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Lemma Degefa

Lemma Degefa

CEO

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General questions

What are the areas that are open for foreign investment?

As the current investment law employs a positive listing approach, only sectors that are open for foreign investors are listed under the investment regulation. A sector that is not mentioned under the investment regulation is not open for foreign investment. However, the Government of Ethiopia is working on a new investment law, which is expected to come into effect by the end of by soon as it is promulgated. This new law will shift the approach to a negative listing in which a few sectors that are not allowed for foreign investors will be specifically mentioned and anything outside this list will be open for foreign investment.

Is the financial sector open for foreign investment?

In both the current as well as the draft investment laws, the financial sector is reserved for domestic
investors. There is a positive development made recently in which Ethiopian Diasporas (foreign
nationals of Ethiopian origin), can invest in the financial sector. With that exception, the sector is
expected to remain closed for foreign investors.

What are the forms of business foreigners may establish?

Foreign investors can structure their investment in any of the following structures:

  • Sole proprietorship;
  • Branch office;
  • Subsidiary in the form of private limited company (PLC); and
  • Subsidiary in the form of share company

Even though the following are not considered as investments, foreign entities could establish their
presence in Ethiopia as a project office (for international companies winning a bid in Ethiopia for a
specific project) or commercial representative office (for international companies wanting to promote
their products in Ethiopia)

What is the minimum capital requirement for foreign investors?

The minimum capital requirement that foreign investors are required to meet while investing in Ethiopia is as follows:

  • $200K – if the foreign investor is investing independently or with other foreign investors;
  • $150K – if the foreign investor is investing jointly with a domestic investor;
  • $100K – if the foreign investor is investing independently or with other foreign investors in areas of architectural engineering works or related consultancy services;
  • $50K – if the foreign investor is investing jointly with a domestic investor in areas of
    architectural engineering works or related consultancy services;
  • No minimum capital requirement – if the foreign investor already has a venture in Ethiopia and it is re-investing the profits or dividends generated from that venture.

Under the new investment laws, the minimum capital requirement is expected to remain the same with the exceptions that it will not be applicable for institutional investors investing in small start-ups, innovators and SMEs owned by Ethiopians and having development potential.

Does the Ethiopian Investment Commission (EIC) provide aftercare support for investors?

Currently, EIC only provides support for foreign investors during the pre-implementation and
implementation phase of the investment project through the One Stop Shop Service (OSSS). Once an investor gets a business license, which is an indication that the company has started operation, the custody will be transferred to the Ministry of Trade and Industry. Under the draft investment law, the OSSS is expected to continue to be provided under the EIC.

How to calculate my package delivery price?

Currently, EIC only provides support for foreign investors during the pre-implementation and
implementation phase of the investment project through the One Stop Shop Service (OSSS). Once an investor gets a business license, which is an indication that the company has started operation, the custody will be transferred to the Ministry of Trade and Industry. Under the draft investment law, the OSSS is expected to continue to be provided under the EIC.