ten divisions and in total there are over 1000 different sub-categories.

  1. Agriculture, Hunting, Forestry and Fishing
  2. Mining and quarrying
  3. Manufacturing
  4. Electricity, Gas and Water Supply
  5. Construction
  6. Wholesale and Retail Trade, Repair of Motor Vehicles, Motor Cycles and Personal and Household Goods; Hotels and Restaurants; Import and Export
  7. Transport, Storage and Communication
  8. Financial Inter mediation, Insurance, Real Estate and Business Services
  9. Community, Social and Personal Services
  10. Private Household Exterritorial, Non-governmental Organizations, Representatives of Foreign Governments and Other Activities not Adequately Defined

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Highlights of Proclamation 980/2016 in regards to Registration Procedures:

Commercial registration of a sole business person(Article 10)

Where the applicant is a sole business person he shall submit the following documents together with his application format:

  1.  passport size photographs of the applicant taken within six months time,
  2.  photocopies of the kebele identification card or copies of valid passport of the applicant,
  3. where the applicant is a foreign investor his investment permit,
  4. where the applicant is a foreigner considered as a domestic investor, a document issued by Ethiopian Investment Agency to testify this,
  5. a document which testifies that he has attained the age of 18,
  6. the exact address of the head office and branch offices of his business if any, and
  7. if the office of his business is his own a title deed or if it is a leased one an authenticated contract of lease and a verification issued by kebele administration as to the address of the office.

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Commercial registration of Share Company (Article 12)

1. Where the applicant is a share company; under formation, the founders or their attorney shall submit the following documents as may be appropriate, together with the application:

    1. where the application is signed by an attorney,the original copy of power of attorney given by all the founders, photocopies of kebele identification card or passport of the attorney and the manager and the passport size photographs of the manager taken within six months time,
    2. a bank statement showing that at least one fourth of the par value of the subscribed shares of the company is deposited in a blocked account,
    3. original copies of minutes of resolution of the subscribers of the company and such other documents as may be associated with the resolution,
    4. original copies of memorandum and Article of association of the company,
    5. documents stipulated under sub Article (1)(c) and (d) of Article 11 of this Proclamation, if necessary,
    6. information and documents prescribed under sub Article (6) and (7) of Article 10  of this Proclamation;
    7. documents mentioned from paragraph (a) to (e) of this sub-Article shall be submitted after authentication by appropriate bodies in Ethiopia.

2. The manger of a share company shall not be a manager in more than one any business organization at the same time.

3. The registering office shall write a letter to the bank, for a quarter of the capital of the share company under formation as mentioned in sub Article (1) (b) of this Article to be deposited in the bank in a blocked account.

4. The provisions of sub Article (3), (5) and (6) of Article 15 of this Proclamation shall apply to commercial registration of a share company.

5. The founders of a share company to be established by public subscription as provided for under Article 317 to 322 of the Commercial Code, in order to start the formation of the company, shall in advance obtain the written permission of the registering office.

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Commercial Registration of a Business Organization Other than a Share Company(Article 11)

1. Where the applicant is a business organization other than a share company, under formation; the founders or their attorney shall submit the following documents as may be appropriate, together with the application format:

    1. where the application is signed by an attorney; a power of attorney given by all of the founders, photocopies of kebele identification card or valid passport of the attorney and the manager and the passport size photographs of the manager taken within six months time,
    2. original copies of memorandum and Article of association,
    3. where there are foreign nationals as members of the business organization; documents evidencing that the foreign nationals are considered as domestic investors or their investment permits and photocopies of pages of their valid passports,
    4. where there is a foreign juridical person involved in the business organization under formation; its certificate of incorporation,originals and authenticated copies of its memorandum and Article of association or similar document, a notarized minutes of resolution passed by the authorized organ of the juridical person to join the business organization and an investment permit where the juridical person is a foreign business organization,
    5. documents prescribed under sub-Article (6) and (7) of Article 10 of this Proclamation, and
    6. documents mentioned from paragraph (a) to (d) of this sub-Article shall be submitted after authentication by appropriate bodies in Ethiopia.

2. The manager of a business organization other than a share company shall not be a manager in more than one business organization at the same time.

3. Before the registration of a business organization other than a share company in the commercial register, there shall be submitted a bank statement that the capital of the business organization to be contributed in cash has been deposited and all appropriate documents relating to contribution in kind.

4. The registering office shall write a letter to the bank for the capital to be contributed in cash of the business organization other than a share company, under formation, to be deposited in a blocked bank account.

5. After a business organization other than a share company has entered commercial register and obtained legal personality, testimonials issued by appropriate government office, which show all contributions in kind have been transferred to the newly formed business organization, shall be submitted to the registering office.

