Investments Permitted for Foreign Investors in Ethiopia
Recently the sectors of Investments Permitted for Foreign Investors in Ethiopia is expanding very much. Ethiopia has made significant strides to attract foreign investment by offering various incentives and establishing a conducive legal framework. The country’s investment policies are governed by the Investment Proclamation No. 1180/2020 and other relevant regulations. This article explores the sectors open to foreign investors.
1. Agriculture
Investments Permitted: Foreign investors are permitted to engage in the production and processing of the following:
- Horticulture: This includes the cultivation of flowers, vegetables, and fruits.
- Sugarcane and sugar beet farming: For sugar production and related by-products.
- Commercial farming: This involves large-scale farming operations for crops such as coffee, tea, and cereals.
2. Manufacturing
Investments Permitted: Foreign investors can participate in various manufacturing sectors, including but not limited to:
- Textiles and garments: Production of fabrics, clothing, and apparel.
- Leather and leather products: Including footwear and other leather goods.
- Pharmaceuticals and medical equipment: Manufacturing of drugs, medical devices, and supplies.
- Food and beverage: Processing and packaging of food items, beverages, and bottled water.
3. Energy
Investments Permitted: Foreign investors can invest in the development and operation of:
- Renewable energy: Including hydro, solar, wind, and geothermal power generation.
- Non-renewable energy: Oil and gas exploration and production.
4. Tourism and Hospitality
Investments Permitted: Foreign investors are allowed to invest in:
- Hotel and resort development: Construction and management of hotels and resorts.
- Tourism services: Including tour operation, travel agency services, and eco-tourism projects.
5. Information and Communication Technology (ICT)
Investments Permitted: Foreign investors can participate in:
- Telecommunication services: Including internet services, data centers, and related ICT infrastructure.
- Software development: Development and sale of software products and services.
6. Real Estate and Construction
Investments Permitted: Foreign investors are allowed to engage in:
- Real estate development: Including residential, commercial, and industrial properties.
- Construction services: Including infrastructure projects like roads, bridges, and airports.
7. Education and Health Services
Investments Permitted: Foreign investors can invest in:
- Private educational institutions: Including schools, colleges, and universities.
- Healthcare facilities: Including hospitals, clinics, and diagnostic centers.
8. Retail Sector
Foreign investors have limited opportunities in the retail sector.
- Franchising: Foreign investors can engage in franchise businesses in Ethiopia.
- Export-oriented businesses: Foreign investors can establish and operate export trading houses that sell locally produced goods abroad.
Retail and wholesale trading were reserved for domestic investors. However, recently there has been a development of opening this sector for foreign investment. Thus, Foreign investors can now engage in retail trade investments reserved for domestic investors. Specific conditions regarding floor area and establishment numbers are outlined for supermarkets, hypermarkets, and malls.
9. Banking Sector
The banking sector in Ethiopia was largely closed to foreign investors. However, recently there has been a development of opening this sector for foreign investment. Thus, Ethiopia is on the brink of a significant transformation in its banking sector as the National Bank of Ethiopia (NBE) rolls out a series of pivotal reforms. These changes are designed to pave the way for foreign banks to enter the Ethiopian market, thereby enhancing competitiveness and stability within the sector.
10. Trading
The trading sector also had restrictions similar to the retail sector. The following wre the trading activities open for foreign investment.
- Export trade: Foreign investors are encouraged to engage in export trade, particularly for value-added products.
- Import of specialized goods: Foreign investors may import specialized equipment and machinery related to their investment projects.
Generally, trading activities were reserved for domestic investors, but recently there has been a development of opening this sector for foreign investment. Thus, Foreign investors are permitted to engage in the export trade of various commodities, including raw coffee, khat, oilseeds, pulses, hides and skins, forest products, poultry, and livestock sourced from the local market. However, their eligibility for investment and business permits is contingent upon possessing relevant experience, capacity, or market linkage in the sector, as determined by the appropriate regulatory body.
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