Why invest in Ethiopia?



 Why invest in Ethiopia

1.      Political-social stability

  • Ethiopia is the oldest independent country in Africa, and is among the most stable countries in the region. The 2012 peaceful transition of power to a new Prime Minister has proven the stability of Ethiopia’s multi-party-political system and parliamentarian form of government.
  • After the coming into power of Dr Abiy Ethiopia undergo unprecedented radical reform
  1. Political Reform

     Democracy and Rule of Law:

  • Pardoning political detainees,
  • Allowing political groups in exile to come home,
  • Lifting the state of emergency imposed,
  • Lifted bans on websites and other media,

          Building peace in the region,

  • Successfully made peace with Eritrea,
  1.  Economic Reform
  • Partial privatization of Ethiopia Airlines, Ethio-Telecom, and Shipping and logistics sector,
  1. Structural Reform
  • Ethiopian Parliament appointed its first Female Head of state H.E President Sahele-Work, Federal Supreme Court President and the head of Ethiopia's electoral board.
  • Ministerial cabinet was reduced to 20 from 28 in an effort to create efficiency and lean government structure & The ministerial cabinet is now composed of 50% female ministers.
  • This is unthinkable in a patriarchal society such as ours. This sets the standard for future but also normalizes women as a decision maker in public life.
  • Ethiopia is most known for its social stability and least crime rate, as well as strong public institutions and reliable police service.

2.    Growing Economy

  • 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).
  • The country gets the recognition of UNCTAD for promoting investment in the Sustainable Development Goals (SDGs).
  • Similarly, the world bank recognized Ethiopia through its “Star Reformer Award” for its outstanding performance on investment policy reform and promotion.
  • Stable and conducive macroeconomic environment.
  • 46% growth in FDI inflow-one of the most dynamic and largest FDI recipients in Africa (UNCTAD World Investment Report,2017)
  • Through a coordinated, prudent fiscal policy and a tight monetary policy, combined with a slowdown in global commodity prices, the Government has brought down inflation to single digits.
  • Ethiopia is ranked 57th which, is higher than its regional peers (Kenya, Rwanda and South Africa) for its conducive macroeconomic environment (World Economic Forum, Global Competitiveness Report,2017-2018)
  • Growth forecasts of more than 7% from the International Monetary Fund and the African Development Bank place Ethiopia among the world’s growth leaders over the medium term.
  • On IMF recent visit to Ethiopia on September they published an article and it suggested that Ethiopia growth could be more than the expected one which was 7.5% for the fiscal year 2018/19 but because of the political change and economic reforms This growth is expected to be 8.5%

3.    Excellent climate and fertile soil

  • Ethiopia is the 27th largest country in the world by land size and given its diverse topography and geographical location, it is suitable for the production of some of the world’s most coveted food crops - cereals, pulses, oil seeds, a wide range of fruits and vegetables, coffee, tobacco, sugar cane, tea and spices, among others.
  • Much of Ethiopia has a surprisingly temperate climate by African standards due to its elevation. Ethiopia has an elevated central plateau varying in height from 2,000 to 3,000 meters above sea level.
  • Thanks to its fertile soils, Ethiopia is among the world’s largest producers of coffee, and the 3rd largest producer of Arabica beans in the world (US Department of Agriculture). Ethiopia also is among the top non-EU exporter of cut-flower to the EU market and the 2nd largest flower exporter from Africa.

4.    Strong guarantees and protections

  • Private property is protected by the Constitution and the investment law.
  • A foreign investor has the right to make remittances out of Ethiopia in convertible foreign currency at the prevailing rate of exchange.
  • Ethiopia is a member of the Multilateral Investment Guarantee Agency (MIGA), a World Bank affiliate which issues guarantee against non-commercial risks in signatory countries, and of the World Intellectual Property Organization (WIPO).
  • Ethiopia has concluded over 30 bilateral investment promotion and protection agreements, of which 11 are with individual European Union Member States. Significant other partners include China, India, South Africa, and Russia, and a number of regional economic partners (Israel, Egypt, and Sudan, among others).

