Ethiopia has taken steps to welcome foreign investments in the export, import, wholesale and retail sectors. For over four decades, foreign investors were not allowed to participating in these business sectors. However, the Ethiopian Investment Board has recently allowed foreign investors to engage in export, import, wholesale, and retail trading in Ethiopia, as long as they meet the requirements specified in Directive No. 1001/2024.

Below, we highlight some of the key requirements and considerations to keep in mind.

1. Areas opened for foreign Investment

Export: Export trade of raw coffee, khat, oilseeds, pulses, hides and skins, forest products, poultry and livestock bought on the market.

Import: All import trade except for importation of fertilizer and petroleum

Wholesale: All wholesale trade except for wholesale of fertilizers.

Retail: All retail business sectors.

2. Other Key Requirements

Prior to obtaining permit to engage in export, import, wholesale, and retail trading in Ethiopia, foreign investors will go through an evaluation process that includes an assessment of their relevant experience, capabilities, and market connections.

Export

Foreign investors wishing to engage in export business in Ethiopia must show a history of purchasing goods from Ethiopia over the previous three years that meets the prescribed minimum threshold. The minimum threshold differs based on the type of commodity they plan to export. Additionally, they must commit to exporting a specific amount of the goods set under the Directive.

For a foreign investor without adequate history of purchasing from Ethiopia, it is necessary to show a well-established market and furnish a purchase order ranging from USD 500,000 to USD 12.5 million for the export, which varies depending on the sectors.

Import

1) manufacturers of the imported product,

2) agents of the manufacturer,

3) existing manufacturers in Ethiopia exporting at least 50% of their products to overseas markets, or

4) those who commit to importing commodities worth at least USD 10 million annually are eligible to engage in import trade in Ethiopia.

Wholesale

To secure an investment permit, the foreign investor must commit to developing modern marketing infrastructure and provide streamlined logistics services to support its wholesale activities.

Retail

The foreign investor needs to operate its retail business in a space that has a minimum floor area of 2000 sq.mt. The investor must also expand its business by opening supermarkets, hypermarkets, or malls, a requirement that varies depending on the scale of their intended investment.

If a foreign investor fails to meet the commitments it has agreed upon, it may result in the non-renewal and the cancellation of its investment permits and business licenses.

Are you considering entering the Ethiopian market?

Here's how our law office can assist you with your entry into the Ethiopian market.

With a proven track record, HSP offers extensive legal and tax assistance to foreign businesses looking to enter the Ethiopian market. Our services include:

Advising on business structures, taking into consideration tax planning and Foreign Direct Investment Regulations;

Drafting the necessary documents to establish a legal entity;

Handling the entity registration process with local regulatory authorities and providing legal and tax support until the company goes live.

Drafting and advising on contracts with suppliers, distributors, contractors, and other business partners.