6. Where the commercial registration of the business organization is completed, the registering office shall write a letter to the bank to release the capital of the business organization kept in a blocked account.

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Commercial Registration of Branch of a Foreign Business Organization (Article 13)

Where the applicant is a branch of a foreign incorporated business organization the attorney shall submit the following documents for registration after being authenticated by appropriate bodies in Ethiopia together with the application:

  1.  notarized minutes of resolution passed by the authorized organ of the foreign business organization evidencing a decision to open a branch in Ethiopia and investment permit,
  2.  certificate of incorporation of the business organization,
  3.  original copy of the power of attorney of the permanent agent of the company in Ethiopia and photocopies of his kebele identity card or pages of valid passport,
  4. original copies of memorandum and Article of association or similar documents of the business organization, and
  5.  information and documents prescribed under sub Article (6)and (7) of Article 10 of this Proclamation.

Commercial Registration of a Federal Public Enterprise or Regional Public Enterprise (Article 14)

Where applicant is a public enterprise established by the federal government or a public enterprise established by a regional state:

  1. the law of its establishment,
  2. the letter of appointment of the manager and the passport size photographs of the manager taken with in six months time,
  3. where the application is signed by an agent, document of agency issued by head of the enterprise and copy of the agent’s kebele identity card or passport,
  4. documents prescribed under sub Article (6) and (7) of Article 10 of this Proclamation, shall be submitted together with the application for registration.

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Commercial Registration of a Commercial Representative (Article 15)

Where the applicant is a commercial representative of a foreign-based business organization or sole business person:

1. authenticated documents by appropriate bodies in Ethiopia

    1. proof of registration and juridical existence of the principal business organization in the country of its registration or in the country where the principal business person operates,
    2. where the principal is a business organization its original copies of memorandum and Article of association or similar documents;

2. a bank confirmation for having brought into the country a minimum of USD 100,000 (One Hundred Thousands United States Dollar) for office operation and salary expenditure for the budget year,
3. an authenticated proof of appointment of the representative by the principal business person as its commercial representative and photocopies of his kebele identity card or passport,
4. documents prescribed under sub Article (6) and (7) of Article 10 of this Proclamation, shall be submitted to the Ministry together with the application.

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Alteration and Amendment of Commercial Registration(Article 16)

1. Any alteration or amendment of a commercial register shall be submitted by completing the appropriate application form within two months from the date the alteration or amendment has been made.

2. For the implementation of sub Article (1) of this Article the applicant shall submit the following documents together with the application:

    1. where the alteration or amendment is to the registration of a business organization, minutes of resolution of the share holders of the business organization to make the alteration or the amendment,
    2. where the alteration or amendment is to admit a new foreign national individual, document evidencing that the individual is considered as a domestic investor or his investment permit or the permit given by the Ministry to buy the shares of an existing company and photocopies of pages of his passport, and
    3. where the new member is a juridical person its original copies of memorandum and Article of association, certificate of incorporation or similar document, a notarized minutes of resolution or letter of its decision to join the business organization as passed by its authorized organ, if it is a foreign company, an investment permit or a permit given by the Ministry to buy the shares of an existing company.

3. The registering office shall give verification, for the submission and acceptance of alteration or amendment of commercial registration and shall notify the applicant and the concerned bodies in writing by citing the details of the date of acceptance and the entry of alteration or amendment of the commercial register. Withoutthis written verification, the alteration or amendment of the registration shall not be considered to have been entered in the commercial register.
4. The registering offices shall strikeout alteration or amendment of registration that it believes is unduly altered or amended and inform details of the rejection to the applicant.

5. Where it is appropriate, criteria set in this Proclamation for commercial registration shall be applicable to alteration or amendment of commercial registration.

6. Amendments or alteration of memorandum and Article of association to be submitted pursuant to this Proclamation shall be in original copies and authenticated.

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Cancellation of Registration(Article 17)

  1. Without prejudice to the provision of Article 112, 113 and 226 of the Commercial Code, the registering office shall decide to cancel the registration upon his being aware of the fact that either the business person has ceased to operate his business or there is a lawful decision prohibiting him from carrying on his business or has violated this Proclamation or where his registration has not been renewed or the business person has submitted false information or documents for registration.
  2. The registering office shall, before making its decision pursuant to sub Article (1) of this Article, require the business person to submit his opinion, except where the business person ceased to operate his business or has requested the cancellation of his commercial registration or has failed to get his registration renewed. If, however, the business person cannot be contacted at his registered address, the registering office shall make its decision on the basis of the available information.
  3. The business person whose registration is can canceled shall get upon his request a certificate of cancellation of registration on payment of the fee prescribed by the regulation.
  4. Cancellation of the registration of business organizations shall be effective from the date of publication of a notice of cancellation in a newspaper at the expense of the applicant. Any other cancellations of commercial registration shall be effective from the date of the entry of the cancellation in the register.
  5. The provisions of Article 8 of this Proclamation shall apply to the forwarding of documents relating to the cancellation of registration.
  6. A business person who has been canceled from a commercial register, because of his violation of this Proclamation or the regulation, can be registered again a year after the cancellation of his registration, unless there is a legal or an administrative reason, which prevents him from being registered again.

