Get Investment Approval

Investors wishing to establish a new business must first apply for an investment permit at the Ethiopian Investment Commission (henceforth EIC). 

Investors wanting to buy an existing enterprise or shares require approval from the Ethiopian Investment Commission (EIC).

To be approved for an investment permit, the project must meet the following capital requirement:

  • USD 200,000 for a single investment project by a foreign investor
  • USD 150,000 if the investment is joint with a domestic investor
  • USD 100,000 if the investment is on architectural or engineering works or related technical consultancy services, technical testing and analysis or in publishing work, and is solely owned by a foreign investor. If the investment  is joint with a domestic investor in these specific sectors, the required amount is USD 50,000. 
  • There is no capital requirement for reinvestment of profit or dividend.

For the first visit to Ethiopia, a business visa can be obtained from an overseas diplomatic mission. Once an investment permit is obtained, the Department for Immigration and Nationality Affairs issues a residence permit. Foreign investors who are shareholders are then entitled to get a residence permit. For investors in industrial parks, multiple entry five year visas are provided.

Register your Business

Depending on the type of business form, investors need to take following steps to register their company after having contacted the Ethiopian Investment Commission (Information and Investment Promotion Department) for information on procedures and entitlements:

Sole Proprietorship
  1. Submit the application for a new investment permit application to the Licensing and Registration Department at EIC.
  2. Collect bank letter from the Licensing and Registration Department to open an account at National Bank of Ethiopia.
  3. Open an account in the bank and transfer/deposit money.
  4. Collect the confirmation letter from the bank.
  5. Collect the investment permit certificate from Licensing and Registration Department.

Private Limited Company (PLC)

  1. Submit a draft memorandum and article of association to the Licensing and Registration Department at EIC and check the uniqueness of the company name in the Ministry of Trade and Industry database.
  2. Collect the letter of clearance of unique company name from the Licensing and Registration Department.
  3. Edit and authenticate the memorandum and article of association at the Licensing and Registration Department.
  4. Collect the letter to the National Bank of Ethiopia from the Licensing and Registration Department to open an account at the bank.
  5. Open an account in the bank and transfer/deposit money.
  6. Collect confirmation letter from the bank, authenticated lease agreement from the Documentation and Authentication Office and TIN number from the Customs and Revenue Office.
  7. Submit the investment permit application to the Licensing and Registration Department.
  8. Collect the investment permit certificate and principal registration from the Licensing and Registration Department.
Branch of a Multinational Company
  1. Submit application, authenticated parent company documents, and particulars of the new company's general manager to the Licensing and Registration Department.
  2. Collect a letter to the National Bank of Ethiopia from Licensing and Registration Department of EIC to open an account in a bank
  3. Open an account at the bank and transfer/deposit money.
  4. Collect confirmation letter from the bank.
  5. Collect investment permit certificate from the Licensing and Registration Department.

Investment incentives

Investors may benefit from the following investment incentives:

  • Income tax exemption period: - An investor is eligible for income tax exemption period averaging 2 - 6 years, whereas Industrial Park Enterprises and Developers are entitled to income tax exemption period averaging 8 - 10 years and 15 years respectively.
  • Loss carry forward: - If an investor incurs a loss during the income tax exemption period they are allowed to carry the loss forward for half of the income tax exemption period after the period expires.
  • Export tax exemption: With the exception of hides and skins all export products are exempted from export tax.
  • Exemption from customs duty: - Capital goods, construction materials, spare parts, vehicles, raw materials for export and personal effects (only for Industrial Park enterprises) can be imported free of customs duty. 
  • Foreign currency retention: Exporters are allowed to indefinitely retain and deposit in a bank account up to 30% of their foreign exchange earnings in foreign currency. They can also make use of the remaining 70% balance within 28 days as it is.
  • No export price control: No export price control is imposed by the National Bank of Ethiopia.
  • Franco valuta:  Franco valuta import of raw materials is allowed to enterprises engaged in export processing.
  • Export credit guarantee scheme: Exporters can benefit from the export credit guarantee scheme, which is presently in place in order to ensure an exporter receives payment for goods shipped overseas in the event the customer defaults, reducing the risk of exporters’ business and allowing it to keep its price competitive.
  • Streamlined and expedited procedures: Enterprises entering parks receive expedited procedures in terms of licensing, permits, registration certificates, tax identification number, customs clearance etc.

Environment Impact Assessment

The environmental impact assessment system requires investors to conduct an initial environmental examination to determine whether the project requires a full EIA or not.

Environmental impact assessments are undertaken by the Ministry of Environment, Climate and Forest Protection. Clearance is required from ministry in order for the project to be approved.

What investors think

Investors find the processing of obtaining the business approval easy and straightforward. They are particularly pleased with the professional and responsive attitude of the Ethiopian Investment Commission (EIC). However, there is a perception that the administrative apparatus outside EIC is not business friendly. The initial administrative procedures prove lengthy with many public agencies involved. Sometimes the required public officials are not present or do not have sufficient and reliable knowledge of the rules and procedures, leading to conflicting instructions and time wasted. Frequent changes in laws and regulations compound the issue. 

Investors in industrial parks also noted the difference in treatment between the EIC and other government departments. For this reason investors in one of the industrial parks have set up an investor association to voice their concerns. EIC remained their preferred point of contact for solving individual matters.

Population and skills

Ethiopia’s population is estimated to be around 107 million, making it the second-most populous country of Africa after Nigeria.

  • More than 63% of the total population is below the age of 24. 
The student population is around half a million at over 50 universities. In the year 2016/17, the total undergraduate enrolment (government and non-government) in all programs was 788,033 while 1,300 technical and vocational education centres had an annual enrolment figure 302,000.

Find out more...

Relevant institutions Ministry of Labour and Social Affairs


Wages are set either at the company level or are based on negotiation between the employer and the employee. Wages shall be paid in cash, if mutually agreed to. Wages paid in kind may not exceed the market value and in no case may exceed 30% of the wages paid in cash.

Ethiopia does not currently have minimum wage legislation.

The prevalent average wage levels in Ethiopia are summarized in the table below.

