New Directive Opens Restricted Investment Areas to Foreign Investors

The Ethiopian Investment Board issued a new directive effective March 2024, titled “Directive to Regulate Foreign Investors’ Participation in Restricted Export, Import, Wholesale and Retail Trade Investments No. 1001/2024” (hereafter “the Directive”). This Directive opens certain export, import, wholesale, and retail trade sectors to foreign investors, which were previously reserved to domestic investors. However, there are specific conditions that foreign investors must meet to participate in these sectors.

Key Elements of the New Directive

Export Trade: Foreign investors can now participate in exporting a variety of Ethiopian goods, including coffee, khat, pulses, hides, skins, forest products, poultry, and livestock. Eligibility requirements to obtain the investment permit vary based on experience. Companies with a proven track record of purchasing Ethiopian goods need to have minimum purchase thresholds (e.g., $10 million USD annually for coffee). Investors with no prior purchase record can still qualify by demonstrating a secured market and a minimum purchase order value (amounts vary depending on the specific goods).

Import Trade: Foreign investors can participate in importing goods into Ethiopia, except for fertilizer and petroleum. To qualify for the investment permit, companies must This legal update provides a concise overview of key legislative changes enacted in March and April 2024. This are: A. Foreign Investors’ Participation in Wholesale and Retail Trade B. Special Economic Zone Proclamation C. Personal Data Protection Proclamation D. Significant Market Power Regulation in Ethiopian Telecom Sector E. Mobile and Fixed Termination Rates in Ethiopian Telecom Sector F. Rent Control Proclamation 2. LEGAL UPDATE 8 demonstrate relevant experience, capacity, or established market connections. Manufacturers, agents of established manufacturers, and existing Ethiopian exporters with significant export volume are automatically eligible. Other potential investors must submit a detailed business plan and commit to importing goods valued at a minimum of $10 million annually.

Wholesale Trade: Foreign investors can now engage in wholesale trade activities within Ethiopia, excluding fertilizer imports. They can sell products they import or those purchased from Ethiopian manufacturers.

Retail Trade: Foreign investors can participate in retail trade by building large-scale stores such as supermarkets (minimum 2,000 sqm), hypermarkets (minimum 5,000 sqm), or giant retail spaces (exceeding 10,000 sqm). The Government will define store types and consider granting permission to smaller single-brand stores on a case-by-case basis.

Authorities

Ethiopian Investment Commission (EIC): The primary point of contact for foreign investors, handling applications, permits, and registrations.

Ministry of Trade and Regional Integration (MoTRI): The Ministry whose mandates include the registration and licensing of business and ensuring fair competition as well as the protection of consumer rights.

Conclusion

The directive is a significant step towards attracting foreign investment and boosting Ethiopia’s trade sector. It has the potential to increase competition, improve service quality, and propel the country towards sustainable economic growth.

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