Renewal of Commercial Registration(Article 18)

  1. Renewal of commercial registration shall be made every year or for the future 5 years all together, within the time after the completion of the budget year of the registration, which is set for the renewal of business license without penalty as provided for under Article 36 sub Article (2) of this Proclamation.
  2. The provision of Article 36 sub Article (13) of this Proclamation shall apply to the renewal of commercial registration of the business persons, for whom a different accounts budget year other than the one provided for in this Proclamation has been designated by the Ethiopian Revenue and Customs Authority.
  3. The commercial registration shall be canceled if its renewal has not been made pursuant to sub Article (1) and (2) of this Article.

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Issuance of Substitute Certificate of Registration(Article 19)

  1. Any person, whose certificate of registration is lost or damaged, may apply in writing to the registering office that made the earlier registration and obtain a substitute certificate of registration.
  2. A person whose registration certificate is damaged or lost, shall, request for issuance of a substitute by submitting a written application signed by him or the manager, to the registering office explaining how the registration certificate got damaged or lost.
  3. Upon receipt of the application with the explanation, the registering office shall, if it is a damaged certificate, cause its return and issue a substitute registration certificate on payment of fee as prescribed in the regulation.

Effective Date of Registration(Article 20)

Any commercial registration shall be effective from the date of the registration of the applicant in the commercial register.

Request for Copies of Entries(Article 21)

  1. Any person requesting for a copy of an entry made in a commercial register or a copy of an extract of entry or a certificate of no entry or a certificate of cancellation of registration shall submit a written request to the registering office.
  2. The registering office shall issue to the applicant the required copy or certificate upon payment of the appropriate fee prescribed in the regulation.

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Highlights of Proclamation 686/2010 in regards to Licensing
 Procedures:

Application for Business License(Article 32)

1. Any person desiring to engage in a commercial activity shall submit to the appropriate authority application for business license by completing an application form.
2. The applicant, shall together with his application pursuant to sub Article (1) of this Article, submit:

    1. a newly issued or renewed commercial registration certificate,
    2. his or his manager’s passport size photographs taken within six months time,
    3. if he is a foreign investor his investment and residence permits,
    4. if he is a foreign citizen desiring to be considered as a domestic investor, a document issued by the Ethiopian Investment Agency evidencing the same and his residence permit,
    5. where the application is submitted by an attorney, an authenticated power of attorney and photocopies of the attorney’s kebele identity card or passport,
    6. a document evidencing the capital allocated for the commercial activity, and
    7. a recommendation given by concerned government office, which testifies that the business premise in which the business is to be conducted is suitable for the intended business.

3. Any applicant requesting for the issuance of a business license, shall supply the documents prescribed under sub Article (6) and (7) of Article 10 of this proclamation.
4. Where the applicant is a foreign investor and requests for a business license desiring to buy and run an enterprise in its existing situation; shall, in addition to the documents provided for under sub Article (2) of this Article, submit to the Ministry photocopies of his passport and document evidencing the sale of the enterprise from the Privatization and Public Enterprises Supervising Agency or where the purchase is from private, an authenticated document evidencing the conclusion of the sale, as may be appropriate.
5. Where the applicant is a business organization, it shall together with the application submit the following documents to the appropriate authority:

    1. commercial registration certificate,
    2. authenticated original copies of memorandum and Article of association of the business organization,
    3. passport size photographs of the manager taken with in six months time,
    4. where the application is submitted by an attorney, an authenticated power of attorney and photocopies of kebele identification card or passport of theattorney, and
    5. documents prescribed under sub Article (2) (c), (d), (f) and (g) of this Article.

6. Where the applicant is a federal public enterprise or a regional public enterprise, it shall together with the application submit the following documents to the appropriate authority:

    1. commercial registration certificate,
    2. the law of its establishment,
    3. the appointment letter of the manager and his passport size photographs taken with in six months time,
    4. where the application is submitted by an attorney, an authenticated power of attorney and photocopies of the attorney’s kebele identification card or passport, and
    5. documents prescribed under sub Article (2)
    6. of this Article.

