Why invest in Ethiopia
The International Monetary Fund (IMF) ranks Ethiopia as among the five fastest growing economies in the Sub-Saharan Africa in 2023. New buildings are rising in the cities daily and sectors like tourism, trade, agriculture, infrastructure, education, health, sport and many others are developing at a fast pace. Ethiopia is a country in motion and presents a positive energy for investors.
Political stability and committed government
- Stable socio-economic governance with sustained peace and security.
- High level political commitment for investment promotion and protection; investment policy making is led by the Ethiopian Investment Board chaired by the Prime Minister
- Wide-ranging incentive packages for priority sectors and export-oriented investments.
- Bold initiative in the development of state-of-the art industrial parks, electric-powered railway connecting the capital and other economic corridors to the port of Djibouti.
Economic Reform
- Full and partial privatization of State-Owned Enterprises
- Liberalization of the aviation, logistics, and telecom industries
- Introduction and implementation of Home-Grown Economic Reform
Economic Growth
- An average of about 11% annual GDP growth for the last 14 years. The fastest-growing economy in the world during the same period (World Bank Global Economic Prospects)
- 46% growth in FDI inflow-one of the most dynamic and largest FDI recipients in Africa (UNCTAD World Investment Report, 2017)
- Ethiopia is ranked 57th, better than its regional peers (Kenya, Rwanda and South Africa), for its conducive macroeconomic environment (World Economic Forum, Global Competitiveness Report, 2017-2018)
- Recognized by UNCTAD for promoting investment in the Sustainable Development Goals (SDGs)
- Recognized by the World Bank through its “Star Reformer Award” for Ethiopia’s outstanding performance on investment policy reform and promotion
- Stable and conducive macroeconomic environment.
- Stable and positive economic outlook forecasts of more than 7% projected by IMF and the African Development Bank, placing Ethiopia among the world’s growth leaders over the medium term.
Excellent climate and fertile soil
- Ethiopia is the 27th largest country in the world by land size. Given its diverse topography and geographical location, it is suitable for the production of some of the world’s most coveted food crops, such as cereals, pulses, oilseeds, a wide range of fruits and vegetables, coffee, tobacco, sugar cane, tea, and spices, among others
- The majority of land in Ethiopia has a surprisingly temperate climate by African standards due to its high elevation. Ethiopia has an elevated central plateau varying in height from 2,000 to 3,000 meters above sea level.
- Due to its fertile soils, Ethiopia is among the world’s largest producers of coffee and the 3rd largest producer of Arabica beans in the world (USDA). Ethiopia also the top non-EU exporter of cut-flower to the EU market and the 2nd largest flower exporter from Africa.
Strong guarantees and protection
- The Constitution and the investment law protect all private property.
- A foreign investor has the right to make remittances out of Ethiopia in convertible foreign currency at the prevailing rate of exchange.
- Ethiopia is a member of the Multilateral Investment Guarantee Agency (MIGA), a World Bank affiliate which issues guarantee against non-commercial risks in signatory countries, and of the World Intellectual Property Organization (WIPO).
- Ethiopia has concluded over 30 bilateral investment promotion and protection agreements, of which 11 are with individual European Union Member States. Significant other partners include China, India, South Africa, and Russia, and a number of regional economic partners (Israel, Egypt, and Sudan, among others).
Young and trainable labour force
- Ethiopia’s labour law, which regulates worker-employer relations, is in line with international conventions.
- Ethiopia is the second-most populous country on the continent with 60% of the population in the labour force
- Ethiopia has a young and trainable labour force (median age of 19) and a supportive government policy that facilitates labour sourcing for industries.
Regional hub with a wide market access
- With a population of more than 100 million people and a rapidly growing middle-class society, Ethiopia is the second-largest market in Africa and is also part of the Common Market for Eastern and Southern Africa (COMESA) comprising 19-member countries and over 400 million people.
- Addis Ababa has emerged as a regional hub and is home to key international organizations such as the African Union (AU) and the UNECA, and the UNDP.
