A GLANCE AT ETHIOPIA
Ethiopia is located in the he Horn of Africa. It is bordered by Eritrea to the north, Djibouti and Somalia to the east, Sudan and South Sudan to the west, and Kenya to the south. It is a landlocked country.
Population 112.08 million people
Total area of 1,100,000 square kilometres (420,000 sq mi)
GDP 84.36 billion US dollars as of 2018
Currency Ethiopian Birr
Language Amharic and English
WHY INVEST IN ETHIOPIA
Ethiopia is now ranking as the fastest growing economy for investments in Africa .The Ethiopian government is setting up policies and incentive to attract investors. These include tax holidays, fair profit repatriation policies etc.
Capital requirement at least 200,000UDS
Obtaining a work permit in Ethiopia is relatively easy, as compare to many other services provided by the government. The lead time to get a work permit at the Ministry of Labor and Social Affairs is not more than two days.
However, this is only possible provided that all the requirements provided by the Ministry are fully complied with.
Highly Competitive Fiscal Incentives Scheme.
Company / factory registration
All foreign companies intending to invest in Ethiopia are required by law to get registered in accordance with the commercial code of Ethiopia.The Ethiopian Investment Commission, representing the Ethiopian Ministry of Trade and Industry, carries out such company registration.
Licences and Registration Process
Tax policies in Ethiopia
Customs Import Duty
One hundred 100% exemption from the payment of import customs duties and other taxes levied on imports is granted to an investor to import all investment capital goods such as plant machinery and equipment, construction materials as well as spare parts worth up to 15% of the value of the imported investment of capital goods provided that goods are not produced locally in comparable quantity, quality and price.
Income Tax Holidays
Any income derived from an approved new manufacturing shall be exempted from the payment of income tax. The period of exemption from profit tax begins from the date of the commencement of production or provision of services as the case may be.
The principal taxes currently in place are the Profit Tax; Turn Over Tax/Value-Added Tax (VAT), Excise Tax, Customs Duty and Income Tax from Employment.
The principal taxes currently in place are the Profit Tax; Turn Over Tax/Value-Added Tax (VAT), Excise Tax, Customs Duty and Income Tax from Employment. The corporate income tax (tax on profit) in Ethiopia is 30% percent.
Principal Taxes Tax rate
Corporate income tax 30%
Turnover Tax (TOT) 2% and 10%
Excise tax 10% up to 100%
Customs duties 0% up to 35%
Income tax from Employment 0% up to 35%
Export tax Nil
With holding taxes 2 %
Value added tax 15%
Dividend tax 10%
The reason for firms setting up in Ethiopia are clear: A package of incentives (including duty free imports of capital equipment, tax exemptions of up to seven years) combined with cheap electricity at US 0.04c kW/h for commercial use .
Basic (Electricity, Heating, Cooling, Water, Garbage) for 915 sq ft Apartment 65.71 $ .
Internet (60 Mbps or More, Unlimited Data, Cable/ADSL) per month 576.25 $.
Telecommunication / call fees
1 min. of Prepaid Mobile Tariff Local (No Discounts or Plans) 0.03 $.
Labour efficiency is about 80% in Ethiopia with the minimum wage of 30USD.
The average wages is 70 USD.
Average monthly salary is between 200$-400$.
Abundant and trainable labor force.
Ethiopia has near universal access to primary education & provides increasingly more opportunities to higher learning. There were only 2 public universities 15 years ago; today there are 31.
This makes it easy for investors to find skilled labor thus cutting on the costs of training.
Ethiopia has a higher rank than comparative African countries in the World Bank’s ease of doing business report for 2014.A high ease of doing business ranking indicates the regulatory environment is more conducive to the starting and operation of a local firm.
Hawassa IP phase I
Location: Located approximately 275 kms south of Addis Ababa.
Cluster: Specialized in textile and garment.
Fully occupied by international and domestic manufacturers.
Land Area: Total land area of (phase I & II) phase I 140 ha, and phase II 160) 300 hectare for the first and Second phase.
Shed rent: The shed rental rate starts with 2 USD per sqm per month for the first four years, 2.5 USD/M2/per month for next three years, 2.75 USD/M2/per month form the 8th to the 10th year and 3 USD/M2/per month for the next five years.
Companies: PVH, JP textile and Arvind are some of the companies in Hawassa Industrial Park.
Eco-industrial park with zero liquid discharge (ZLD) facility.
Vertical integration, Environmental and social sustainability are some distinct characteristics of the Hawassa IP.
Location: The Park is located 100 KM from the Capital Addis Ababa which is Proximity to the port of Djibouti: 678 km
Cluster: Textile & Apparel and Machinery and equipment
Total area: The total area of land designated for the park is more than 2000 hectare and only 345.5 hectare is to develop in the first phase by both IPDC and private investors.
Only a limited number of sheds with 3000available
Shed Rent: The shed rental rate starts with 2.75 USD per sqm per month for the first four years, 3 USD/M2/per month for next three years, 3.5 USD/M2/per month form the 8th to the 10th year and 4 USD/M2/per month for the next five years.
Companies: Sunshine Ethiopia Wool textile, Antex Textile PLC and Kingdom Linen Ethiopia PLC are some of the companies in the Mekelle IP.
The park is found along the railway line which connects Addis Ababa to Djibouti Port and the express high way.
Rights of Investors
Guarantee against expropriation or nationalization (The Constitution &Investment Law provide guarantee for investors.)
Ethiopia is signatory of Multilateral Investment Guarantee Agency & has concluded Bilateral Investment Promotion & Protection Treaties with 30 countries.
Privilege to full repatriation of profits, dividends, principal and interest payments on external loan, etc. out of Ethiopia in convertible currency.
The right to employ expatriate managers and experts.
Double taxation avoidance treaties with 18 countries.