7. When an alteration or amendment is made toa business license, passport size photographs of the license holder or of the general manger shall be attached to the original and copy of the business license.
8. There shall be submitted a certificate of professional competence in testimony of the fulfillment of the requirements set by the relevant government office in a directive, for the business a business license has been requested, and a statement signed by the applicant. The appropriate authority shall inform the concerned government office about the implementation of the directive.
9. Without prejudice to the provision sub Article (8) of this Article government offices which issue certificates of professional competence or certificate of ownership, for commercial activities require certificate of competence, may remind the appropriate authority to demand the submission of the certificates before issuing business license.

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Issuance of Business License (Article 33)

  1. Where an application for business license is submitted to the appropriate authority pursuant to Article 32 of this Proclamation, it shall issue a business license to the applicant upon payment of the appropriate fee by ascertaining that the condition set by this Proclamation are fulfilled and that the commercial activity intended to be carried on by the applicant is not prohibited by law.
  2. Where the appropriate authority ascertains that the application for business license pursuant to Article 32 of this Proclamation is not acceptable, it shall notify the applicant in writing of the reasons for rejecting the application.
  3. Where the successors and the spouse of a sole business person who was engaged in transport business do not want to form a business organization, a business license can be issued in the name of one of the successors or the spouse in accordance with the power of attorney given to him by the other successors and/or the spouse after being registered in the commercial register pursuant to sub Article (9) of Article 6 of this Proclamation.

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Rights and Duties of a Business Person Holding a Business License (Article 34)
Any person to whom a business license has been issued have the following rights and duties?

  1. may carry on any commercial activity so long as such activity is with in the scope of the field of activity for which the license is issued, abide by the prohibitions and restrictions imposed by the provisions of sub Article (2),(3), (4), (5) ,(6) ,(7) and (8) of this Article and other laws, and depending on the type of commercial activity he is engaged in, to supply goods and services to consumers and users or to manufacture goods;
  2. shall carry on the various businesses for which business licenses have been issued in separate places or premises, where carrying on such activities at the same place or premise endangers public health and safety or property;
  3. shall not concurrently, carry on different activities where doing so entails damage to the consumers or customers; or gives rise to conflict of interests;
  4. shall display a price list for his goods and services by posting such list in a conspicuous place in his business premise or by affixing price tags on the goods;
  5. shall comply with what the nature of the business demands and render service as directed by public notice;
  6. shall display his business license in a conspicuous place within the business premise;
  7. shall not assign the business license to the benefit of any person or pledge or lease it ; and
  8. When the dissolution of a business organization is ordered by court of law, the business organization shall not use for operation the business license obtained in its own name.

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Permit for Expansion and Upgrading (Article 35)

  1. Any person desiring to produce goods or dispense service by expanding or upgrading an existing industry, or agricultural development or a service business, may apply to the appropriate authority to obtain a permit by attaching the documents specified under Article 32 of this Proclamation.
  2. After examining the documents submitted to it and ascertaining that it is satisfactory, the appropriate authority shall issue to the applicant the expansion or upgrading permit.
  3. Where the appropriate authority rejects the application submitted to it pursuant to sub Article (1) of this Article it shall notify the applicant in writing of the reasons of rejection.
  4. Any person desiring to obtain an expansion or upgrading permit shall submit together with the application, commercial registration certificate, business license previously issued to him and passport size photographs of him or the manger taken within six months time.
  5. The permit to be issued pursuant to sub Article (2) of this Article, shall serve only until the completion of the expansion or the upgrading and it shall not be used for manufacturing or production and marketing or for dispensing services.
  6. A business person who has completed the expansion or the upgrading, before starting manufacturing or production or dispensing service, may apply to the appropriate authority by attaching the necessary documents, to obtain a business license to manufacture goods or produce agricultural products or to dispense services.
  7. Where the appropriate authority ascertains that the expansion or upgrading is capable of manufacturing goods or producing agricultural products or dispensing services, shall, issue business license to the applicant upon submission of documents specified under Article 32 of this Proclamation and by the payment of the appropriate fee prescribed in the regulation.
  8. Where the appropriate authority rejects the application submitted to it pursuant to sub Article (6) and (7) of this Article, shall inform the applicant, in writing, of the reasons for the rejection of the application.

