Ethiopia

Economic liberalisation

In September 2020, the government gazetted Investment Regulation (IR) 2020, which, among other amendments, allowed foreigners to invest in areas or sectors that were previously restricted to the government or domestic investors. One of the key sectors that was open for foreigners through IR 2020 was the telecommunications sector.

IR 2020 also opened other sectors where foreign investors are now allowed to invest jointly with the government or domestic investors, some of which are as follows:

• Jointly with the government: international air transport services, bus rapid transit, import and export of electrical energy, etc.
• Jointly with domestic investors: freight forwarding and shipping agency, accounting and auditing, advertisement and promotion services, etc.

For the investments allowed jointly with domestic investors, the foreigner investor is not allowed to hold more than 49% of the share capital.

Further, the Council of Ministers approved a policy that aims at opening up the banking and telecommunication sectors to foreign investors.

In April 2024, the Ethiopian Investment Board issued a new directive to further regulate foreign investors’ participation in restricted export, import, wholesale, and retail trade. This new directive introduced significant changes to the previous regulations. 

Under the new directive, the retail and import sectors are now open to foreign investors, with the exception of fertilizer and petroleum. The export trade of raw coffee, khat, oilseeds, pulses, hides and skins, forest products, poultry, and livestock purchased from the market, as well as the wholesale of products, are now included in the sectors open to a broader scope of foreign investors.

The introduction of this new directive demonstrates Ethiopia’s renewed emphasis on enhancing the nation’s productivity and competitive stance in the global market.

Introduction of social welfare levy

The Council of Ministers approved a regulation to introduce social welfare levy on imported goods. The levy is earmarked for the rehabilitation and construction of education, training, and medical facilities and expansion of other social services. The levy will be at the rate of 3%.