- Who can import to Ethiopia and export goods out of Ethiopia?
- Prohibition and Restriction of Import-Export
- Foreign Currency in Import-Export Trade
Under the current legal system the import and export trade is regulated in accordance with several laws, which include:
|Amendment of Retention and Utilization of Export Earnings and Inward Remittance Forex Directive/70/2021
|Amendment FXD-70-2021 Retention Account Forex Directive/73/2021
|Transparency in Foreign Currency Allocation and Foreign Exchange Management Forex Directive/77/2021
|Amendment of Retention and Utilization of Earnings and Inward Remittances Forex Directive/79/2022
|Commercial Registration and Business Licensing Proclamation No. 980/2016
|The new Commercial Code of Ethiopia (this law was voted into law since 25 March 2021provides the legal base for doing business in Ethiopia)
|A Proclamation on Export Trade Duty Incentive Schemes, Proclamation No. 768/2012
|Investment Proclamation No. 1180/2020
|The Revised Regulation on the Importation of Goods on Franco-Valuta Basis Council of Ministers Regulation No. 88/2003
|Import Sur-tax Council of Ministers Regulation No. 133/2007
|Council of Ministers Investment Regulation No. 474/2020
|Council of Ministers Investment Incentives Regulation No. 517/2022
|Income Tax Proclamation No. 979/2016
|Tax Administration Proclamation No. 983/2016
|Value Added Tax Proclamation No. 285/2002
|Value Added Tax Amendment Proclamation no. 609/2008
|Value Added Tax Amendment Proclamation No. 1157/2019
|Excise Tax Proclamation No. 1186/2020
|Customs Proclamation No. 859/2014
|Customs Proclamation Amendment No. 1160/2019
The Ministry of Trade and Regional Integration (the former Ministry of Trade and Industry) is the major body of the government to regulate all import and export of goods and licensing. The other major organ is the National bank of Ethiopia (NBE) which regulates the foreign currency aspect of import-export. The responsibility of the NBE include registration of sales contract agreement; issues Export Bank Permit; issues Foreign currency Approval; and issues Bank import permit for Letter of Credit, Advance Payment, approves Purchase Order for Cash Against Document (CAD).
There are also other regulatory bodies which specifically issue import and export permit for specific goods. For example; the Ministry of Agriculture issues import permit for plants, seeds, plant products, pesticides and fertilizers, and export permit for animal feed, live animals and meat products; the Ministry of Mines and Petroleum issue permit for the exportation of mineral products; the Ethiopian Food and Drugs Authority (EFDA) (formerly Food, Medicine and Health Care Administration and Control Authority (FMHACA)) regulates the import and export of drugs, medical supplies or instruments, baby food, supplement food, and cosmetics; and the Information Network Security Agency (INSA) issue Import permit for communication and security equipments.
Here are some major points on the Regulation of Import and Export License. (See also the article Import-Export Procedures in Ethiopia)
According to Investment Proclamation No. 1180/2020 the following import-export activities are reserved for domestic investors only:
- import trade, excluding liquefied petroleum gas and bitumen;
export trade of raw coffee, Khat, oilseeds, pulses, minerals, hides and skins, products of natural forest, chicken and livestock including pack animals bought on the market;
A business person who desires to engage in import-export trade, first, has to obtain a business license and import permit (note that export permit is only required for certain goods) from the Ministry of Trade and Industry (Article 43(2) of the commercial registration and business licensing proclamation no. 980/2016) or other government agencies which can issue business license and import-export permit.
There is also a special import permit that such business person must acquire for the importation of certain goods. For instance a special permit is required for the importation of ‘genetically modified food’, infant and follow up formula or complementary food, and medicine for clinical trials or any other scientific investigation for conducting laboratory quality test for registration purpose. (See article 10(4) article 11 of Council of Ministers Regulation No. 299/2013 to provide for Food, Medicine and Health Care Administration and Control)
|Council of Ministers Regulation No. 299/2013 to provide for Food, Medicine and Health Care Administration and Control
(See also the article Regulations of Commercial Registration and Business Licensing in Ethiopia)
According to article 43(1) of the commercial registration and business licensing proclamation no. 980/2016, the Ministry of Trade and Industry (now Ministry of Trade and Regional Integration) can ban importation into or exportation from Ethiopia of certain goods and services. The prohibition made by the Ministry may be complete prohibition or temporary prohibition. The complete prohibitions are permanently applicable for specific imports or exports. However, the Ministry may issue a temporary suspension of the prohibitions where it is found necessary. For instance, teff is permanently prohibited unless for persons of Israeli origin residing in Ethiopia (but not more than 4000 tons) and commercial farmers. However, the Ministry had reportedly issued a temporary suspension of the prohibition where there is an excess of products.
On the other hand, the Ministry may issue a temporary prohibition on import and export. Most of the temporary prohibitions are issued where there is food scarcity, drought or other serious circumstances in Ethiopia.
In relation to restriction of import-export goods, the various relevant government organs, discussed in the beginning of this article, have the power to restrict the importation or exportation of certain goods. The import of certain goods into Ethiopia is restricted for safety, security, environmental, health and other reasons, i.e. they must not be imported without permission.
A business person is required to obtain a pre-import permit and export permit to import and export restricted goods, respectively. For instance the importation of medical supplies, pharmaceuticals, food supplements, and baby food are restricted, thus an importer needs to obtain a pre-import permit. Further, an importer who obtained a pre-import permit should also have an entry permit that is issued at the port of entry. Similarly a person, who wants to export coffee, is required to obtain an export permit to from the Coffee and Tea Development Center which is under the Ministry of Agriculture and Natural Resource.
