Ethiopia attracts $843 million foreign direct investment

Ethiopia has attracted $843 million foreign direct investment (FDI) in the last five months, said Investment Commission.

The Ethiopian Investment Commission (EIC) said it has issued licenses to 94 foreign investment projects in the last five months who registered a total capital of 23.6 billion birr ($843 million at current exchange rate).
Ethiopia has attracted a total FDI of $3.75 billion, last Ethiopian fiscal calendar ended July 7, 2018.

In a related development, registering a total capital of 7.3 billion birr ($261 million), some 69 investment projects have begun operation, Mekonnen Hailu, Communications head at EIC, told the state news agency ENA.

During his address at the World Economic Forum in Davos Switzerland, Prime Minister Abiy Ahmed of Ethiopia has also promised to make Ethiopia one of the top investment destinations in the world in the coming few years by improving business climate of the country.

Of 190 countries, Ethiopia ranks 159 in World Bank’s Doing Business Index 2018. To improve this, Prime Minister Abiy has a few weeks ago set up a team that will be led by him.

Mainly because of its generous investment incentives, the big market with over 100 million people and its strategic location for other markets, many foreign investors are attracted to investing in Ethiopia.

Meanwhile many complain about shortage of hard currency, which is resulting in  long procedure to repatriate profit and ope letter of Credit to import inputs.

Some of the incentives Ethiopia provides include:
Income tax exemption period: – An investor is eligible for income tax exemption period averaging 2 – 6 years, whereas Industrial Park Enterprises and Developers are entitled to income tax exemption period averaging 8 – 10 years and 15 years respectively.

Loss carry forward: – If an investor incurs a loss during the income tax exemption period they are allowed to carry the loss forward for half of the income tax exemption period after the period expires.

Export tax exemption: With the exception of hides and skins all export products are exempted from export tax.

Exemption from customs duty: – Capital goods, construction materials, spare parts, vehicles, raw materials for export and personal effects (only for Industrial Park enterprises) can be imported free of customs duty.

Foreign currency retention: Exporters are allowed to indefinitely retain and deposit in a bank account up to 30% of their foreign exchange earnings in foreign currency. They can also make use of the remaining 70% balance within 28 days as it is.

No export price control: No export price control is imposed by the National Bank of Ethiopia.

Franco valuta: Franco valuta import of raw materials is allowed to enterprises engaged in export processing.

Export credit guarantee scheme: Exporters can benefit from the export credit guarantee scheme, which is presently in place in order to ensure an exporter receives payment for goods shipped overseas in the event the customer defaults, reducing the risk of exporters’ business and allowing it to keep its price competitive.

Streamlined and expedited procedures: Enterprises entering parks receive expedited procedures in terms of licensing, permits, registration certificates, tax identification number, customs clearance.

Recently in collaboration with the UN agency for African economic affairs, the Ethiopia Investment Agency has launched online investors’ guide that provides information on investment opportunities and procedures for investors.