Average wages

Unskilled labourerUSD402018per month
Semi-Skilled labourerUSD1502018per month
Skilled labourerUSD3002018per month

Non-Wage Benefits

The following, negotiable, non-wage benefits are payable to employees in addition to the leave entitlements in the table below:

    • over-time;
    • per diems, hardship allowances, transport allowance, transfer expenses, and similar allowance payable to the worker on the occasion of travel or change of his residence;
    • bonuses;
    • commission;
    • other incentives paid for additional work results;
    • service charges received from customers and others.

Leave Entitlement

Type of Leave Entitlement Comment
Annual leave 14 days Add one day of annual leave for every additional year of service
Special leave 3 days The necessary supporting evidence should be presented at the request of the employer
Sick Leave 6 months First month at full pay, next two months at half pay and next three months without pay

Social Security Contributions

Employers are required to provide pension contributions, according to the below table, for their employees excluding workers involved in cotton collection, sugar cane cutting and such other similar works regularly repeated in the course of the year. These contributions provide for the following benefits:

  • Retirement benefits
  • Invalidity benefit
  • Incapacity benefits
  • Reimbursement of contribution
The Private Organizations' Employees Social Security Agency is mandated with maintaining the registry of employees of Private Organizations while the Ministry of Revenue collects the dues along with the Income Tax obligations of the employees.

Minimum social security contributions

From Employer From Employee
Minimum Contribution (%) 11 7

Find out more...

Relevant institutions Private Organizations Employees Social Security Agency

Work Permits

Expatriates may be employed in Ethiopia with a view to developing local capacity. When calculating the number of expatriates that may be recruited, factors such as availability of local professionals, complexity of the investment and the need for high skilled professionals are taken into account.

The Ethiopian Investment Commission issues work permits to investors. A work permit is issued upon presentation of all the necessary documents and the issuance of a work permit takes about two hours.

Documents required for a work permit include:

  • Educational certificate
  • Renewed investment permit
  • Work visa
  • Five passport sized photographs
  • Completed application form

What investors think

Companies operating in Ethiopia confirm that labour costs are favourable.

However, investors also strongly encourage newcomers to familiarise themselves with and adapt their management techniques to the local culture. Cultural clashes between foreign managers and local workers are frequent, especially in the early stages of production when the two groups do not know each other very well. Investors agree that Ethiopian labourers tend to put emphasis on self-respect and appreciation of their national cultures and history. Commitment to work seems to vary and workers’ motivation may have to be fostered. Investors agree that the vast majority of labour force does not react to financial incentives. However, individual mentoring and investing in people’s food and shelter has proved effective in motivating people to improve their productivity.

The knowledge base of unskilled workers may sometimes be poor, which then complicates the early stages of training and upskilling. Vocational training still does not result in the needed skilled workers. Investors also note a high staff turnover after staff acquire new skills around 5-8% of staff per month, sometimes rising to 10%.  Skilled workers tend to be scarce, particularly outside Addis Ababa and expensive with costs on a par with middle-income countries.

Investors also sometimes complain about cumbersome and time-consuming procedures for bringing expatriate workers.

All private operators in industrial parks contract their workers through the grading centre of the industrial park and are satisfied with this approach. Investors are pleased with the technical abilities of their staff and concur that new workers can be quickly brought up to speed. Companies usually start with a relatively high number of expatriate staff but they steadily replace them with local workers by referring to in-house training. As many of the companies operating in the park are multinational, they bring their newly hired engineers and middle management staff from sites in other parts of the world (e.g. in Asia or Europe) to train them for several months. They report satisfaction with this approach of training their staff even though wage expectations may rise following these trainings that usually last between three months to one year. Soft skills, such as communication, teamwork and time-keeping also require particular attention.


The current power generation capacity is approximately 5,200 MW with an average performance of 52 percent. More power plants with an additional cumulative capacity of 6,300 MW are under construction, including the Grand Ethiopian Renaissance Dam, which is set to be the largest hydroelectric power dam in Africa, which alone will create an additional generation capacity of 6,000 MW. The Dam is expected to commence full operation by 2022 GC.

Industrial parks enjoy access to reliable electricity supply as each of them features a dedicated power station. 


Industrial low voltage three phaseUSD 0.022018per KWh
Industrial high voltage (15 KV) three phaseUSD0.022018per KWh
Commercial three phaseUSD0.032018per KWh


Ethiopia has significant water resources. Most of the river courses become full and flood their surroundings during the rainy season (June to August). Recent research suggests that the country has about 124.4 billion cubic metres of river water, 70 billion cubic metres of lake water, and 30 billion cubic metres of groundwater resources. The country has the potential to develop 3.8 million ha of irrigated land and 45,000 MW of hydro-power production.


Consumption of 300 to 500 m3 per monthUSD0.342018per month at this consumption level
Consumption of over 500 m3 per monthUSD0.422018per month at this consumption level


Ethiopia’s telecommunications services have been growing extensively in terms of area coverage and the number of telephone subscribers (currently at 74.6 million). The percentage of the rural population with access to telephone services within a 5 km radius stood at 96 percent in 2014. 

International links are maintained via satellite earth stations and fiber-optic networks providing telephone and digital data transmission.

 Ethio Telecom provides landline, mobile telephone, internet, and data communication services. 

Additionally, as part of the partial privatization initiative to further boost the country's economy through the significant engagement of the private sector, Ethio Telecom is the first major enterprise to be put on the table and the process is now in its final stages. 


4 GBUSD222018per month
30 GBUSD1082018per month

Transport infrastructure

Road network

The government has been extensively developing new road infrastructure. In 2016, Ethiopia registered 113,066 kilometres of all-weather roads, including the expressway between Addis Ababa and Adama. The country’s road network is planned to expand to 220,000 kilometres by 2020. A new expressway connecting Addis Ababa with Hawassa is currently under construction.


Ethiopia is currently expanding its railway network.