Foreign Exchange Allocation and Priorities(Article 6 of Directives No. FXD/77/2021)
Sub Article 6.1 Imports of essential goods:
In the allocation of foreign currency a bank shall give priority for the categories as listed in First priority, Second priority and Third priority to the following import items and payments, among them, on first come first served basis.
- First priority:
- Pharmaceuticals - Medicine, input for manufacturing of pharmaceuticals and laboratory reagents
- Input for manufacturing of Edible Oil
- liquefied petroleum gas (LPG)
- Second Priority:
- Input for Agriculture: Fertilizer, Seed, Pesticide and Chemical
- Input for Manufacturing: Raw material and Chemical
- Third Priority:
- motor oil and lubricants;
- agricultural inputs and machineries:
- irrigation pumps,
- animal feeds,
- machineries and equipment,
- tractors, harvesting machineries and their spare parts,
- animal hybrids;
- pharmaceutical product:
- laboratory equipment
- medical equipment and appliances;
- manufacturing industries requests for procurement of machineries, equipment, spare parts, and accessories;
- import of nutritious food for babies;
- spare part for construction machineries for own use construction companies whose total values not exceeding USD 50,000;
- educational materials
- exercise book, ball pen, pencil and
- printing papers,
- profit and dividend transfer
- transfer of excess sales of foreign airlines;
- sales from share and liquidation of companies by FDI
- 6.1.1: The total foreign currency allocated for imports listed under article 6.1 above by a bank shall not be less than 50% of the total foreign currency allocated for all import of goods and services at any time. The 50% allocated under 6.1 above shall be distributed 15% for first priority, 45% for 2nd and 40% for 3rd priority.
- 6.1.2: In case the allocation to the imports listed under article 6.1 above is less that 50% of the total foreign currency aaloaction for all import of goods and services at any time,the bank is obliged to surrender the difference to the National Bank every month within the first five working days of the next month.
- 6.1.3: In case the utilization of allocated foreign currency under 6.1.2 above is less than 50% of the total foreign currency allocated for all import of goods and services at any time, the bank shall surrender the difference to the National Bank every six months ie. on June 30 and December 31 within the first five working days of the next month.
- 6.1.4: The National Bank shall credit the payment and settlement account of the bank with equivalent amount in birr at the prevailing mid exchange rate.
Sub Article 6.2: Special approval for import of spare parts
- In the case of interruption of production due to damage parts of machinery or equipment and small value critical inputs, CEO of the Bank is authorized to give special approval for import of spare parts requested by Manufacturing or Agricultural sector.
Sub Article 6.3: Special priority approval by vice governor
- The Governor or Vice Governor of the Monitory Cluster of the National Bank may give special priority approval for Financial Institutions, Federal Government, and Regional Government and City administrations requests in a case by case basis.
Sub Article 6.4: Foreign Exchange sales on demand
Items listed under this article are exempted from registration procedure required under sub-article 6.1 and shall be served on demand.
- foreign currency requests from:
- Non-Resident Foreign currency and Non-Resident Transferable birr account,
- Foreign Currency accounts of Non-resident Ethiopian and Non-Resident Ethiopian Origin,
- Retention accounts,
- forex request for all transaction set under the operation of forex Bureau Directives No. FXD/17/2001.
- invisible payments i.e.,
- consultancy, commissioning, installation, erecting and royalty fees;
- payment of services and travel payment and other invisible transaction drawn from Non-Resident Non-transferable accounts;
- area Commissions for refueling jet oil by oil companies;
- communications and other service payments ie. Telecom service charge satellite service payment postal service charges;
- aviation service payments and associated costs;
- salary, allowances and administrative expenses of Ethiopian Diplomatic missions abroad and representatives of Ethiopian companies in Djibouti and other countries;
- naval personal, Djibouti Ethiopian customs authority, licensed transit and forwarding companies and other oil companies, Ethiopian Orthodox church transfer abroad;
- travel allowances for religious institutions;
- cargo handling, fright and other associated costs like container service, storage, port dues incurred on goods handled in transit by shipping and forwarding firms licensed to handle such services;
- payments on imports and export freight and transit services;
- payment for quality claim, loss in weight, commission, superintendency or survey fee, demurrage request by exporters;
- payments authorized by the National Bank:
- external debt payment obligation ie principal interest and fees
- supplier’s credits,
- salary transfer of foreign employees.
Sub Article 6.5 List Amendment
- National Bank may amend the above lists under sub-articles 6.1 and 6.4 as required.
Sub Article 6.6 First Come First Served Basis
- Notwithstanding sub-article 6.1 of this Article, a bank shall sale foreign currency to its all other customers on the basis of first come first served basis.
Sub Article 6.7 Foreign Exchange Receipt of an Exporter
- A bank shall allocate foreign exchange receipt of an exporter in line with the "Retention and Utilization of Export Earnings and Inward Remittance" Directive
Retention and Utilization of Foreign Currency for Exporters(Directives No. FXD/70/2021, FXD/73/2021, FXD/79/2022 )
- An exporter has a right to retain their foreign exchange earnings but only through retention accounts. In plain word, an exporter can obtain the foreign currency which is paid to him by the buyer, provided that he/she has a retention account in one of the banks authorized by the NBE.
- An exporter or earner of foreign currency can keep 20% of its export earnings indefinitely in its retention account. The exporter may utilise the forex in his retention account for any import material provided he has the license to import the product.