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Validity Period and Renewal of Business License (Article 36)

  1. A business license issued pursuant to Article 33 of this Proclamation shall be valid unless canceled on the grounds specified under Article 39 of this Proclamation and as long as it is renewed pursuant to sub Article (2) of this Article.
  2. Unless the business license is renewed within four months after the expiry of the budget year in which the license has been issued or renewed upon payment of the appropriate fee, the business license shall not, in anyway, be put in use.
  3. After the expiry of the time for renewal of business licenses without penalty provided for under sub Article (2) of this Article, the business licenses shall be renewed without penalty in the following months of Hidar and Tahisas.
  4. The holder of a business license who has failed to have it renewed within the time specified under sub Article (2) and (3) of this Article, shall have it renewed within the time, from Tir 1 to Sene 30 by paying in addition to the renewal fee, a penalty of Birr 2,500 (two thousand five hundred) for the month Tir and Birr 1,500 (one thousand five hundred), for the next each month of delay.
  5. A business license not renewed within the  provided for under sub Article (4) of this Article shall be canceled after the expiry of the time made available for the renewal of the business license with penalty.
  6. Where a business license is canceled because of the failure of the business person to renew his business license within the time of renewal with penalty; he can obtain the canceled business license within one year after the cancellation, only when the reason for not getting the license renewed in due time is found to be acceptable by the higher official of the appropriate authority and upon payment of the double of the penalty provided for under sub Article (4) of this Article.
  7. A businessperson who has not got permission to obtain his business license again under sub Article (6) of this Article shall obtain the same business license without penalty one year after the cancellation of the business license.
  8. When the license holder appears for the renewal of his license, shall submit:
    1. a clearance statement written to the appropriate authority at its address for the payment of income tax, other taxes, land use fee, employee’s income tax, municipality services fees and any other payment due to be paid to the government,
    2. a renewed commercial registration certificate, and
    3. the appropriate application form for the renewal of business license.
  9. Clearance statement issued pursuant to sub Article (8) (a) of this Article for the payment of taxes or other government revenues shall not be acceptable, if, it is written so as to address several bodies, does not indicate the type of business it has been issued for and does not attest the payment of the tax and other government revenues.
  10. Clearance statement issued by the tax collecting office pursuant to sub Article (8) (a) of this Article for the payment of taxes and any other government revenues, shall, lose its validity, if not used for the renewal of the business license within one month time from the date of its issuance.
  11. The appropriate authority shall renew the business license when it finds that the application is complete upon payment of the appropriate fee or when it rejects the application, it shall inform the applicant in writing the reasons of its rejection.
  12. A business person who changes his business’s address shall present clearance statement for the complete payment of government tax and any other revenues, to the appropriate authority of his new business address from the place of his former business operation.
  13. The computation of time of renewal of business licenses provided for in this Proclamation for business persons who use different accounts budget year otherwise than provide for in this Proclamation, as authorized by the Ethiopian Revenues and Customs Authority, shall commence from the beginning of the authorized accounts budget year.
  14. The requirements set in this Proclamation, to be met for the issuance of a new business licenses, shall be applicable to the renewal of business licenses.

Suspension of Business License (Article 37)
1. The appropriate authority may, until such time as the short comings indicated below are rectified, suspend a business license where the license holder:

    1. has failed to maintain the standards of health and sanitary conditions, environmental protection, safety measures and the quality of his products or services or has done any other illegal act in connection with his commercial activity or that he failed to observe the conditions under which the business license is issued, as confirmed by the concerned government institution or the appropriate authority; or
    2. has failed to supply accurately and on time the information requested by the
    3. appropriate authority pursuant to this Proclamation; or
    4. has, in any way, violated this Proclamation or the regulation.

2. Where a business license is suspended under sub Article (1) of this Article, the appropriate authority shall notify the license holder, in writing, of the reasons of suspension and the measures to be taken to rectify the shortcomings with in a fixed period of time.

3. The license holder who has received a written notification pursuant to sub Article (2) of this Article shall have the obligation to rectify the shortcomings within the fixed period of time.

4. A suspended business license shall not be renewed. When the suspension is lifted the provisions of Article 36 of this Proclamation shall apply to it.

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Cancellation of Business License (Article 39)

1. Without prejudice to sub Article (3) of this Article the appropriate authority may cancel a business license, where the holder there of:

    1. is found to have obtained or renewed his license by submitting false document or for any purpose submit a false document or false information; or
    2. is found using the license for a purpose other than that for which it was issued or for unfair trade practice; or
    3. has committed the faults specified in Article 37(1) of this Proclamation twice; or
    4. has failed to comply with the provision of Article 37(3) of this Proclamation; or
    5. has become bankrupt or ceased to operate his business; or
    6. has failed to renew his business license pursuant to Article 36 of this Proclamation; or
    7. his commercial registration has been canceled.

2. Where the appropriate authority or the concerned government institution has confirmed; that the business is dangerous to public health and safety or the national economy, a business license may be suspended and the business may be sealed until such time as the appropriate authority decides to cancel the license pursuant to sub Article (1) of this Article.
3. The appropriate authority, before deciding to cancel the license for the reasons specified in sub Article (1) of this Article shall require the license holder by letter sent to his registered address to submit his written opinion on the anticipated cancellation of the license. The license shall be canceled where the license holder has not submitted his opinion within 30 days from the day the letter was received by him or his opinion is not adequate.
4. Unless a business person who has voluntarily ceased his business; returns his business license to the appropriate authority within the time of renewal of license without penalty, he can obtain the business license again only one year after, starting the expiry date of the time of renewal of license without penalty.
5. A business person whose business license has been canceled for any reason provided for in this Proclamation; other than those provided for under sub Article (7) of Article 36 and sub Article (4) of this Article, shall obtain that same business license which has been canceled only two years after, starting from the date of cancellation.
6. A businessperson who returns his business license to the appropriate authority pursuant to sub Article (4) of this Article or who wants to obtain the same business license as new, after being canceled pursuant to sub Article (6) and (7) of Article (36) of this proclamation, shall submit a tax clearance statement for the duration he used the returned or the canceled business license.

Issuance of a Substitute Business License (Article 40)

  1. Any person who has his business license lost or damaged may obtain a substitute by applying in writing to the appropriate authority, which issued the license.
  2. When a request for a substitute business license is made, a tax clearance statement given from the tax collecting office shall be submitted.
  3. A business person whose license is damaged shall return it when he applies for a substitute.
  4. The appropriate authority to which application for a substitute business license is submitted under sub Article (1) of this Article, shall issue to the applicant a substitute upon payment of fee prescribed by the regulations and upon signing a liability undertaking for the lost business license by the applicant.

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Issuance of Business License Upon Transfer of Business (Article 41)

  1. When a business is transferred to another person, the previous license shall be returned and the person to whom it is transferred shall obtain a business license in his name.
  2. Where a business is lawfully transferred to another person it shall, in advance be published in a newspaper at the expense of the person to whom it is transferred.
  3. The appropriate authority, after verifying the transfer is being made lawfully, it shall issue a business license in the name of the person to whom the business is transferred, upon payment of the appropriate fee.
  4. When the appropriate authority ascertains the application submitted to it pursuant to sub Article (1) of this Article is not acceptable, it shall inform the applicant in writing of the reasons of the rejection of the application.
  5. There shall be submitted a tax clearance statement for the duration the former license holder used the business license.

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Business Startup in Ethiopia: Information and Frequently Asked Questions

What do you need to start a business in Ethiopia? Let's assume you have garnered enough capital to start some kind of business in Ethiopia and you do not know where to start. We believe that any potential businessperson who wants to start business in Ethiopia should be well informed of the existing regulations, procedures, incentives, potential partners. This way errors and potential losses can be minimized.

2Merkato can serve as a launch pad to start a business in Ethiopia because by attempts to answer frequently asked questions to start a business in Ethiopia.

Do I need to register and obtain license to do business in Ethiopia?

Yes. It is prohibited to engage in any commercial activity unless registered in a Commercial register; and according Proclamation No. 980/2016, no person shall engage in business activity without acquiring business license. The Proclamation further stipulates no persone is allowed to obtain any kind of business license without first being registered in the commercial register and acquiring commercial registration certificate. It is upon registration that business organizations will have legal personality.

For a detailed answer please check our business licensing and registration page.

Do I need to have a Trade Name and Trade Mark?

Not necessarily. Although a trade name is one of the entries of a principal registration as provided for under Article 105 of the Commercial Code, principal registration shall be made without waiting for the registration of a trade name under Proclamation No. 980/2016 If there is no name registered, the business is referred by name of the owner in Sole Proprietorship business form or the name of the Private Limited Company or the Share Company.

For a detailed answer please check our business licensing and registration page and Trade Mark page.

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What are the main business forms/ types in Ethiopia?

Some of the main types and more common business forms/ types in Ethiopia:

  1. A sole business person: the business is owned by one person. Some of the advantages are: it's easier to start and close.
  2. Private Limited Company: Can be formed by a minimum of 2 and a maximum of 50 persons. It is advantageous for high profit making businesses and it can be managed in a structured way, but it's difficult to close the business.
  3. Share Company: Can be formed by a minimum of 5 persons. A minimum capital of Br. 50,000 is needed to set up a Share Company. The minimum price a single share can have is Br. 10.

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

The previous investment law had a rule that 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.

However, the current investment law, Proclamation No.  Currently issuane of domestic status for foreign investors in on hold.

Is there an incentive for investors in Ethiopia?

Yes. There are two: exemption from Customs duty and exemption from income tax. For a detailed answer, please check the investment incentives page.

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As a businessperson (or entity), do I need to be registered as a taxpayer, what are the tax regulations and procedures in Ethiopia?

Yes, every business person or entity should be registered to pay tax and must obtain a taxpayer's identification number(TIN). However, each person or entity will have only one TIN. For a detailed analysis check our tax page.

Who can be my potential business partners in Ethiopia?

We have a list of more than 5000 businesses in Ethiopia assembled and sorted in categories, sub categories etc. Please check our business directory.

How to find information on tenders/bids in Ethiopia? How to participate in a tender/ bid in Ethiopia?

You can find information on tenders/ bids in Ethiopia on our tender page. The guidelines to participate in a tender/bid in Ethiopia are found here.

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Can I engage in import/ export business in Ethiopia?

Yes and no. That depends on the type of import/ export business you want to engage in and whether you're a domestic investor or a foreign one. Please check our import, export and investment pages.

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How to Set Up an Office in Ethiopia for a Small or Medium Business

This article is a general guideline on how to set up an office in Ethiopia (particularly in Addis Ababa). Regulations on Licensing/Registration/Investment permit etc are found separately on our Starting A Business section and Investment page.

Office Building:

There are numerous new buildings coming up in Addis Ababa. You can rent offices on these buildings. The buildings can be found in almost all areas and you can choose as per your need, location of your clients, etc. Villas that can be turned to offices are available as well. The rent lease has to be authenticated by the Documents Authentication and Registration Office, as is required by the Commercial Registration and Business Licensing Proclamation No. 686/2010 or 686/2002 EC. in order to aquire commercial licence.

What you have to check when renting offices on buildings or Villas

  • Is deposit required? How many months advance rent have to be paid?
  • Is regular Generator service available in case of power outage? (This is important!!)
  • Are there sufficient phone lines in the building? This is very crucial for your work.
  • Are there sufficient parking spaces?

Furnishing your office

You can buy imported or locally made furniture. Almost all the main furniture sellers will agree to deliver the material to your office. The main office furniture sellers are found on Bole Road, at Hayuhlet Area and at Piazza. Technostyle (located in Flamingo area in Bole, on Lex Plaza at Hayahulet); Waryt (located on Waryt Building on Haile Gebreselassie Avenue); 3F (in Piazza, Before Bambis on Dil Building); Deluxe Furniture (Located at Olympia and also on Bole Road some 100m East from Getu Commercial Centre) are the biggest that provide quality material; Technostyle is known for their quality yet cheap priced office furniture.

But it's good to take a tour of Bole Road, Ethio China Friendship Road, Debrezeyit Road, Hayahulet area, Urael Area and Piazza to check every possibility. You may also check our business directory.

Communication

  • Fixed Phone Lines

The best thing is to have a fixed land line. You can apply to the local telecommunications office and it takes 2-5 weeks to get the lines depending on availability, etc. You can have the phone numbers with you when you move your office provided your new office is located in the same sub city/region.

In case land lines are not available, you can always buy wireless phones that operate on CDMA 1x technology.

For more you can visit Ethio Telecom's website.

  • Mobile Phones

You can buy prepaid SIM cards almost everywhere. But when you buy credit to charge your account, the shopkeepers usually give you local receipts that may be rejected by the tax auditors. Therefore, the best thing is to apply for post paid SIM CARDS. For more you can check Ethio Telecom's website.

  • Internet

You can apply for dial up service (but you need to have a phone line), broadband, wireless CDMA (CDMA 1x and EVDO). All have their pros and cons. Dialup is very slow, broadband is fast but expensive, CDMA 1x is good and post-paid service is available for the voice-data, but for the data service no post-paid service is available; EVDO is fast but expensive and there are two types of EVDO service (limited and unlimited) and post-paid service is available for the unlimited service. For application process and rates, you may check Ethio Telecom's website. Ethio Telecom has also setup a new website for CDMA information only. This new website can serve us a good guide while choosing which CDMA service to buy.

Office Equipment

  • Computers, Laptops, Networking equipment and accessories

Computer Dealers are found in almost every corner of the city. While buying a computer, you can go for brand or assembled PC’s, brand laptops, and second hand brand PC’s. Dell, ACER and HP brands are widely available for desktop PC’s and Toshiba, Dell, HP and ACER are available for laptops. All these brands have their own authorized dealers. SNAP Computer (on Bole Road), Net Computer (on Bole Road), SysTech (at Bole Medhanialem), ALTA CompuTEC (Bole Road), Nejat (Bole Road) and ETComp (on Bole Road) are among the best known dealers in the city. You may find accessories in these shops as well. But it’s worthwhile to take a tour of the city (especially Bole Road, Bole Medhanialem area, Piazza) and compare prices. You can also check the Computer & Accessories Importers section and Computers/ Accessories Sales and Maintenance Service Providers section of our Ethiopian business directory.