  • Addis Ababa - Djibouti railway: A 656 kilometre railway that connects the capital city Addis Ababa to the port of Djibouti was constructed and inaugurated in October 2016. The railways line is planned to provide transport services for 750,000 passengers and 7.5 million tons of cargo per annum by 2020. This railway plays a significant role in facilitating Ethiopia's international trade, reducing logistics cost and delivery time. It cuts transport time from Djibouti to Modjo (dry port city 70 kilometers away from Addis Ababa) from 84 hours to just 10 hours. Cargo trains which are operating on this rail network have a capacity to carry some 3500 to 4000 tons of freight. Virtually all industrial parks are located in relation to the railway.
  • Addis Ababa Light Rail Transit: Major locations in Addis Ababa are inter-connected by a 34 km long light-rail way network. 
  • A 391 km long rail line from Awash to Weldiya and 216 km rail line from Weldiya to Mekelle are currently under construction. These rail lines will link the central and eastern parts of the country with northern Ethiopia connecting to the Addis Ababa-Djibouti railway at Awash.


Ethiopian Airlines (Ethiopian) is the flag carrier of Ethiopia. During the past seventy-plus years, Ethiopian has become one of the continent's leading carriers, unrivaled in Africa for efficiency and operational success, turning profits for almost all the years of its existence. Operating at the forefront of technology, the airline has also become one of Ethiopia's major industries and a veritable institution in Africa. It commands a lion's share of the pan African network including the daily and double daily east-west flight across the continent. Ethiopian currently serves 100 international and 21 domestic destinations operating the newest and youngest fleet.

Other Costs

Indicative costs for a basket of goods are displayed below.

Living Costs

WaterUSD0.22018Natural water of 0.6 L
BeerUSD0.52018Locally manufactured beer of 0.3 L
Coke/PepsiUSD0.42018A bottle of 0.3 L
MilkUSD1.032018A regular milk of 1 L
EggsUSD1.72018A regular habesha egg of 12 pieces
Fitness ClubUSD602018Monthly Fee for 1 Adult in a full-fledged fitness center
Cinema USD2.852018International Release, 1 Seat
Preschool (or Kindergarten) USD195.562018Full Day, well-known private school, Monthly for 1 Child
International Primary SchoolUSD17,9002018Full Day, Yearly for 1 Child
Apartment USD526.342018(1 bedroom) in City Center, Monthly
PetrolUSD0.752018per litre

Find out more...

Relevant documents Advertising Costs for Branding

What investors think

Investors note that electricity costs are low but do not see supply as reliable and often use their own power generators. Moreover, getting production sites connected to the electricity grid may be delayed by months as companies wait for a compulsory inspection.

Getting connected to the water and sewage system is more straightforward but companies often drill their own wells to ensure supply.

In spite of a significant improvement in telecommunications and internet services, investors still believe that the internet connection is thought to be rather slow and unreliable.

Investors also think that it is still expensive to move goods around the country. The road to Djibouti can get blocked and takes a toll on trucks, which may then break down.

Customs are usually very slow and inefficient. The port of Djibouti is often congested and represents a bottleneck. Transit and clearance usually takes between three to four days but sometimes up to two weeks and on occasions even several months.

Some companies operating in industrial parks outside Addis Ababa provide their own potable water because a water treatment facility in the park premises has not yet been built. Investors in industrial parks consider electricity costs low in spite of a recent price hikes, but they keep back up generators. They appreciate the ongoing infrastructure drive.


Foreign nationals are not allowed to buy land. However, foreign investors enjoy the right to own acommodation and other immovable property needed for the investment.

Investors do not find the rules on land allocation to be very clear. Moreover, they criticise the fact that many lots that would be suitable for investments have been assigned in the past but now remain idle, limiting the land supply. On the other hand, companies that have benefitted from land set aside by the government have faced no issues and found the process of land acquisition straightforward.

Most companies operating in industrial park are not sensitive to the land cost and access even if they allege that the rental costs are relatively high. They appreciate the services provided, including reliable and affordable water and electricity.

Find out more...

Relevant documents Land Prices in Detail

Acquisition Procedures

Investors may lease land and enjoy their land use rights for a limited period of time. The lease cannot exceed 99 years but is renewable. Lease of land in Ethiopia is categorized into housing, urban and rural land lease and can be obtained through negotiation with the government or through the sub-lease of an existing lease.

Any lease holder may transfer or undertake guarantees on their lease-hold and may also use it as a capital contribution to the amount of the lease payment they have made.

Construction Permit Procedures

Construction permits are issued at district, municipality, or ministry level depending on the location of the construction.

Applications for permits must be made at the urban administration or designated organ at the location of the construction. The application should contain the following:

  • Full name and address of the applicant
  • Investment permit
  • Location of construction
  • Table showing the total area of the floors
  • Planning consent
  • Architectural, structural and electrical designs for buildings of Category “A” having concrete roofing
  • Architectural and electrical designs for buildings of Category “A” which have no concrete roofing
  • Architectural, structural, sanitary, electrical designs and soil test and structural analysis report for buildings of Category “B”
  • In addition to the plans required for buildings of Category “B”, fire safety plans and descriptions thereof shall be submitted for buildings of Category “C”
  • Electro-mechanical designs and analysis for buildings using lifts and artificial ventilation
  • Number of floors of neighbouring buildings below and above ground level and their distance from the boundary lines
  • Full name, address, signature and a copy of registration certificate of professionals who prepared plan of the building.

A plan which has been approved constitutes a construction permit. The respective constructions bureaus of the investment area are responsible for approving a plan.

Find out more...

Relevant institutions Ministry of Construction

Land Disputes

Disputes over land rights are mainly dealt with by courts. Federal and Regional land laws and court establishment laws stipulate provisions for land dispute settlement. Regular courts (Woreda/First instance, High, and Supreme) have binding power over all disputes including those regarding land. However, in some instances, administrative authorities entertain land related disputes even without having specific authority under the law.

Industrial Parks

Industrial parks are the centrepiece of the government's strategy to attract foreign direct investment.

A number of laws regulate the parks and their constituents (i.e. developers, enterprises and operators) to ensure that industrial park objectives set by the government are met and observed. Parks in Ethiopia are developed by either the government or private developers. Private developers who wish to develop their own parks have to submit detailed project proposal along with other mandatory documents to the Ethiopian Investment Commission. 

Industrial parks tend to be located along economic corridors, connected to ports by roads and railways. Their facilities are ready to accommodate tenants and equipped with all the necessary infrastructure.

