The Ethiopian Investment Board has issued a new Directive outlining the conditions under which foreign investors can engage in specific trade activities previously reserved for domestic businesses. This transparency aims to attract foreign investment while ensuring a level playing field for Ethiopian enterprises. The Directive is titled “Ethiopian Investment Board Directive to Regulate Foreign Investors’ Participation in Restricted Export, Import, Wholesale and Retail Trade Investments No. 1001/2024’’ and it has the following key features:
Export Trade
Foreign investors can generally participate in exporting raw materials like coffee, hides, and skins if they meet minimum purchase thresholds or have established markets.
The minimum purchase thresholds depend on the product:
- Raw coffee: $10 million annually for the past 3 consecutive years, with a contractual agreement to export at least $10 million within the permit year.
- Oilseeds: $5 million annually for the past 3 consecutive years, with a contractual agreement to export at least $5 million within the permit year.
- Khat and pulses: $1 million annually for the past 3 consecutive years, with a contractual agreement to export at least $1 million of each within the permit year.
- Hides and skins, forest products, and poultry: $500,000 annually for the past 3 years, with a contractual agreement to export at least $500,000 of each within the permit year.
- Live Animals: no prior experience or minimum purchase requirements are applied.
- Investors with no prior experience: can participate in the export of the above products if they demonstrate an established market and have purchase order contracts for specific minimum amounts ranging from $500,000 to $12,500,000 depending on the product.
Import Trade:
Foreign investors can participate in importing most goods except for fertilizer and petroleum. The conditions to qualify for import permit include:
- Being a manufacturer of the imported product,
- Being an agent of a manufacturer,
- Being an existing manufacturer in Ethiopia exporting at least 50% of its products overseas, or
- Not being a manufacturer or agent but committing to a detailed plan and agreement to import commodities worth at least $10 million annually.
Wholesale Trade:
Foreign investors can participate in wholesaling most goods except for imported fertilizers. Investors must get written consent to enter into an agreement with the appropriate body and commit to building modern marketing infrastructure.
Retail Trade:
Foreign investors can participate in retail trade but must meet minimum store size requirements and open multiple locations. However, there are exceptions for smaller, single-brand stores decided on a case-by-case basis. The minimum store size requirements depend on the type of retail:
- Supermarkets: minimum 2,000 sq. mt. floor area, commit to opening 5 supermarkets within 3 years, open at least 2 to get a business permit.
- Hypermarkets: minimum 5,000 sq. mt. floor area, commit to opening 2 hypermarkets within 3 years, open at least 1 to get a business permit.
- Malls: minimum 10,000 sq. mt. floor area.
Overall, this directive presents exciting new opportunities for foreign investors in Ethiopia’s trade sectors. However, it should be noted that the permits are obtained upon fulfilling the requirements under the Directive and other laws in relation to minimum capital, competence, or other standards.
This Directive shall come into force as of the date when it is posted on the web pages of the Ministry of Justice and the Commission.
Download the Directive here:
