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Presentation on Ethiopian Economic & Investment Potential By the Ethiopian Embassy Moscow at Chamber of Commerce & Industry of RF May 21, 2018 Basic Facts of Ethiopia Located at the Eastern part of Africa, Area - 1.104 mln.
By the Ethiopian Embassy – Moscow at Chamber of Commerce & Industry of RF May 21, 2018
➢Located at the Eastern part
➢Area - 1.104 mln. Km2, 10th largest in Africa, ➢Population - over 100 Million, 2nd largest in Africa, ➢Capital city – Addis Ababa with above 3 mln. Population
➢ The economy is basically agricultural, ➢ Agriculture employs over 70% of the population, ➢ Agriculture contributes 90% of the export, ➢ The strategy now is to transform the economy to industrial base, ➢ GDP Volume – 81 billion USD (2017)
39% 43% 18%
Sectors’ Share to the GDP
Agriculture Service Industry
➢Agriculture - coffee & tea plantation, cereals, pulses,
➢Industry - textile & garments, leather goods, food processing, construction materials & cement manufacturing, electricity & water supply, ➢Mining - gold, tantalum, precious stones, etc., ➢Service sector - trade, banking & insurance, hotel & tourism, transport, telecommunications, education, health, etc.
➢Coffee - 26% ➢Oilseeds -17% ➢Gold - 11% ➢Beans - 7% ➢Flowers - 7% ➢Livestock and meat - 5% ➢Leather and leather products - 3%
➢Capital goods - 42% (including machinery, equipment & transport vehicles), ➢Consumer goods - 27%, ➢Semi-finished product -16% (including fertilizer) ➢Fuel -12%.
➢Coffee, ➢Pulses - kidney Beans, ➢Flowers, ➢Plants and their parts, used for perfumery and pharmaceuticals, ➢Oilseeds – black cumin seeds, ➢Vegetables & fruit.
➢Fertilizers, ➢Vehicles, Electric machines and equipment & parts ➢Semi-finished ferrous metal products, ➢Wheat, ➢Paper and paperboard, ➢Wood and articles thereof.
➢No close connection and knowledge between Business communities of two countries, ➢Weak work relations between the two chambers, ➢Absence of direct flight between two capitals, ➢ Trade exchanges usually carried out through third countries, ➢ Absence of direct trade exchange makes product prices uncompetitive, ➢Lack of common working ground to tackle trade exchange problems.
➢Stress the concerned bodies to finalize air service agreement, ➢Make efficient use
Addis Ababa – Djibouti railway service.
The Overall Enabling Environment ➢Favorable investment policy, ➢Government commitment to support foreign investors, ➢Stable macroeconomic environment, ➢Rapid economic growth, ➢Huge domestic market.
The Overall Enabling Environment … ➢Easy Access to international markets, ➢Established legal framework, to protect private property against expropriation, ➢Industrial parks & infrastructure facilities for investment, ➢Energy, water and labor supply at relatively low cost, ➢Low level of crime.
The Growing Market:
➢ Large domestic market - Population – over 100 million ➢ Free trade Agreement reached by African Union ➢ Proximity to the Middle East market ➢ Duty-free given by USA & EU, ➢ Preferential Regime by Euroasian common market, China, India, Japan, South Korea
Investment Incentives:
➢ Duty-free imports of machinery and equipment for the investment, ➢ Exemption from income tax from 2 to 9 years, up to 10 years in industrial parks ➢ Access to long-term loans up to 50% of the project cost from the Development Bank of Ethiopia for priority projects, ➢ Loss carry forward (for half of income tax exemption period), ➢ Special export incentives (Duty drawback system, Voucher system, Bonded manufacturing warehouse scheme).
Investment guarantees:
➢Constitutional protection of private property, ➢Free transfer of profits, dividends and interest rates on external debt, ➢Signatory to the "International Convention for the Settlement of Investment Disputes between States and Nationals of other States (ICSID), ➢Membership in the Multinational Investment Guarantee Agency (MIGA), ➢Membership in the World Intellectual Property Organization, ➢Bilateral agreements on promotion and mutual protection of investments, ➢Bilateral agreements on the avoidance of double taxation.
Competitive Factor Costs:
➢ Favorable climate, ➢ Relatively cheap land lease, ➢ Water & Energy supply at competitive price, ➢ Relatively cheap, unskilled and semiskilled labor supply, ➢ Ready made agro-industrial parks, ➢ Good transportation facilities - air, road and railways.
➢Mineral Resources - natural oil & gas, gold exploration, ➢Agriculture - horticulture business (flower, fruits & vegetables), ➢Agro-processing machinery - animal feed processing, ➢Energy production, ➢Services - hotel and restaurant, ➢Chemical and pharmaceutical industries.
➢Sesame Processing, ➢Corn Processing, ➢Coffee Processing ➢Packaging - Glass, Plastic and Flexible, Metal & Paper Packaging, ➢Leather Accessories manufacturing Plant, ➢Garment Accessories and Labels manufacturing Plant
Proposed by Private Sector in Agro-processing:
➢Corn-soya blend and baby food, ➢Extraction of oil from moringa, jatropha, castor, niger seed for medicine, ➢Food processing flour mill & production of pastas, ➢Cleaning, hulling & packaging of sesame, grains,
Proposed by Private Sector in Agro-processing:
➢Wheat flour, biscuits, maize, dietary supplementary food, ➢Production of complimentary food, snacks,Edible
➢Processed milk, processed cheese, animal feed, ➢Processing of white pea beans, light brown pea beans, cereals, ➢Coffee processing,
Proposed by Private Sector in Manufacturing…
➢ Ministry of Mines, Petroleum and Natural Gas(MoMPNG) - www.mom.gov.et ➢ Ethiopian Revenue and Customs Authority - www.erca.gov.et ➢ Ethiopian Investment Commission - www.investethiopia.gov.et ➢ National Bank of Ethiopia - www.nbe.gov.et ➢ Development Bank of Ethiopia - www.dbe.com.et ➢ Ethiopian Chamber of Commerce and Sectoral Associations - www.ethiopianchamber.com ➢ Addis Ababa Chamber of Commerce and Sectoral Associations - www.addischamber.com ➢ Ethiopian Horticulture Producers & Exporters Association (EHPEA) - www.ehpea.org ➢ Industrial Parks Development Corporation (IPDC) - www.ipdc.gov.et
➢ Ministry of Industry - http://www.moin.gov.et ➢ Ministry of Trade - http://www.mot.gov.et