  • Photocopy Machines, Fax Machines

Gellately and Hankey (located in Piazza and Bole Road), ICAS (located in Bole Road), Jupiter Trading (located in Kazancis area) and PETRAM (located on Mexico Square area) are among the biggest dealers. They have brands such as Cannon and Olivetti. You can check the Office Machines Importers section and of Office Machines Sales & Repair our Ethiopian business directory.

How to Start a PLC (Private Limited Company) in Ethiopia (particularly in Addis Ababa)

Private Limited Company is a popular incorporated business form in Ethiopia that can be established by a minimum of 2 and maximum of 50 persons. We give a brief account of what one needs to do to start a PLC in Addis Ababa. We focus on Addis Ababa, as the bulk of commercial activity in Ethiopia is done here.

Step 1: Preparing memorandum of association and articles of Association

Prepare a memorandum of association and articles of association. This can be done in Amharic or English. One can get samples from the Ministry of Trade and Industry or from the business centres located around the Documents Authentication and Registration Office.

Step 2: Checking the proposed name of the PLC

Take the draft copies of the memorandum of association and articles of association to the Ministry of Trade. They have an office on the ground floor of their building where they can check names. (Ministry of Trade's main office is located near Hilton Hotel besides Casanchis Super Market). The proposed name as shown on the documents will be checked and if it’s not taken, you will be given a letter addressed to the Documents Authentication and Registration Office. If it’s taken, you will be advised to change it.

Step 3: Process at the Documents Authentication and Registration Office

The Office is located on the second floor of Chelelek ALSAM Tower (the twin tower of the building where Ethiopian Commodity Exchange is located). It’s a one minute drive from Mexico Square on the way to Lideta.

You will submit the draft copies at office no. 201. You can get more information from there too. You will be sent to the appropriate desk and at this desk, the officer will go thorugh your drafts. The drafts will either be approved or you will be asked to correct them. Finally, if the officer is satisfied with your documents and all the shareholders are present with their ids or passports, you will be asked to sign the paper. (You have to have copies of your identity cards and passports along with the documents). Then you will be asked to pay. After payment, you have your PLC!

Cost: the total cost you have to pay at the Ministry of Trade is Br. Twenty Seven (ETB 27.00) and Br. Five hundred and fifty two (ETB 552) at the Documents Authentication and Registration Office. Of course, you may have to pay some money at the business centers and at the copy shop. That may take anything between Br. 10 to Br. 200.

Additional points:

You can mention as many types of business as possible in the documents as your intended areas of business. You may not immediately get registration and license for these businesses. You can get registration and license for the types of businesses you want to engage immediately (provided you have fulfilled the requirements). For further info on business registration and license regulation and procedures, pls check this page.

How to Start an Export Business in Ethiopia

Any domestic investor can engage in import/ export business in Ethiopia. Check our import/export page

Registration and License: A minimum capital of Br. 5,001.00 is needed to register and get business license. All exporters in Ethiopia, except those who are found in Dire Dawa, should be registered and get their license from the main office of the Ministry of Trade and Industry located near Hilton Hotel or beside Casanchis super market, located in Addis Ababa. Exporters in Dire Dawa can apply in Dire Dawa.

What documents one has to provide is mentioned on our business registration and license page

Cost:

  • To get principal registration: Br. 80

  • To get summary Registration: Br.10

  • To get new trade name: Br. 80

  • To get New Business License: Br. 80

One can register to export all types of goods allowed for export.  According to the new proclamation number 686/2010, there is no license for General Import/Export. The subcategory has to be specified for all kinds of exports on the business license as per the Ethiopian Standard Industrial Classification. However, it used to be the case that exporting the following goods only needed to be mentioned specifically in the business license.

  • Forestry Products

  • Gemstone

  • Incense and Gum

  • Gum

  • Gold

  • Coffee: special permit/approval is needed from Ethiopian Commodity Exchange: www.ecx.com.et 

  • Live Animals except calves and lambs

  • Tantalum

  • Chat (Qat)

  • Platinum

  • Veterinary Medicine: special permit/approval is needed from Ethiopian Drug Administration and Control Authority (DACA). To know the regulations, guidelines and procedures of permits issued by DACA (permits for Medical Appliances, some kind of chemicals, pharmaceuticals and veterinary medicine), please check DACA’s website: www.daca.gov.et (Phone: +251 11 5524122-23, fax: +251 11 5521392, email: This email address is being protected from spambots. You need JavaScript enabled to view it. ; located on Bole Road, adjacent to Shoa supermarket).

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