The criteria for Ethiopia's industrial parks include the following:

  • Specialisation: Enhancing economy of scale and efficiency by specializing in priority sectors such as apparel and textile, leather and leather products, pharmaceuticals, and agro-processing.
  • Export oriented: Government provision of industrial park incentives and support measures targeted at increased export performance and competitiveness.
  • Skills development and competitiveness: Creating and developing a pool of trained industrial work force and enabling environment for skills attraction and retention, leading to enterprise competitiveness.
  • Vertical integration: Enhancing backward and forward linkages in the economy.
  • Sustainability: Maintaining high environmental standards through environmentally friendly technologies, zero liquid discharge systems and other socially sustainable facilities such as housing accommodation for staff.

Find out more...

Relevant institutions Industrial Parks Development Corporation

Key facilities present in Ethiopia's industrial parks

  • One stop services including processing and issuance of permits, licenses, registration certificates, agreements, tax identification numbers, customs clearance, and banking services.
  • Dedicated power sub-stations.
  • Waste treatment facilities.
  • Commercial buildings.
  • Housing facilities.
  • Health stations.
  • Fire brigade.
  • Security services .

Hawassa Industrial Park – Flagship Park

The Eco-Industrial park (ZLD) was inaugurated in July 2016:

  • Labour pool: 5 million people within 50 km radius
  • Land area: 1.4 million m2
  • 1st phase: >400,000 m2 factory shed built up area
  • Cluster: Apparel and textile
  • Facilities: Factory sheds fully leased out to leading global manufacturers in the sector
  • Operational manufacturers: Hela-Indochine Apparel, PVH-Arvind, TAL Garments, ONTEX, EPIC, Raymond, Hirdaramani, JP Textile, Chargeurs Fashion, Century Garments, Isabella Socks, Best International, Silver Spark Apparel, Arvind Lifestyle, ITL.
  • Employment: ~ 20,000 workers

Bole Lemi I Industrial Park

The Bole Lemi I Industrial Park commenced operation in 2014:

  • Labour pool: 4 million people within 25km radius
  • Land area: 3.4 million m2
  • 1st phase: 1,500,000 m2
  • Cluster: Apparel and textile, leather and leather products
  • Factory sheds fully leased out to leading global manufacturers in the sector
  • Operational manufacturers: New Wide Garment, George Shoe, Shints ETP Garment, Vestis Garment, Jay Jay Mills, C&H Garments, Ashton Apparel, KEI Industrial Engineering, Evertop Sportswear, Arvind Lifestyle.
  • Employment: ~ 14,000 workers

Mekelle Industrial Park

The Mekelle Industrial Park opened in 2017:

  • Labour pool: 1 million people in and around the city
  • Cluster: Apparel and textile, leather and leather products
  • Land area: 10 million m2
  • 1st phase: 750,000 m2 with factory shed built up area of 60,500 m2
  • Signed manufacturers: Ananta, Dewhirst Group, Pretty Group, SCM Garments, Intrade Co. and Taj Imports

Kombolcha Industrial Park

The Kombolcha Industrial Park opened in 2018:

  • Labour pool: 1 million people in and around the city
  • Cluster: Apparel and textile, leather and leather products
  • Land area: 10 million m2
  • 1st phase: 750,000 m2 with factory shed built up area of 60,500 m2
  • Operational manufacturers: Carvico, Kanoria, Trybus, Pungkook Corporation, Saytex

Adama Industrial Park

The Adama Industrial Park opened in 2018:

  • Labour pool: 500,000 people in and around the city
  • Cluster: Apparel and textile, leather and leather products
  • Land area: 10 million m2
  • 1st phase: 1.2 million m2

Dire Dawa Industrial Park

The Dire Dawa Industrial Park is under construction and has a direct rail connection to the Port of Djibouti:

  • Labor: 600,000 people in and around city
  • Cluster: Apparel and textile, leather and leather products
  • Land area: 10 million m2
  • 1st phase: 1.5 million m2

Integrated Agro Industrial Parks

The GoE is developing the 4 IAIPs to attract private sector investments into agro-industrial parks in Tigray (North), Amhara (North West), Oromia (Central) and Southern Nations, Nationalities and People (SNNP) (South) Regions, respectively, to enhance a much-desired agricultural transformation of the country, create jobs, boost exports, and reduce urban and rural poverty. The Integrated Agro-Industrial Parks are accompanied by Rural Transformation Centers (RTC) for an improved supply of raw materials to the industries.

The IAIP support project sites are located in:

Bure (in Amhara Region)

        1. Location – South west Amara

        2. RTC location- Merawi, Finote Selam, Dangila, Enjibara, Chagni, Amanuel and Motta

        3. Population - Over 2,600,000 people in 100 KM radius

        4. Specialization - Maize and sesame, soybean processing, fruits and vegetables, dairy, meat and other animal products.

        5. Land size - Phase I: 260.35 hectares

Bulbula (in Oromia Region)
        1. Location – central eastern Oromia

        2. RTC location- Shashemene, Dodola, Robe, Bekoji, Ete  Eteya, Welenchiti, Meki & Biyo Biske

        3. Population - Over 1,800,000 people in 100 KM radius

        4. Specialization – wheat, Barley, Haricot bean, fava bean, tomato, potato, fruits and vegetables, fish, poultry, dairy, honey, and meat.

        5. Land size/Phase I: 258.62 hectares

Yirgalem (in Sidama Region)
        1. Location – Sidama Region

        2. RTC location - Dilla, Yirgachefe, Bule, Daye, Aletawondo, and Hawala Tula

        3. Population - Over 3,700,000 people in 100 KM radius

        4. Specialization – Cereal, coffee, fruit and vegetable, dairy, meat, and other animal product

        5. Land size - Phase I: 176 hectares 

Baeker (in Tigray Region)
        1. Location – Western Tigray

        2. Specialization – sorghum and sesame, fruits and vegetables, honey, dairy and meat, and other animal products

        3. Population - Over 450,000 people

        4. RTC location - Maykadra, Setit-humera, Adigoshu, Adi-hirdi, Maygaba, Dansheha and Shire-Indaselassie

        5. Land size - Phase I: 258.62 hectares

What investors think

Investors do not find the rules on land allocation to be very clear. Moreover, they criticise the fact that many lots that would be suitable for investments have been assigned in the past but now remain idle, limiting the land supply. On the other hand, companies that have benefited from land set aside by the government have faced no issues and found the process of land acquisition straightforward.