5.    Young and trainable labor force

  • Ethiopia’s labor law, which regulates worker-employer relations, is in line with international conventions.
  • Ethiopia is the second most populous country on the continent with a working population of 60%
  • Ethiopia has a young and trainable labor force and supportive government policy that facilitates labor sourcing for industries.

6.    Regional hub with access to a wide market

  • With a population of appx. 100 million people and a rapidly growing middle-class society, Ethiopia is the second largest market in Africa, and is also part of the Common Market for Eastern and Southern Africa (COMESA) comprising 19-member countries and over 400 million people.
  • Addis Ababa has emerged as a regional hub and is home to key international organizations such as the African Union (AU) and the United Nations Economic Commission for Africa.
  • Addis Ababa is also the main air hub for Africa and the home of Ethiopian Airlines, which has won repeated recognition as the best airline in Africa. Ethiopian Airlines offers flights to 101 international passenger destinations (57 in Africa, 20 in Europe and America and 23 in the Middle East and Asia), 22 domestic passenger destinations, and 35 cargo destinations (21 in Africa, 11 in the Gulf, Middle East and Asia, and 3 in Europe). It carries two thirds of Africa’s air freight.
  • Ethiopian products have duty-free, quota-free access to wide market:
    • Large domestic market,
    • COMESA (Common Market for Eastern and Southern Africa),
      • 19 member countries,
      • Over 400 million people
    • AGOA (African Growth and Opportunities Act) and GSP (Generalized system of preference) of the United States Government initiatives, and
    • EBA (Everything but Arms) of the European Union.

7.    Improved economic infrastructure

  • Power production has increased steadily over the last ten years, with 99% sourced from clean energy in the form of hydropower. Ethiopia has the second largest hydropower potential in Africa (Deloitte, 2014), and the country’s installed electricity generating capacity is expected to reach 10,000 MW by mid-2015.The Grand Ethiopian Renaissance Dam – the largest hydroelectric power dam in Africa being built on the Nile river - is expected to generate 6,000MW electricity. This coupled with Gilgel-gibe III (1,870MW) and Genale-Dawa III (254MW) and other wind power projects will make Ethiopia a regional power house.
  • Cheapest electricity rate in Africa and the whole world.
  • Expanding and improving telecommunication service.
  • Expanding road networks connecting national and regional markets.
  • Newly built Addis-Djibouti electric-powered railway - making access to port Djibouti much easier. Other standard gauge networks are in pipeline. As a significant portion of Ethiopia’s import/export trade passes through port Djibouti, the rail way construction is a huge efficiency enhancer for producers and traders. As part of this big project, a 34 km Addis Ababa light rail is fully operational while a new 756 km Addis Ababa-Djibouti electrified railway route is well completed in 2016.
  • Africa’s world class and star alliance member Ethiopia Airlines the passenger network covers more than 90 international destinations in the five continents in Africa, Asia, Europe South and North America. As an African Airline Ethiopian Airlines flies to more than 50 destinations in Africa alone.

8.    Competitive incentive packages

·       Ethiopia offers a comprehensive set of incentives, particularly for priority sectors, such as:

o   Customs duty payment exemption on capital goods and construction materials, and on spare parts whose value is not greater than 15% of the imported capital goods’ total value;

o   Investors have the right to ask refund of customs duty paid on inputs (raw materials and components) when buying capital goods or construction materials from local manufacturing industries.

o   Income tax exemption of up to 6 years for manufacturing and agro-processing, and of up to 9 years for agricultural investment. Additional 2-4 years income tax exemption for exporting investors located within industrial parks and 10-15 years exemption for industrial park developers;

o   Carry forward of losses for half of the tax holiday period;

o   Several export incentives, including the Duty Draw-Back, Voucher, Bonded Factory and Manufacturing Warehouse, and Export Credit Guarantee schemes.


·       In addition, the government guarantees the remittance of profit, dividends, principals and interest payments on external loans, and the provision of land at competitive lease prices.

9.    Government commitment

  • High level political commitment for investment promotion and protection, investment policy making is led by the Ethiopian investment board chaired by the prime minister.
  • 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.


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