Why invest in Ethiopia

As one of the fastest growing economies in the world, Ethiopia's economy has achieved sustained and broad-based growth. Why invest in Ethiopia, says the country's government Investment Commission (EIC), which provides specialized services to companies looking to invest in Ethiopia, as well as investors based in the country looking to expand their operations.

Ethiopian Investment Commission

For nearly 30 years, the Ethiopian Investment Commission (EIC), an autonomous government agency mandated to promote and regulate investment, has served more than 5,000 foreign direct investments in the country.

Since its inception in 1994, the EIC has been active, focused and specialized in promoting Ethiopia and its strategic investment opportunities in Ethiopia. Thus, it quickly responded to the needs of both new and existing investors. Working under the leadership of the Ethiopia Investment Council (chaired by the Prime Minister of Ethiopia), the EIC is at the forefront of creating an enabling investment environment for foreign direct investment

Why Ethiopia

We are a growing and attractive investment destination for investors looking for market, efficiency and resources who want to start or expand their operations in Africa.

Dynamic policy

One of the pillars of our remarkable economic growth is a stable and favorable macroeconomic environment. As a result, we are among the top five host countries for foreign direct investment in Africa, attracting $4.1 billion in investment in 2021.

In 2020, we carried out historic reform of the investment climate in the form of a new investment declaration. Previous legislation restricting investment access has been repealed and all sectors of the economy (with the exception of some that are fully/partially reserved for domestic investors) are open to foreign investment. We have also introduced several reforms to make it easier to invest in Ethiopia, including introducing multi-year investment visas, improving investment protection, expanding our one-stop service, improving investment protection, expediting investor complaint resolution, and more.

Our investment reforms have been recognized as world best practices, and in 2021 Ethiopia received the highest “gold” rating. award in the global competition of the World Association of Investment Promotion Agencies and the World Bank "Strengthening IPA Advocacy Services."

Sustainable economy

With a GDP growth rate of 6.3% in the 2020-21 financial year, we are the fastest growing economy in Africa. Over the past 15 years, our economy has been one of the fastest growing in the world with an average annual growth rate of 10%. Our growth is evident in various sectors of the country, including agriculture, manufacturing, mining, tourism and other services.

We have an ambitious plan to become a middle-income country by 2025, and the government (led by Prime Minister Abiy Ahmed) has been implementing its economic reform program since 2019, backed by a three-year $3 billion funding plan approved International Monetary Fund.

Enabling infrastructure

Driven by our desire to create excellent investment-friendly infrastructure, we have invested 10% of our GDP in infrastructure development over the past decade — this is the highest percentage in Africa.

We built Africa's largest hydroelectric dam — The Grand Ethiopian Renaissance Dam (GERD), capable of generating 6,450 MW of electricity, significantly improves energy supply to local industries and opens up opportunities for energy exports. We now offer electricity at one of the lowest utility rates in the world: US$0.3-0.4/kWh (compared to US$0.9/kWh in China).

To meet the growing demand for transportation and facilitate import-export trade, we built the Addis Ababa-Djibouti railway, which is 780 km long, capable of transporting 24.9 million tons of cargo per year. Since its launch, the Addis-Djibouti Railway has significantly reduced freight transport times, reducing delivery times from three days to just 10 hours.

We have built over 145,000 km of roads and are currently building another 50,000 km of roads.

For the purpose of economic agglomeration, we have built 13 industrial parks, equipped with the necessary infrastructure and services, which serve 189 companies. Our fleets offer plug-and-play capabilities, allowing investors to get up and running in record time.

Connected market

Ethiopia, with a population of 120 million and a fast-growing middle class, is Africa's second largest consumer market. We are also strategically positioned to serve the African continent as part of the Common Market for Eastern and Southern Africa (COMESA), which has 21 member countries and over 583 million consumers. In addition, our central location on the world map, proximity to markets in the Middle East, Europe, USA and Asia makes us an ideal location for trading in the global economy.

We are connected to major regional and global markets through our flagship carrier, Ethiopian Airlines, the largest on the continent by number of passengers carried and fourth in the world by number of countries served. Ethiopia currently serves 127 international passenger and 44 cargo destinations. Bole International Airport in the capital Addis Ababa handles 12 million passengers annually and is one of Africa's busiest and fastest-growing airports. More than 3.5 billion of the world's population live within an 8-hour flight from Addis Ababa.

Resource-rich country

Our virtually untapped, diverse and extensive mineral resources offer enormous potential for exploration and development. These include tantalum, potash, precious stones, gold, iron ore, various industrial, energy and construction minerals and much more.

According to the Extractive Industries Transparency Initiative (EITI), Ethiopia boasts approximately 200 tons of gold, as well as another 360 million tons of coal and 69 million tons of iron. Thus, there is every reason to be optimistic about the country’s mineral and raw materials future.

The number of investors in the mining sector has increased significantly over the past couple of years, and there are now 24 mining companies operating in Ethiopia. Exports from the mining sector account for 14% of total exports and create 54,000 jobs.

Competitive workforce

Since the beginning of the new millennium, our population has doubled and reached 120 million people. This has enabled us to become the second largest workforce in Africa, with over 60 million active workers. Our employees are young, fast-learning and productive. It grows by two million every year, becoming the engine of our rapidly growing economy. To build our human capital, we are investing heavily in expanding access to high-quality technical and vocational education.

Our relatively low wage rates and large industrial workforce offer investors significant labor cost advantages. Our investor-friendly labor regime features one of the lowest labor tax contributions in the region (12.4% of profits in 2019).

Attractive incentives

The Ethiopian government offers attractive fiscal and non-fiscal incentives to investors:

• Up to 15 years tax holiday for developers of industrial parks
• Up to 10 years tax holiday for enterprises organizing production on the territory of industrial parks
• Exemption from duties and other taxes on the import of machinery, equipment, construction materials, spare parts, raw materials and vehicles.
• Provision for carry forward of losses
• Duty-free benefits for exporters
• Customs simplification through customs export factory and similar schemes
• Guarantee against expropriation
• Guarantee of funds repatriation
• Relaxed land regime for industrial parks — free lease for 60-80 years for intellectual property developers
• Expedited procedure for obtaining a visa to ensure entry, work permit and certificate of residence
• Multiple entry visa for shareholders and general managers
• Promoting market linkages
• Comprehensive EIC services, including licensing, registration and follow-up services.

While in Ethiopia, investors can benefit from attractive bilateral trade agreements, including duty-free and quota-free market access to the European Union through Everything But Arms. (EBA), duty-free and quota-free access to China, Japan, Canada, Turkey, Australia and New Zealand, covering almost all exports from Ethiopia, and preferential access to the Indian market.