Is Ethiopia becoming global investors’ hub?

January 30th, 2009 | by addis portal |

Investors from 30 different countries obtain licenses in just 30 day. These are some of the latest investment data obtained from the Ethiopian Investment Agency, which reveals that the number of foreign investors coming to Ethiopia is increasing.

Addis Ababa

In just one month, September 2007, a total of 173 investment projects were registered, with more than half of these being foreign ventures from 30 countries. Chinese investors lead by investing in 18 projects out of the 90 registered.

They are followed by 17 Americans and 10 Britons, most of whom are of Ethiopian descent, according to the record found from the Agency. The remaining projects are joint ventures between foreigners and Ethiopians. 

The origins of the remainder of investors registered in September are: India, Canada, Germany, Australia, France, Netherlands, Italy, Sweden, Belgium, New Zealand, South Africa, Barbados, Saudi Arabia, Yemen, Lebanon, Palestine, Pakistan, Indonesia, Nigeria, Chad, Cameroon, Sudan, Trinidad, Kenya and Djibouti. 

In addition to the 173 companies registered by foreigners, almost half of the 52 share companies licensed in the same period have at least one or two foreign shareholders along with Ethiopian partners.

Real-estate, manufacturing, Hotel and construction sectors are among the major areas that attract most of the investors.

Many observers attribute the provision of incentives to investors by the government as one of the reasons behind the huge interest from abroad to invest in Ethiopia. On the other hand, some also opine that foreign investors are interested in Ethiopia because of the cheap labor and less fierce competition in larger markets which also include neighboring countries.

The incentives for investors include one hundred per cent exemption from the payment of import customs duties and other taxes levied on imports of all investment capital goods such as plant machinery, equipment and construction materials.

In addition, Ethiopian products and services destined for export are exempted from the payment of any export tax and other taxes levied on exports.
Duty Draw-Back Scheme, Voucher Scheme and Bonded Manufacturing Warehouse Scheme are also among the incentives for exporters.

Besides, any income derived from an approved new manufacturing and agro-industry investment or investment made in agriculture shall be exempted from the payment of income tax for the periods depicted in the following table, depending upon the area of investment, the volume of export, and the location in which the investment is undertaken.

According to Council of Ministers Regulation No.84/2003 issued on the basis of the Investment Proclamation No. 280/2002, the following Profit tax holidays are provided for investors.

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