Why Invest in Ethiopia

1. Political and 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.
  • Security in Ethiopia has been ranked 55th out of 148 countries by the World Economic Forum (Global Competitiveness Report, 2013-2014), well above most of its regional peers such as South Africa (109th), Kenya (131st), and Nigeria (142nd). In fact, Ethiopia ranked 36th and 38th globally in business costs of crime and violence, and organized crime.

2. Growing Economy:-

  • Ethiopia has grown at an average rate of 10% since 2010. In 2012, Ethiopia was the 12th fastest growing economy in the world, managing to grow faster than other African countries such as Rwanda, Mozambique, Zambia, and Ghana, as well as China and India (World Bank, 2013).
  • Through a co-ordinated, 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. Consumer prices have increased by only 5.7 percent in 2013 and are forecasted to grow by only 6.6 and 5.5 percent, respectively, in 2014 and 2015 (International Monetary Fund, 2014).
  • 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.

3. Excellent Climate and Fertile Soils:-

  • 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 the world’s 5th largest producer of coffee, and the 3rd largest producer of Arabica beans in the world (US Department of Agriculture). Ethiopia also became the 4th largest non-EU exporter to the EU cut-flower 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 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).
  • The country ranks 44 out of 189 economies for ease of enforcing commercial contracts on the World Bank’s Doing Business report (2014), placing Ethiopia within OECD levels.

5. Abundant and Affordable Labor:-

  • Ethiopia’s labor law, which regulates worker-employer relations, is in line with international conventions.
  • With over 43 million workers, Ethiopia has the second largest labor force in Africa (World Bank’s Doing Business Report, 2014).
  • Ethiopia’s minimum wage is among the lowest in Africa, with only 5 countries – Burundi, Uganda, Egypt, Gambia and Malawi – having lower minimum wages (International Labor Organization, 2010/11).
  • Generally, private sector monthly salaries for university graduates range from USD 150 to USD 200, while construction sector monthly wages range from USD 60 for daily laborers to USD 300 for a foreman (Source: Ethiopia’s Ministry of Urban Development and Construction).

6. Regional Hub with Access to a Wide Market:-

  • With a population of almost 85 million people, 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. As well as services to 17 domestic destinations, Ethiopian offers flights to 91 international destinations and carries two thirds of Africa’s air freight.
  • Ethiopian products have duty-free, quota-free access to the U.S. and EU markets under the African Growth and Opportunities Act (AGOA) and the Everything But Arms (EBA) initiative, respectively

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.
  • Ethio Telecom is currently engaged in a major transformation work of Next Generation Network (NGN) projects to create a world class telecom service provider.
  • National access to potable water is expected to reach 98.5% by 2015 thanks to a number of projects underway.
  • A 5,000 km-long railway network is currently under construction. While the first priority is to join Addis Ababa to Djibouti’s main port, the network is expected to reach every corner of the country.

8. Competitive Incentive Packages:-

  • Ethiopia offers a comprehensive set of incentives, particularly for priority sectors, such as:
    • 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;
    • Income tax exemption from two to seven years for manufacturing or agro processing and agricultural investments;
    • Carry forward of losses for half of the tax holiday period;
    • 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.

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