Executive summary

The Ethiopian Investment Board in March 2024 issued Directive No. 1001/2024 to list out investment areas in the export, import, wholesale and retail trade sectors reserved for domestic investors in which foreign investors may participate, subject to laid out conditions.

Without prejudice to requirements imposed by other laws in relation to minimum capital, competence and other standards, the new Directive has set out conditions under which a foreign investor may obtain consent to enter into agreement before receiving an investment permit.

The Directive is intended to promote the sectors' gradual opening to willing and capable foreign investors.

Detailed discussion

Participation in export trade

Any foreign investors may engage in export trade investment of raw coffee, khat, oilseeds, pulses, hides and skins, forest products, poultry and livestock bought on the market.

Conditions

To engage in the export of trade of raw coffee, oilseeds, khat, pulses, and hides and skins, a foreign investor must have procured from Ethiopia for the last three consecutive years, and contractually agree to attain for export within the permit year, an average of at least:

• US$10m worth of raw coffee
• US$5m worth of oilseeds
• US$1m worth of khat and pulses
• US$500,000 worth of hides, skins, forest products and poultry

Participation in import trade

Except for import trade in fertilizer and petroleum, any foreign investor may engage in all import trade investments reserved for domestic investors under the Investment Regulation.

Conditions

The applicant must be one of the following:

1. A manufacturer of the imported product
2. An agent of a manufacture
3. An existing manufacturer in Ethiopia exporting 50% or more of its products to the overseas market

If the applicant is neither a manufacturer nor an agent, the applicant must commit to submitting a detailed plan and enter into agreement with the appropriate body to annually import commodities worth at least US$10m.

Participation in wholesale trade

Except for the import of fertilizers, any foreign investor may engage in the wholesale trade investment of all sectors reserved for domestic investors under the Investment Regulation.

Conditions

The applicant must:

1. Obtain prior express consent, in writing, to enter into agreement with the appropriate body
2. Contractually commit to build modern marketing infrastructure and provide streamlined logistics service facilitating its wholesale operations

Note that the minimum level of marketing infrastructure shall be determined by the Ministry of Trade and Regional Integration.

Participation in retail trade

Pursuant to the new Directive, any foreign investor may engage in retail trade investments reserved for domestic investors under the Investment Regulation.

Conditions

The applicant must undertake to carry out the retail trade on land or a building having a floor area set out below under one unified ownership structure, and consent to enter into agreement before taking out an investment permit. The applicant must commit to do one of the following:

• Establish five 2000m2 supermarkets within a total of three years and complete the opening of at least two supermarkets to receive a business permit
• Establish two 5000m2 supermarkets within a total of three years and complete the opening of at least one hypermarket to receive a business permit
• Establish one 10,000m2 supermarket, complete the construction and enter into agreement to receive a business license

Next steps

Foreign investors who are interested in these investment opportunities should consider the Directive and the other conditions that will be laid out by the relevant Government agencies.