- Addis Ababa is also the main aviation hub for Africa and the home of Ethiopian Airlines, which has won repeated recognition as the best airline in Africa.
- 109 international passenger destinations (58 in Africa, 23 in Europe and America and 28 in the Middle East and Asia), 22 domestic passenger destinations, and
- 35 cargo destinations (21 in Africa, 11 in the Gulf, Middle East, and Asia, and 3 in Europe). Carrying two-thirds of Africa’s airfreight.
- Ethiopian products have duty-free, quota-free access to a wide market, including major markets such as the USA, and the EU:
- Large domestic market of over 100 million consumers,
- COMESA (Common Market for Eastern and Southern Africa), with 19 member countries and over 400 million people
- AGOA (African Growth and Opportunities Act) and GSP (Generalized System of Preference) of the United States Government initiatives, and
- EBA (Everything but Arms) of the European Union
- AfCFTA (The African Continental Free Trade Area)
Improved economic infrastructure
- Power production has increased steadily over the last ten years, with 99% sourced from clean energy in the form of hydropower.
- Ethiopia has the second-largest hydropower potential in Africa (Deloitte, 2014)
- The Grand Ethiopian Renaissance Dam (GERD) – the largest hydroelectric power dam in Africa being built on the Nile River – is expected to generate 6,000MW of electricity. This coupled with Gilgel-Gibe III (1,870MW) and Genale-Dawa III (254MW) and other wind power projects will make Ethiopia a regional powerhouse.
- Cheapest electricity rate in Africa and the whole world.
- Expanding and improving telecommunication service and road networks connecting national and regional markets.
- Newly built Addis-Djibouti electric-powered railway -making access to port Djibouti much easier.
o As a significant portion of Ethiopia’s import/export trade passes through port Djibouti, the railway construction is a huge efficiency enhancer.
o 34 km Addis Ababa light rail is fully operational.
· Africa’s world-class and Star Alliance member, Ethiopia Airlines, network covers more than 109 international destinations in the five continents of Africa, Asia, Europe South, and North America. Additionally having 22 domestic flight destinations.
o Ethiopian Airlines flies to more than 50 destinations in Africa alone.
Competitive incentive packages
Ethiopia offers a comprehensive set of incentives, particularly for priority sectors, such as:
- Customs duty payment exemption on capital goods and construction materials, and on spare parts whose value is not greater than 15% of the imported capital goods’ total value;
- Investors have the right to ask a refund of customs duty paid on inputs (raw materials and components) when buying capital goods or construction materials from local manufacturing industries.
- Income tax exemption of up to 6 years for manufacturing and agro- processing, and up to 9 years for agricultural investment.
- Additional 2-4 years income tax exemption for exporting investors located within industrial parks and 10-15 years exemption for industrial park developers;
- Carry forward of losses for half of the tax holiday period;
- Several export incentives, including the Duty Draw-Back, Voucher, Bonded Factory, and Manufacturing Warehouse, and Export Credit Guarantee schemes.
Government commitment
- High-level political commitment for investment promotion and protection
- Investment policy-making is led by the Ethiopian Investment Board and chaired by the Prime Minister
- Wide-ranging incentive packages for priority sectors and export-oriented investments
- Bold initiative in the development of state-of-the-art industrial parks, an electric-powered railway connecting the capital and other economic corridors to the port of Djibouti
International Air Connections
Thanks to its strategic location in the crossroads between Africa, the Middle East, and Asia and to the national carrier Ethiopian Airlines (a member of Star Alliance), Addis Ababa is an air transportation hub of Africa. The Ethiopian Airlines cargo carrier is the largest cargo network operator in Africa with 65 cargo destinations. The carrier handles over 2,000 tonnes daily of which over 600 tonnes are transported in belly holds. “Through a revision of its vision 2025, Ethiopian Cargo and Logistics Services is planning to grow its cargo network to 90 destinations and operate 37 freighter aircraft by 2035.”