Most companies operating in industrial parks are not sensitive to the land cost and access even if they allege that the rental costs are relatively high. They appreciate the services provided, including reliable and affordable water and electricity.

Taxation system in Ethiopia

Tax payers are classified into the following three categories:

  • Category A: companies incorporated in Ethiopia or abroad (operating in Ethiopia) and business enterprises having an annual turnover of 1,000,000 Birr or more (approximately 36,000 USD).
  • Category B: companies with an annual turnover between 500,000 and 1,000,000 Birr.
  • Category C: companies with a projected annual turnover of up to 500,000 Birr.

Tax returns must be filed annually as follows:

  • Category A: within four months of the end of the taxpayers’ tax year.
  • Category B: within two months of the end of the taxpayers’ tax year.
  • Category C: shall file a tax declaration within the period specified in Article 82(4) of the income tax proclamation

Business income tax

All companies are required to pay 30% tax on their annual profit (net of all deductibles). However, businesses other than companies are subject to progressive tax rates.

The following expenses shall be deducted from gross income in computing taxable income:

  • The direct cost of producing the income, such as the direct cost of manufacturing, purchasing, importation, selling and such other similar costs;
  • General and administrative expenses connected with the business activity;
  • Premiums payable on insurance directly connected with the business activity;
  • Expenses incurred in connection with the promotion of the business inside and outside the country, subject to the limits set by the directive issued by the Minister of Revenue;
  • Commissions paid for services rendered to the business;
  • Sums paid as salary, wages or other emoluments to the children of the proprietor or member of the partnership shall only be allowed as deduction if such employees have the qualifications required by the post.

Taxable business income rates by income category for businesses other than companies

Income category (Birr) Tax rate (%)
0 - 7200 0
7201 -19800 10
19801 -38400 15
38401 -63000 20
63001 -93600 25
39601 -130800 30
Over 130800 35

Employment income tax

Employment income can come in the form of salaries, wages, allowances, bonuses, commission, gratuities, or other remuneration received by an employee. Employment income tax on an employee is imposed monthly.

Employment income tax

Income category (Birr) Tax rate (%)
0 - 600 0
601 - 1650 10
1651 -3200 15
3201 -5250 20
5251 -7800 25
7801- 10900 30
Over 10900 35

Value Added Tax

VAT is paid at a rate of 15 percent of the value of every taxable transaction by a registered person and all imports of goods and services other than those exempted. 

Registration is compulsory where the annual turnover is expected to be 1,000,000 Ethiopian Birr (approximately 36,000 USD) or more.

If at least 25 percent of the value of a registered person's taxable transactions for an accounting period is taxed at a zero rate, the Authority shall refund the amount of VAT applied as a credit in excess of the amount of VAT charged for the accounting period within a period of two months after the registered person files an application for refund, accompanied by documentary proof of payment of the excess amounts.


Category Tax rate (%)
Normal rate 25

Excise tax

Excise tax is levied on selected items when produced locally or imported. 

Find out more...

Relevant documents Excise tax rates by type of goods
Relevant institutions Ministry of Revenue and Ethiopian Customs Commission

Withholding tax

Withholding tax is imposed on imported goods on the sum of cost, insurance and freight).

Withholding tax

Category Tax rate (%)
Normal rate 3
For business entities, non-governmental organizations, private not-for-profit institutes and government agencies 2

Turnover tax

Turnover tax is collected from non-VAT registered taxpayers. Filing of tax returns and payment can be done either at the end of each Ethiopian calendar month or at the end of every quarter of the tax year (that is every three months starting from 8th of July (11 month in Ethiopian Calendar).

Customs duties

All goods imported to Ethiopia are subjected to customs duties and taxes, unless exempted.

An additional surtax is charged on all imports.

In addition, imports may be subject to VAT, excise tax and withholding tax (see above).

Find out more...

Relevant documents Ethiopia's Custom Guide Customs Tariffs Customs Procedures

Double taxation agreements

Ethiopia has concluded double taxation avoidance agreements with the following countries: Cyprus, Egypt, India, Ireland, Kenya, Malta, Netherlands, Poland, Portugal, Saudi Arabia, Seychelles, Singapore, Slovakia, Sudan, Switzerland, Uganda, United Arab Emirates, United Kingdom and Qatar.

What investors think

While investors are pleased with the 10 years tax holiday incentive (and most say that it is one aspect that attracted them to Ethiopia), investors are not always pleased with the operation of tax authorities. They bemoan a lack of transparency of calculating the tax assessment base and frequent changes in regulations. Insufficient internal communications at the tax office also means that companies have to keep starting over with the same process as assigned staff might change. Companies have also been asked to pay taxes that were settled years earlier. Investors state that tax controls are infrequent and that errors found by tax collectors during these sporadic visits may have significant consequences for the management. 

Issues of transparency and reliability are also reported in relation to the customs office, including with regards to treatment of incentives in industrial parks.

Finally, investors find that the voucher system where producer companies are allowed duty free raw materials lacks full transparency and expose them to penalties.

Legal framework

The Federal Democratic Republic of Ethiopia follows the civil law legal system. The Constitution is the supreme law. Next in hierarchy are the substantive and procedural laws codified in codes, proclamations, regulations and directives. There are proclamations addressing various issues that are passed down by Parliament, followed by regulations that are enacted by the Council of Ministers and implementing directives passed by Ministries or Agencies. All proclamations and regulations are published in the official gazette, Federal Negarit Gazette.

Did you know?

Ethiopia has received the following recognitions:

  • ‘2017 United Nations Award’ for “Outstanding performance in targeted promotion, facilitation and execution of sustainable investment projects”
  • 2017 Global ‘Star Reformer Award’ to the Government of Ethiopia for its effective foreign direct investment (FDI) related reforms and the resulting success.   
  • 2018 "Best Investment Promotion Agency in East Africa" at the Annual Investment Forum held in UAE.
  • Ranked 80th out of 190 economies for ease of enforcing commercial contracts, World Bank's Doing Business Report, 2017 
  • Top 10 Most Attractive Investment Destination in Africa, Africa investment Index, 2018
  • Top East African investment Destination by the Rand Merchant bank(RMB), 2018


Investments may not be expropriated or nationalised neither directly nor indirectly except for the public interest and only in conformity with the requirements of the law. This is a primary investment guarantee and protection provided in the Constitution and specific investment laws as well as the investment treaties that Ethiopia is party to.

