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Investments permitted for foreign Investors in Ethiopia

Posted on by FALO Office

Sectors of Investments permitted for foreign Investors in Ethiopia

This article serves as an update to our previous blog post titled “Areas of Investment Restricted for Foreign Investors in Ethiopia” (posted in 2015). The focus of this article is to address the list of the Investments permitted for foreign Investors, those restricted to foreign investors and those reserved for joint investments with the government or domestic investors. According to Article 6(1) of the new Investment Proclamation No. 1180/2020, any investor may engage in any area of investment except where it is contrary to law, morality, public health, or security. However, certain areas are reserved for joint investment with the government, for domestic investors, and for joint investment with domestic investors. In other words, foreign investors are not allowed to engage in areas of investment exclusively reserved for domestic investors as listed below. Notably, under the new Investment Proclamation and regulation, the Investment Board is granted the authority to revise the lists of investments reserved for joint investment with the government, for domestic investors, and for joint investment with domestic investors under special circumstances.

Areas Reserved for Joint-Venture Investment with the Government

  • Manufacturing of weapons, ammunition and explosives used as weapons or make weapon,
  • Import and export of electronical energy,
  • International air transport services,
  • Bus rapid transit: and
  • Postal services excluding courier services

Areas Exclusively Reserved for Domestic Investors

  • Subject to applicable law, banking, insurance, and microfinance business excluding capital goods finance business,
  • Transmission and distribution of electrical energy through integrated national grid system.
  • Primary and middle level health services,
  • wholesale trade, petroleum, petroleum products, wholesale of own products produced in Ethiopia, Excluding wholesales of electronic commerce,
  • Retail trade, excluding retail of electronic commerce as provided under appropriate law of own products produced in Ethiopia,
  • Import trade excluding liquefied petroleum gas and bitumen,
  • Export trade of raw coffee, khat, oil seeds, pulses, minerals, hides and skins, products of natural forest, chicken, and livestock including pack animals bought on the market,
  • Construction and drilling services below Grade1,
  • Hotel, lodge, resort, motel, guesthouse, and pension services excluding those that are star designated,
  • Restaurant, tearoom, coffee shops, bars, nightclubs, and catering services excluding star-designated national cuisine restaurant service,
  • Travel agency, travel ticket sales and trade auxiliary services,
  • Tour operation,
  • Operating lease of equipment, machineries and vehicles excluding industry- specific heavy equipment, machineries, and specialized vehicles,
  • Transport services, excluding the following areas.
    1. Railway transport,
    2. Cable-car transport,
    3. Cold-chain transport,
    4. Freight transport having a capacity of more than 25 tones, and
    5. Transport services reserved for joint investment with the Government or domestic investors,
  • Making indigenous traditional medicines,
  • Producing bakery products and pastries for domestic market,
  • Grinding mills,
  • Barbershop and beauty salon services, smithery, and tailoring except by garment factories,
  • Maintenance and repair services including aircraft maintenance repair and overhaul (MRO), but excluding repair and maintenance of heavy industry machineries and medical equipment,
  • Aircraft ground handling and other related services,
  • Saw milling, timber manufacturing, and assembling of semi-finished wood products,
  • Media services,
  • Customs clearance service,
  • Brick and block manufacturing,
  • Quarrying,
  • Lottery and sports betting,
  • Laundry services excluding those provided on industrial scale,
  • Translation secretarial services,
  • Security services,
  • Brokerage services,
  • Attorney and legal consultancy services and
  • Private employment agency service, excluding such services for the employment of seafarers and other similar professionals that require high expertise and international experience and network,

Areas Exclusively Reserved for Joint Investment with Domestic Investors

  • Freight forwarding and shipping agency services,
  • Domestic air transport services,
  • Cross-country public transport services using buses with a seating capacity of more than 45 passengers,
  • Urban mass transport services with large carrying capacity,
  • Advertisement and promotion services,
  • Audiovisual services motion picture and video recording production and distribution and
  • Accounting and Auditing services,

If you have any question or comment don’t hesitate to contact us.

FALO Office