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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