Dispute settlement

The Constitution as well as the investment law guarantee the right of a person to lodge complaints with regards to the treatment of their investments. 

The Bilateral Investment Treaties (BITs) to which Ethiopia is party also provide for specific dispute settlement mechanisms.

Repatriation of Funds

The Ethiopian Investment Law provides that all foreign investors shall have the right to the remittance of its profits, dividends, principal, interest payments and compensation paid, out of Ethiopia in a convertible foreign currency. This right is subject to meeting certain requirements set out by the National Bank of Ethiopia.

Any foreign investor shall have the right, in respect of his approved investment, to make the following remittances out of Ethiopia in convertible foreign currency at the prevailing rate of exchange on the date of remittance:

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Relevant documents

Intellectual Property

Ethiopia has put in place a system for the protection of intellectual property which include trademarks, certification and collective marks. There are established legal and institutional regimes safeguarding intellectual property rights. Accordingly, the country's national and international commitments are as follows.

Convention Establishing the World Intellectual Property Organization (1967)

Link to WIPO website

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Relevant documents WIPO Convention

Nairobi Treaty on the Protection of the Olympic Symbol (1981)

Link to WIPO website

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Relevant documents WIPO Nairobi Treaty

Competition Law

Ethiopia has established a competition law to protect consumers from anti-competitive acts of traders or firms. The legal framework on competition prohibits abuse of market dominance, anti-competitive agreements, concerted practices and decisions, protects against unfair competition and provides consumer protection. 

The implementing organ is the Trade Competition and Consumer Protection Authority.

What investors think

Investors feel that their property rights are generally protected and do not fear expropriation. However, investors also remain wary of political unrest, which may affect their business operations.

Foreign exchange shortages have also been identified as a major challenge.

In terms of competition, there is also a sense that some state-owned companies can operate with an in-built advantage.

Economy and production

With more than 112 million people (2019), Ethiopia is the second most populous nation in Africa after Nigeria, and the fastest growing economy in the region. Ethiopia aims to reach lower-middle-income status by 2025. Ethiopia’s economy experienced strong, broad-based growth averaging 9.8% a year from 2008/09 to 2018/19, Ethiopia’s real gross domestic product (GDP) growth rebounded to 9% in 2018/19. Industry, mainly construction, and services accounted for most of the growth. Agriculture and manufacturing made lower contribution to growth.

Ethiopia’s strategy for growth, industrialization and international trade integration is reflected in the Government’s Growth and Transformation Plan (GTP) that was launched in 2009/10 in two phases covering the period of 2010-2015 and the later covering 2016-2020. With the Country’s homegrown economic reform and 10 years development plan covering the period 2020-2030, Ethiopia is set to continue its ambitious development agenda based on its agriculture-based, manufacturing-driven, and export-led growth strategy. The main principles of this strategy are to build to the largest possible extent on linkages between manufacturing industries and agriculture, to focus on the development of the most labor-intensive sectors to generate employment, and to concentrate government support on a selected number of strategic sectors.

Economic composition

The Home-Grown Economic Reform envisages boosting the private sector’s contribution to the overall economy by opening up major public enterprises (Ethiopian Airlines, Ethio telecom, Ethiopian Electric Power Corporation, and Ethiopian Shipping & Logistics Services Enterprises) to private and foreign investment.

Ethiopia’s economy is pre-dominantly based on agriculture. However, the government is working to diversify into light manufacturing such as agro-processing, leather and leather products, textile and textile products and import substituting sectors (chemicals, basic iron, steel and pharmaceuticals).

Exports: Ethiopia exported US$3.2 billion worth of goods in 2017Ethiopia’s export trade is largely dominated by agricultural commodities such as coffee, tea, spices, vegetables, cut flowers as well as gems, precious metals, hides, leather and footwear.

Imports: Ethiopia bought US$14.7 billion worth of imported products in 2017. Ethiopia imports manufactured industrial and consumer goods. Its major import products are machinery, vehicles, electronic equipment, mineral fuels, iron and steel, and pharmaceuticals.

Market access

Ethiopia is a member of a number of bilateral, multilateral, and international free trade and preferential duty-free agreements.

With a total population of over 750 million people, the African market represents an important area of potential for investors in Ethiopia. Ethiopia is a member of COMESA with preferential market access to a regional market of 400 million people. Ethiopia also entertains duty-free, quota-free access to the USA and EU markets through AGOA and EBA, respectively. Additionally, duty-free, quota-free access to Japan, Canada, China, Turkey, Australia, and New Zealand covering substantially all export goods from Ethiopia. Preferential market access to India.

The African Continental Free Trade Agreement (AfCFTA) has recently been launched including all fifty-four African countries with a population of more than one billion people and a combined gross domestic product (GDP) of more than US $3.4 trillion.  According to the documents prepared to establish the free trade area, the major aim of AfCFTA is to create a single continental market for goods and services, which will ensure free movement of business persons and investments, as well as create an avenue for the establishment of the continental and the African Customs Union. Once finalized, It is a market access mechanism that is expected to deliver several benefits to the African Continent. AfCFTA will enhance Intra-African trade through trade liberalization.

Under European Union's Everything But Arms Initiative (EBA), least developed countries (LDCs) enjoy duty-free access to the EU market for all products except arms and ammunition. Sugar and other processed foods are permitted.

Developing countries benefit from preferential duty-free access to the United States for up to 5,000 products, under its Generalized system of preferences (GSP). Eligible include: most manufactured items; many types of chemicals, minerals and building stone; jewelry; many types of carpets; and certain agricultural and fishery products. Among the products that are not eligible are: most textiles and apparel; watches; and most footwear, handbags, and luggage products.

Under the African Growth and Opportunity Act (AGOA) Sub-Saharan African countries benefit from duty-free access to the United States for an additional range of 1,800 products that are excluded from the Generalized system of preferences. These include most textiles and apparel; watches; and most footwear, handbags, and luggage products. With regards to apparels, the textiles and yarns must in general originate from Sub-Saharan African countries or the United States.

COMESA forms a major market place in Africa bringing together as it does 19 member states covering a total population of 444 million. A Free Trade Area (FTA) was created in 2000 and now encompasses 15 of the 19 member states (all but Democratic Republic of the Congo, Eritrea, Ethiopia and Seychelles). A customs union is planned in the close future with the eventual elimination of quantitative and non-tariff barriers for goods originating from within the region. Common external tariffs are also foreseen. Given the technical and legal challenges posed by a number of countries being both members of COMESA and the EAC single market, it is likely that the conditions of the COMESA union will be harmonized with that of EAC.

Its member countries are: Burundi, Comoros, Democratic Republic of the Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, Zimbabwe.

The East African Community (EAC) comprises Burundi, Kenya, Rwanda, Tanzania and Uganda. Its membership means being part of a single market with a population of 138 million and a GDP of $82.1 billion.

As a member of the EAC single market, all goods manufactured in one EAC country and sold in another are treated as if they were manufactured locally, by virtue of there being no internal tariffs between partner countries. Non-tariff barriers to trade are also being removed. The same countries also levy a common external tariff for goods entering the EAC, with the aim of promoting manufacturing and the processing of raw materials. Under this scheme, raw materials are imported duty free, intermediate goods are charged 10 percent and finished goods 25 percent.

Future steps being considered include a monetary union and a political federation. Expansion is also being considered. In 2011 South Sudan, with its petroleum industry, applied to join, at the invitation of Kenya and Rwanda. DRC, with its vast mineral reserves has observer status.

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Relevant documents EAC map (UN cartography)


The share of manufacturing in the country stands at about 6% of GDP and employs approximately 0.5% of the population. However, Ethiopia possesses huge investment potential in the sector especially in light manufacturing and import substituting sectors. Besides, the sector is regarded by the government as the engine of accelerated and sustained economic growth.

Relative strengths for Ethiopia include:

  • Industrial parks ready for ’plug and play’.
  • Attractive investment incentives.
  • 100 plus million people and growing annually at 2.9%; GDP of US$ 80 billion.
  • Preferential access to US markets through AGOA and the Generalized System of Preferences (GSP) of the United States.
  • Preferential access to the European markets through the Everything But Arms (EBA) initiative.
  • Close proximity to the Middle East and Southern Asia.
  • Cheap electricity.

Textile and apparel

This is a priority sector, which has seen growth of more than 50 percent over the past six years mainly due to expansion propelled by foreign direct investment. The country’s comparative cost advantage in the sector is supported by investor friendly policies, industrial parks dedicated to the sector, attractive investment incentives, quota and duty-free access to a number of markets such as USA and Europe and affordable labour.

The sector has been able to garner many internationally known brands and companies such as H&M, PVH, Kanoria, DBL from Bangladesh, Ayka Addis (the Ethiopian subsidiary of the Turkish textile giant Ayka Textiles) and others.

The government is also looking to increase domestic cotton production in order to supply yarn for the sector. It has identified 3 million hectares of land suitable for cotton production and there would be opportunities in cotton production, spinning and weaving.

JP Textile

JP Textile was among the first firms to move into the Hawassa industrial park. The Chinese textile manufacturer started its production in July 2017 and currently sells its fabric within the park to other companies, including as PVH, Arvin, Century, Everest and PAL.

So far, JP Textile has made investments exceeding 30 million USD. Encouraged by its experience in the park and business results, the company is gearing up to carry out its future investment plans totalling 70 million USD by 2026. Having already secured the necessary lot, JP Textile wants to set up new dye production and associated printing production lines and expand into garment.

They have 570 local employees and 62 expatriate workers working for JP textile in the Hawassa Industrial Park. Like other manufacturers in the area, the management of JP Textile is takes measures to gradually bring the number of expats down.

JP Textile currently imports all chemical products as well as yarn from abroad. The yarn supplier, Wuxi No.1 is set to open a spinning factory in the city of Dire Dawa. JP Textile looks forward to the establishment of the new production site in the East of Ethiopia, expecting a positive effect on its supply operations.

Leather and Leather products

Ethiopia has the largest population of cattle in Africa and the tenth-largest in the world: 54 million cattle, 25.5 million sheep, 24 million goats, seven million donkeys, two million horses and one million camels. This results in an annual production of 2.7 million hides, 8.1 million sheepskins and 7.5 million goatskins.

Ethiopian leather products are exported to the UK, Italy, US, Canada, China, Japan, the Far East and the Middle East. Earnings from the sector amounted to US$ 132 million in 2013, having grown from US$ 76 million in 2008. 
There is also strong domestic demand and opportunity for import substitution. Ethiopia is still importing large quantities of shoes, leather and synthetic leather products from across the world, spending millions of hard currencies.

Big multinational companies in the sector

  • In 2011, Chinese footwear manufacturer Huajian Group established a factory at Bole Lemi industrial park located on the outskirts of Addis. It is now developing its own industrial park on 138 ha land at a cost of US$ 2.2 billion.
  • UK’s Pittards has installed a factory to produce high-quality leather items for export.
  • A Taiwanese company named George Shoe established a factory with an initial investment cost of about 150 million USD. It has a daily production capacity of 16,000 Shoes.
  • US shoe company Brown is now exporting shoes to China from the country under its own trademark.


The annual pharmaceutical market in Ethiopia is estimated to be worth about US$ 500 million, and it is growing at 25 percent per year. More than 85 percent of the country’s demand for pharmaceutical products is met by imported drugs. In July 2015 Ethiopia became is the first country in Africa to establish a pharmaceutical strategy, one of the key priority sectors of the government. 

The government has allocated industrial park space for pharmaceutical production just outside Addis Ababa and has put in place a procurement policy with advance payment of 30 percent of sales and 25 percent price protection when competing with foreign suppliers. There is also full exemption from payments of custom duties and other taxes levied on imports such as raw materials, capital goods and construction materials.

The government is also committed to the development of a pharmaceutical value chain and has more then ten pharmacy colleges.

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Relevant documents National Pharmaceutical Industry Strategy


The government has keen to add value to the country’s agriculture-oriented economy through the development of the agro-processing sector.

To this end, it has been developing agro-industrial parks equipped with specialized infrastructure consists of cold storage units, quarantine facilities, quality control labs, quality certification centers, raw material storage, and central processing centers.

There is strong demand for consumer goods in the form of processed food items and this can provide an import substitution opportunity.

The GoE is developing 4 Integrated Agro-Industrial Parks to attract private sector investments into agro-industrial parks in Tigray (North), Amhara (North West), Oromia (Central) and Sidama (South) Regions, respectively, to enhance a much-desired agricultural transformation of the country, create jobs, boost exports, and reduce urban and rural poverty. 


Ethiopia’s economy is dominated by subsistence agriculture. The sector employs more than 80 percent of the population and accounts for around 46 percent of GDP. Ethiopia has generally good agronomic conditions for the cultivation of a wide variety of food crops, industrial crops, cash crops, beverage crops and oilseeds. Opportunities exist in the following areas.

Cereal crops: Wheat, barley, corn, rice and teff

  • Up to 10.65 million hectares of land in Ethiopia is under cereal cultivation, producing an average annual crop yield of about 18 million tons. Cereals production accounts for 80 percent of total cultivated land and employs 60 percent of rural labour.
  • Corn is Ethiopia’s largest cereal crop, accounting for 22 percent of total land area covered by cereals and 30 percent of the total cereal crop.
  • Wheat is the second most significant cereal in the country. Average annual production is 3.2 million tons.

Pulses: Soya beans, haricot beans, chickpeas, beans and lentils

  • Pulses occupy about 13 percent of cultivated land and account for approximately 10 percent of agricultural value addition.
  • They contribute significantly to Ethiopia’s export earnings, after coffee and sesame.

Horticulture and floriculture

  • Ethiopia’s cut flower business is the second largest on the continent after Kenya. There are about 120 high-tech flower growers on about 1,700 ha of land and generating US$ 265 million in revenues (2014) from just US$ 28.5 million in 2005.
  • The climate is favourable. South of Addis Ababa, rising about 2,800 feet above sea level, it is ideal for floriculture. The country has 12 river basins, 18 natural lakes and a potential of 3.7 million hectares of irrigable land.
  • The country has regular and direct air connections to markets in Europe, Africa and the Middle East.

Oilseeds: Sesame, Niger seeds, canola, linseed, groundnuts and sunflower

  • Oilseed is the second most important export commodity after coffee. It is currently cultivated on about 860,000 ha of land by about four million smallholder farmers who produce about 86 percent of the annual yield.
  • The main crops are sesame seed, Niger seed and linseed. Thirty-three per cent of oilseed production is sesame and 13 percent is linseed. Ethiopia is the third largest exporter of sesame after India and Sudan.
  • All the seeds have two parts to them – the oil, which is extracted by pressing the seeds, and the seed cake, which is used for animal feeds.
  • Most of Ethiopia’s oilseeds are sold raw and unprocessed. About 850 small-scale and micro enterprises account for 95% of the manufacturing base. Capacity utilization is seriously constrained and equipment generally old and dilapidated.


Despite Ethiopia's many attractions, both natural and human made, and ten UNESCO World Heritage sites, the sector only contributes 4.1 percent to the country’s GDP, and 3.6 percent to total employment. Work on infrastructure enhancement is underway in a bid to increase the investment attractiveness of the sector.

Over 800 thousand tourists visited Ethiopia in 2016, bringing over 5.6 billion US dollars to the country.

Key benefits include:

  • Moderate climate.
  • Unique historical and religious sites.
  • Beautiful ecology boasting rich fauna and flora with many endemic species.
  • A national airline with connections to more than 100 international destinations.

What investors think

The investment community in Ethiopia is enthusiastic about the country’s investment opportunities. In particular, they have highlighted manufacturing, agriculture, packaging, logistics, consumer goods, pharmaceuticals, health services (for both people and livestock), infrastructure and IT as sectors with particular promising growth prospects. Existing textile companies are planning to expand their operations and encourage more investors to invest in this quickly growing sector. Some of them plan to develop complementary business to reach vertical integration.

Local culture and arts also represent valuable intangible assets. 

Investors have called for a clear legal framework for PPPs to encourage investment in new infrastructure projects.

Why invest in the country?

Ethiopia has become a preferred destination for foreign direct investment and emerging hub for manufacturing in Africa due to its:

  • Sustained socio-economic governance and high-level political commitment to investment promotion and protection under the leadership of the Ethiopian Investment Board chaired by the Prime Minister.
  • Conducive macroeconomic environment: annual GDP averaging 11% over the last 14 years.
  • Population size over 100 million with a labour force counting 54 million people. 
  • Globally competitive labour costs.
  • Duty-free, quota-free access to Australia, Canada, China, EU, USA, Japan, Turkey through GSP, AGOA and EBA as well as membership of COMESA.

  • Wide-ranging incentive packages for priority sectors and export-oriented investments
  • Four operational and five upcoming government industrial parks; eight private industrial parks in the pipeline.
  • Newly built Addis-Djibouti electric-powered railway and  road networks connecting national and regional markets.
  • Africa’s world-class Ethiopian Airlines flying  to  more than  100  international  passenger  and  36  dedicated cargo  destinations in addition to 20  domestic destinations.
  • Significant investment potential in renewable energy including hydro, wind and geothermal. The Grand  Ethiopian  Renaissance  Dam, the  largest hydroelectric power dam  in  Africa, is expected to generate 6,000MW electricity upon completion.

Country data

Quick facts about Ethiopia

Official name Federal Democratic Republic of Ethiopia
Political system Federal State with a multi-party system
Capital city Addis Ababa, seat of the African Union (AU) and United Nations Economic Commission for Africa (UNECA)
Location Horn of Africa, at the crossroads between Africa, the Middle East and Asia
Area 1.1 million square kilometers
Population 2nd most populous country in Africa with a population size of over 105 million
Language Working Federal language - Amharic, English is widely spoken
Exports Leading exports: coffee, oilseeds, gold, pulses, horticulture, live animals, growing manufacturing export (textile and apparel, leather and leather products etc.)
Climate Temperate in the highlands: 20°C - 30°C, low in the lowlands: up to 45°C Rainfall ranges from 200 mm to 2000 mm and highly suitable for production.
GDP per capita 842 USD
Currency Ethiopian Birr(ETB)
Time Zone GMT+3
Country Code +251
Annual GDP about 80billion USD

Country map

last update on: 4/3/2024