Market Opportunities Return to top Ethiopia is endowed with abundant agricultural resources and has diverse ecological zones. In 2009, the GOE shifted its agricultural policy focus towards encouraging private investment (both domestic and foreign) in larger-scale commercial farms (defined as farms of 5,000 hectares or more).
The Ministry of Agriculture (MoA) created a new Agricultural Investment Support Directorate and charged the new office with negotiating long-term leases on over seven million acres of land for these commercial farms.
The new Directorate’s goal is to boost productivity, employment, technology transfer, and foreign exchange reserves by offering incentives to private investors. GOE also seeks to attract investors through incentives for priority export sectors – textiles/garments, leather, horticulture/floriculture and agro-processing. Many Ethiopian goods are eligible for duty-free access to the U.S. market under the African Growth and Opportunity Act (AGOA).
The GOE has also in recent years sought to attract foreign direct investment in the local manufacture of goods as a means of import substitution and eventual reduction of its trade deficit. Leading non-agricultural sectors for U.S. trade and investment include: renewable energy, information technology and communications (ICT), construction, tourism and aviation. Main U.S. exports to Ethiopia include: aircraft, trucks/vehicles, vehicle and machinery car parts, medical equipment, and pharmaceuticals.
The GOE has developed a list of approximately 200 eServices or electronic services needed to be developed in the next several years. Nearly all tenders issued by the GOE’s Privatization and Public Enterprises Supervising Agency (PPESA) are open to foreign participation. Most of the 280 public enterprises sold since 1994 have been small enterprises in the trade and service sectors. There are several examples of big privatized enterprises such as four breweries which were acquired by foreign enterprises including Heineken (Holland) and Diageo (UK). Fifty-two public enterprises remain under PPESA control.
Market Entry Strategy Return to top Getting a firsthand look at the Ethiopian market, conducting extensive due diligence, and developing personal relationships are important first steps. U.S. firms should consider appointing experienced local agents to represent their products and services in Ethiopia. Ethiopian Diaspora living in the United States often serves as resources in establishing U.S.-Ethiopian partnerships. Hiring a local lawyer to review documents and contracts is recommended for any investor.
The GOE requires that all imports be channeled through Ethiopian nationals registered as official import or distribution agents with the Ministry of Trade (MOT). A significant portion of Ethiopia’s imports are solicited through government tenders. The tender announcements are made public to all interested potential bidders, regardless of the nationality of the supplier or origin of the
products/services. Tender procedures are not fully transparent or adhered to in many cases.
Selling U.S. Products and Services Using an Agent or Distributor Establishing an Office Franchising Direct Marketing Joint Ventures/Licensing Selling to the Government Distribution and Sales Channels Selling Factors/Techniques Electronic Commerce Trade Promotion and Advertising Pricing Sales Service/Customer Support Protecting Your Intellectual Property Due Diligence Local Professional Services Web Resources
Using an Agent or Distributor
To conduct business effectively and participate in local tenders, it is strongly advised that U.S. firms appoint local agents to represent their products and services in Ethiopia. U.S. firms could begin by consulting with local chambers of commerce and the U.S. Embassy’s Economic/Commercial Section for initial points of contact.
Establishing an Office
The Ethiopian Investment Agency (EIA) should be one of the first stops for an investor wishing to apply for a business license and receive information on any pertinent incentives. In addition, all importers and exporters who establish a local office must be registered with the Ministry of Trade to seek project approval and the Ethiopian Revenue and Customs Authority (ERCA) to obtain a tax identification number.
A U.S. firm wishing to establish a branch office in Ethiopia must submit the following documents for registration:
A notarized copy of the registration of a parent company in the U.S.. A copy of a U.S. Memorandum and Articles of Association. An authenticated decision of the parent company’s board of directors or a similarly authorized body for the establishment of a branch in Ethiopia.
The decision should
indicate the types of activities of the branch, the individuals appointed by the parent company to act on its behalf, and the capital allocated for its operation. An authenticated power of attorney issued by an authorized organ of a company for the permanent representative in Ethiopia. A letter of financial reference from the company’s bank. A notice published in a local newspaper announcing the establishment of a branch company in Ethiopia.
Please refer to the World Bank’s “Doing Business in Ethiopia” report link for more information: