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Executive Report on Strategies in Ethiopia
ICON Group International, June 2007, Pages: 382
How to Strategically Evaluate Ethiopia
Perhaps the most efficient way of evaluating Ethiopia is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
Relative Accessibility
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).
Latent Demand and Accessibility in Ethiopia
This report provides an extremely detailed overview of factors driving latent demand and accessibility in Ethiopia. Latent demand is largely driven by economic fundamentals. But, latent demand only represents half of the picture. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks.
Chapter 2 deals with macro-accessibility. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Ethiopia:
Openness to Trade in Ethiopia
Openness to Direct Investment in Ethiopia
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are also covered in Chapter 2, which is presented from the perspective of an American firm, though it is equally applicable to most firms entering Ethiopia. This chapter has been authored by local offices of the U.S. Government. I have included a number of edits to clarify the provided information as it relates to the general strategic framework.
In Chapter 3, I summarize the economic potential for Ethiopia over the next five years for hundreds of industries, categories, and products. The goal of this chapter is to report my findings on the real economic potential, or latent demand, represented by Ethiopia when defined as an area of dominant influence. The data presented are the result of various spatial econometric and time-series forecasting models which, for each category presented, are applied to forecast and allocate latent demand across all countries of the world and major distribution centers or centers of dominant influence within each country. This is accomplished knowing that economic fundamentals (e.g. income) generally vary from one country to another within a given country over time. In this chapter, I report the allocation for each category for Ethiopia as an area of dominant influence in Africa and, potentially, the world.
As a whole, this report presents a strategic assessment of Ethiopia by considering an extremely broad set of factors affecting both latent demand and accessibility, as outlined in the following chapters.
MACRO-ACCESSIBILITY IN ETHIOPIA
Economic Fundamentals and Dynamics
Government Intervention Risks
Despite the government’s stated intention to pursue a program of economic reform and liberalization, it is still heavily involved in Ethiopia’s commercial and economic sectors. The government maintains complete ownership of all land in Ethiopia. The constitution allows the leasing of land, the value of which is established by public auction or via pre-set rates established by the market. In the agricultural sector, parts of the market for agricultural inputs were liberalized, and coffee marketing has been opened to competition.
To date, the Ethiopian Privatization Agency (EPA) has sold off about 200 government business entities. Although the bulk of these were state-owned retail shops, hotels, and restaurants, it also included the Pepsi-Cola and Coca-Cola bottling plants, the St. George Brewery, the Lega Dembi Gold Mine, and the Kenticha Tantalum Mine. Many enterprises valued at over three million dollars, such as major hotel chains, tanneries, textile mills and garment factories, have become incorporated as share companies under the ownership of the Ministry of Finance to facilitate their sale, in whole or in part, in joint venture with the government.
About 40 percent of Ethiopian imports are conducted through government tenders. The tender announcements are made public to all interested potential bidders, regardless of nationality of supplier or origin of the products/services. Both Ethiopian and foreign suppliers, especially those from Italy, Germany, France, Japan, the United Kingdom, and China who have local representatives, participate aggressively and tend to compete successfully. It is important that U.S. suppliers be involved at the earliest design stages to ensure that project specifications fit American products.
Infrastructure Development
Transport infrastructure in Ethiopia comprises a road network estimated at 33,000 km (16,000 km federal roads and 17,000 km regional roads); a 781 km railway line from Addis Ababa to Djibouti; a national merchant marine and air transport facilities including two international airports, seven major domestic airports, and over 30 other domestic runways and airstrips. Roads carry about 95 percent of the country’s passenger and freight traffic and they provide the only form of access to most rural communities.
Although road transport is the dominant mode of transport, Ethiopia’s surface transport infrastructure is inadequate and underdeveloped. In fact, Ethiopia has the lowest road density per capita in the world. Only 21 percent of the highway network is paved, with few interconnecting links between adjacent regions and a grossly insufficient feeder road network. As a result, large parts of Ethiopia, especially in its mountainous regions, are isolated and dependent on pack animals for transport. The poor road sector has hampered economic development and remains an obstacle to economic integration, export growth, and the realization of greater economic potential in general. Concerned about the dependence and vulnerability that result from conducting nearly all external trade through the port of Djibouti, the government is exploring the use of Port Sudan, Mombassa in external Kenya, and Berbera in Somaliland as alternatives.
Development of the road network is a critical part of the government’s strategy to integrate the rural population into the economy. With the help of the World Bank, the European Union, the African Development Bank, and other donors, the Ethiopian government is implementing a road sector development plan. The program will also lead to the repair and renovation of major and minor trunk roads and help develop private road construction and contracting capacity. Reforms undertaken in support of the Road Sector Development Program include privatizing state construction companies, liberalizing transport charges, and implementing a road fund for sustainable road maintenance.
Limited rail service links Addis Ababa with Djibouti via the eastern Ethiopian city of Dire Dawa. Passenger and cargo air transport service is mainly provided by Ethiopian Airlines. Its international flights link the country with 44 cities on four continents, and its domestic service links 43 airfields and 21 landing strips with Addis Ababa. In order to modernize its fleet, Ethiopian Airlines has concluded a deal with Boeing to acquire a total of twelve airplanes (six new generation B737-700s and six B767-300Es) to replace its older B737-200s and B767-200s.
Ethiopia has one of the lowest numbers of telephone lines per capita in sub-Saharan Africa, with a teledensity of 0.53 lines per 100 population. The unmet demand for telephone services is substantial. The Ethiopian Telecommunications Corporation (ETC), the government-owned service provider, is the sole provider of all core services in the country and the dominant provider of most of the telecommunications-related services. Internally, direct microwave telephone links are available to most regional cities. A number of smaller towns also have automatic telephone services. International communications links are maintained through two satellite earth stations, providing telephone, fax, telex, and television services. Digital telephone exchanges have also been installed recently and cellular phone service is also introduced in Addis Ababa.
The Government of Ethiopia wishes to engage a strategic partner to support ETC’s development, implement reforms and expansion plans, offering a 30% stake together with management control to a potential investor. The reforms may include the re-issuance of a contract for the provision of a wireless local loop within Addis Ababa and the relaxation of the government monopoly on the provision of Internet and cellular services. The ETC’s monopoly of these services has resulted in new customers waiting years for access to the services as well as long delays and slow service for those who have obtained an account.
Power
Ethiopia has vast hydropower and promising geothermal energy resources. Its hydropower potential has been estimated at about 30,000 MW, of which only a minute proportion, around 1.5 %, is utilized to-date. The Ethiopian Electric Power Corporation (EEPCo), a state-owned monopoly, is currently the only operator responsible for generation, transmission, distribution and sales of electricity all over the country. EEPCo maintains two supply systems, the Inter-Connected System (ICS) and the Self-Contained System (SCS). In terms of total installed capacity in the country, the ICS and SCS represent about 93% and 7%, respectively. The total electricity generation capacity of the installed power plants is about 450 MW of which 90% of the capacity is from hydropower plants while the remaining 10% is obtained from thermal plants using diesel fuel and geothermal energy.
Broadcast Media
The Government issued a broadcast proclamation in 1999 creating a broadcasting authority to review applications for private radio and television licenses. Despite the issuance of the proclamation, the provision of licenses to private operators has not started yet. The broadcast proclamation prohibits political parties and religious organizations from owning stations; foreign ownership is also prohibited. Private entities that would like to be engaged in radio and TV broadcasting claim that the delay in implementing the broadcast law is deliberate.
Radio remains the most influential medium for reaching citizens, especially those who live in rural areas. There are two state-run radio stations Radio Ethiopia and FM-Addis (received only in the capital). Broadcasting time on the state-run radios is sold to private groups and to individuals who want to buy spots for programs and commercials. Two nongovernmental stations, Radio Fana, a station controlled by the ruling EPRDF coalition, and the TPLF radio, which broadcasts in the Tigrigna language from Mekele, have close ties to the Government. The Government operates the sole television station. The state-run ETV continued to broadcast “TV Africa,” which is contracted from a South African company. There are no restrictions on access to international news broadcasts. Ownership of private satellite receiving dishes and the importation of facsimile machines and modems are permitted; however, access to this technology is limited by its cost.
Although the state controls radio and television, the print media has seen dramatic changes and the number of privately owned newspapers has grown to more than 40. There are approximately 28 private Amharic-language weekly newspapers, 1 independent Tigrigna-language weekly, 7 English-language weeklies, and 1 English-language daily. Circulation figures range from 2,000 to 20,000 copies each. In addition to the private press, there are 5 ruling party coalition papers, in Amharic, Oromifa, and Tigrigna that have a total circulation figure of 110,000. There are 2 government dailies, the English-language Ethiopian Herald (circulation 40,000) and the Amharic Addis Zemen (circulation 50,000), and a government Arabic-language weekly, Al-Alam (circulation 10,000). The official media, including broadcast, wire service, and print media receive government budget subsidies; however, they are legally autonomous and responsible for their own management and partial revenue generation. The majority of private papers as well as government papers are printed at government-owned presses. However, a few private papers have started using smaller private printing presses.
Regional Integration
Ethiopia trades freely, except for Eritrea, with neighboring countries - Sudan, Somalia, Kenya and Djibouti. It is a member of the Common Market for Eastern and Southern Africa (COMESA), which is in the final stages of harmonizing and reducing tariffs within and among member countries.
Political Risks
Economic Relationship with the United States
The U.S. has had long and cordial relations with the Ethiopian people, even during periods when official relations between the governments were minimal. This year marks the centenary of the establishment of formal relations between the United States and Ethiopia. In 1903, most of Africa was consolidated into colonial empires, unlike the relationship between Ethiopia and America which was based on friendship and commerce between the two independent nations. The U.S. wants Ethiopia to prosper both economically and democratically. Promoting a market economy, developing democratic institutions, and building understanding of the rule of law and respect for human rights are the primary objectives of U.S. policy in Ethiopia. Ethiopia has made progress in each of these key areas.
Politics and the Business Environment
The war between Ethiopia and Eritrea has been the primary political issue affecting the business climate. Beyond the human costs in killed, wounded and displaced, the conflict strained the country’s meager resources, reduced donor support and undermined investor confidence. A peace agreement was signed in December 2000 and is now being implemented.
There are complaints from the private sector that businesses must contend with political favoritism; party affiliated enterprises have considerable de facto advantages over private firms, particularly in the realm of Ethiopia’s regulatory and bureaucratic environment, and including ease of access to credit and speedier customs clearance. These have contributed to an uncertainty within the private sector.
The Political System
Ethiopia has a parliamentary system of government.
Marketing Strategies
Distribution Channel Options
Ethiopia requires that all imports be channeled through Ethiopian nationals registered with the government as official import or distribution agents. The importer or agent is required to apply for an import license and register with the Ministry of Trade and Industry.
Pricing Issues
All transactions in Ethiopia are conducted in the local currency, the “Birr”. Prices are generally very low for locally produced products while import prices reflect the high cost of transportation.
Agents and Distributors
It is not difficult to find experienced and reputable agents and distributors in Ethiopia. To conduct business effectively and participate in local tenders, it is advisable for U.S. firms to appoint local agents to represent their products in Ethiopia. The Embassy maintains a list of experienced local representatives interested and able to assist U.S. companies in bids on major projects. Limitations on foreign exchange and import and export services make direct marketing difficult.
Franchising Activities
Even with the relaxation in rules governing the convertibility and repatriation of Ethiopia’s currency, difficulties in product quality control, banking regulations, and continuing foreign exchange convertibility issues make franchising difficult. Currently, there are no U.S. franchises operating in the country.
Joint Ventures and Licensing Options
Foreign investment inflows through joint ventures are promoted and encouraged in Ethiopia. The following are the major criteria for the approval of joint venture proposals:
Transfer, absorption, and adaptation of needed technology and know-how into the country;
Improvement of the country’s foreign exchange position;
Utilization and development of the country’s resources, including the generation of local employment, and;
Development of forward and backward linkages, and increased added value in various economic sectors.
Creating a Sales Office
All importers and exporters must be registered with the Ministry of Trade and Industry and obtain a business license. Foreign investors are required to seek project approval and receive incentives from the Ethiopian Investment Authority. The Ministry of Trade and Industry regulates imports and exports. Foreign exchange permits are required for all imports.
Selling Strategies
Methods used by successful competitors in the Ethiopian market place include active contact with key officials responsible for various major programs and projects, personal visits by representatives for initial market surveys, and contact with local representatives knowledgeable about future plans and market potentials.
Advertising and Trade Promotion
Advertising and trade promotions are important in the Ethiopian market. The government-owned mass media (radio, television, and newspapers) and privately owned magazines and newspapers are the major means of advertising. In Ethiopia, radio and newspapers have a wider audience than television, which is very limited. Some of the major English-language newspapers and magazines include:
Ethiopian Herald
P.O. Box 30701
Addis Ababa, Ethiopia
Tel: 251-1-156-760/157-017
Fax: 251-1-516-819
The Reporter
P.O. Box 7023
Tel: 251-1-661-518/661-519
Fax: 251-1-661-517
E-mail: mcc@telecom.net.et
http://www.ethiopianreporter.com
The Monitor
P.O. Box 4502
Addis Ababa, Ethiopia
Tel: 251-1-560-518/560-794
Fax: 251-1-552-643
E-mail: themonitor@telecom.net.et
Addis Tribune
P.O. Box 2395
Addis Ababa, Ethiopia
Tel: 251-1-615-228/615-229
Fax: 251-1-615-227
E-mail: tambek@telecom.net.et
http://www.addistribune.com
Capital
P.O. Box 3155
Addis Ababa, Ethiopia
Tel: 251-1-531-759/515-264
Fax: 251-1-533-323
http://www.capitalethiopia.com/
Ethiopian Trade Journal
Ethiopian Chamber of Commerce
P.O. Box 517
Addis Ababa, Ethiopia
Tel: 251-1-518-240
Fax: 251-1-517-699
Nigdna Limat
Addis Ababa Chamber of Commerce
P.O. Box 2458
Addis Ababa, Ethiopia
Tel: 251-1-518-055/513-814
Fax: 251-1-511-479
E-mail: aachamber1@telecom.net.et
Fortune
P.O. box 259 Code 1110
Addis Ababa, Ethiopia
Tel: 251-1-184-087/627-150
Fax: 251-1-627-150
E-mail: tengirtt@hotmail.com
http://www.ethioguide.com/aa-ethioguide/ethioguide/Fortune/About Fortune.htm
Entrepreneur
P.O. Box 26845
Addis Ababa, Ethiopia
Tel: 251-1-627-920
Fax: 251-1-614-228
ACPAC
P.O. Box 22373Addis Ababa, Ethiopia
Tel: 251-1-556-177
Fax: 552-654
E-mail: akpac@telecom.net.et
Addis Business
P.O. Box 2458
Addis Ababa, Ethiopia
Tel: 251-1-513-882/518-055
Fax: 251-1-511-479
E-mail: aachamber1@telecom.net.et
Press Digest
P.O. Box 12719
Addis Ababa, Ethiopia
Tel: 251-1-112154 / 511301
Fax: 251-1-513523
E-mail: Phoenix.Universal@telecom.net.et
http://pressdigest.phoenixuniversal.com
Seven Days Update
P.O. Box 5707
Addis Ababa, Ethiopia
Tel: 251-1-115020
Fax: 251-1-550322
Sub Saharan Informer
P.O.BOX 22178 Code 1000
Addis Ababa, Ethiopia
Tel: 251-1-151800
Fax: 251-1-526722
E-mail: info@subsaharaninformer.com
http://www.subsaharaninformer.com/
The Sun
P.O. Box 56343
Addis Ababa, Ethiopia
Tel: 251-1-564-804/110-207; 251-1-564-804
Pricing Issues
All retail prices except petroleum, fertilizers and pharmaceuticals have been decontrolled.
Supplying Customer Service
Sales service is obtainable for products in most sectors. Neither consumer advocacy or protection associations currently operate in Ethiopia.
Public Sector Marketing
Government purchases account for about 40 percent of total imports, with fun ds coming from project loans by international financial institutions such as the World Bank and the African Development Bank or from other international donors. Government procurement is by competitive bidding and there are no special document requirements. Bureaucratic procedures and delays in the decision-making process sometimes impede participation in tenders. It is mostly advisable to work with local agents or representatives in order to effectively participate in local tenders. In general, it is not difficult to find experienced and reputable agents and distributors in Ethiopia.
Intellectual Property Risks
Regulations for the protection of patents and copyrights are limited. Some protection can be secured for trademarks through the Ministry of Trade and Industry and the publication of cautionary notices in local newspapers in Ethiopia. In April 2003 the government established the Ethiopian Intellectual Property Office under the Science and Technology Commission to administer trademark, copyrights and intellectual property issues.
Hiring Local Counsel
Most of the necessary commercial and investment procedures and licenses can be handled through a local business agent.
Performing Due Diligence
Due diligence and project analysis are highly recommended, although Ethiopia’s investment provisions do not yet accord full privileges for pre-investment research.
Web site addresses of business related institutions:
Ethiopian Investment Authority: www.ethioinvestment.org
Ethiopian Privatization Agency: www.telecom.net.et/~epa
Ethiopian Export Promotion Agency: www.ethioexport.org
Addis Ababa Chamber of Commerce: http://www.addischamber.com/
Ethiopian Business Development Services Network: www.bds-ethiopia.net
Ethio Market (on-line Ethiopian market information): http://www.ethiomarket.com
Development Information Network on Ethiopia: www.devinet.org
Import and Export Regulation Risks
Trade Barrier Risks
The VAT rate is 15% for all goods and services. VAT is only payable by companies with annual turnover of more than $58,000. According to the Federal Inland Revenue Authority (FIRA), smaller businesses that have annual sales of less than $58,000 continue to pay the flat rate turnover tax of 2%. There are ten excise tax brackets, applied equally to domestically produced and imported goods, ranging from 10% for textiles and electronic products to as high as 200% for alcoholic beverages.
Customs Regulations
Ethiopia continues to maintain a pre-shipment inspection regime. The pre-shipment inspection law requires that all imports coming into the country be checked for type, quality, origin, quantity and price in conformity with sales contracts before entering the country. Ethiopia signed the pre-shipment inspection agreement with the Swiss-based, SGS. Any consignment that has not been inspected by SGS cannot get clearance from the Customs Authority. Delays in customs clearance remain a barrier to trade. Goods are sometimes charged duties on the basis of imputed values instead of the transaction value listed on the invoice.
Tariff Rates
The tariff structure, per se, does not constitute a meaningful trade barrier to access the Ethiopian market. Ethiopia has reduced customs duties on a wide range of imports. The lowest tariff rate is 5% while the highest tariff rate is reduced from 230% to 35% and the number of official tariff rates (tariff bands) is reduced from 23 to 6. The weighted average tariff rate is also reduced from 41.6% to 17.5%. The strict foreign exchange control regime administered by the national bank is still a deterrent to imports.
Licenses Required for Imports
The Ministry of Trade and Industry is responsible for issuing import licenses. In accordance with the foreign exchange control regulations of the National Bank of Ethiopia, all imports require import permits which are obtainable upon presentation of a valid import license and the provision of satisfactory information on costs and payment terms.
Entering Temporary Imports
Bonded warehouse storage facilities are available for periods up to six months.
Additional Trade Issues
Most imports to Ethiopia require:
Three certified copies of the commercial invoice
Two detailed copies of the manufacturers invoice
A bill of lading or airway bill
Pro-forma invoices
Documents that should accompany exports include:
Export declaration
Sales contract
Invoice
Insurance certificate or policy
Medicines and medical supplies must be registered with the Drug Administration and Control Authority of Ethiopia. Any plant or plant product, including seeds, agricultural inputs such as chemicals, pesticides and fertilizers cannot be imported to Ethiopia unless registered and duly authorized for import by the Minister of Agriculture.
All exports require an export permit that enables the goods to pass through customs. When applying for a permit an exporter must specify the goods to be exported, their destination and value. The licensing system is used to ensure that all foreign exchange receipts come into the country.
Labeling Issues
Shipping marks and labeling are required in all imported goods and should be identical on all documents.
Restrictions on Imports
The Ministry of Trade and Industry has the power to restrict and/or limit imports and exports. There are restrictions on the importation of products that compete with locally produced goods, particularly in agricultural sectors. Automobile or motor vehicle imports require approval from the Ministry of Transport and Communications. The import of arms and ammunitions, except by the Ministry of Defense, is totally prohibited.
Warranty and Non-Warranty Repairs
Regulations in this category are applicable only to the terms of the sales or services contract.
Controls on Exports
Ethiopia maintains some restrictions and taxes on the export of coffee and chat and regulates the sale of petroleum products and pharmaceuticals. The tax on coffee exports is temporarily lifted because of the slump in world coffee prices.
Local Standards
The Ethiopian Quality and Standards Institute regulates the quality of all exports and imports. Standards are consistent with international norms and do not act as a barrier to U.S. products. Government procurement is by competitive bidding. There are no burdensome administrative procedures or special document requirements.
Free Trade Zone Options
Ethiopia does not operate or allow the development of free-trade zones, although a transshipment port is available in Djibouti.
Adherence to Free Trade Agreements
In 1992, Ethiopia became eligible to participate in the Generalized System of Preferences (GSP). In October 2000, Ethiopia was also designated as one of the 35 sub-Saharan African countries eligible to receive African Growth and Opportunity Act (AGOA) benefits. In August 2001, Ethiopia was certified for textile and apparel benefits under AGOA. Ethiopia has an observer status in the World Trade Organization (WTO) and it applied for membership in February 2003. It is a member of the Common Market for Eastern and Southern Africa (COMESA).
Customs Contact Information
The Customs Authority is a branch of the Ministry of Revenue. The General Manager is Mr. Damtew Demiss (Tel: 251-1-511639; Fax: 251-1-551355).
Investment Climate
Openness to Foreign Investment
The Government of the Federal Democratic Republic of Ethiopia (GFDRE) has publicly stated that the private sector will be the engine of development and that private capital should play an important role in the economy. To this end it has eliminated some or all of the discriminatory tax, credit and foreign trade treatment of the private sector; simplified administrative procedures; and established a clear and consistent set of rules regulating business activities. Implementation, however, has not consistently reflected these objectives, with some investors facing excessive bureaucratic hurdles. The Government has designated the Ethiopian Investment Authority as the main point of contact for foreign investors.
In June 1996, the Ethiopian Government issued a revised Investment Code which provides incentives for development-related investments, reduces capital entry requirements for joint ventures and technical consultancy services, creates incentives in the education and health sectors, permits the duty-free entry of capital goods (except computers and vehicles), opens the real estate sector to expatriate investors, extends the losses carried forward provision, cuts the capital gains tax from 40 to 10 percent, and gives priority to investors in obtaining land for lease.
Amendments to Ethiopia’s Investment Proclamation (Law) were issued in September 1998 and July 2002 further liberalizing the investment regime and removing most of the remaining restrictions. In the latest amendment, areas solely reserved for government investment are reduced to only transmission and supply of electricity through the Integrated National Grid System and postal services with the exception of courier services. Manufacturing of weapons and ammunitions and telecommunications services can only be undertaken as joint ventures with the government.
The Investment Code prohibits foreign firm participation in domestic banking, insurance and micro-credit services. Other areas of investment reserved for Ethiopian nationals include broadcasting, air transport services using aircraft with a seating capacity of up to 20 passengers and forwarding and shipping agency services. Professional service providers must be licensed by the Government to practice in Ethiopia. Also a foreign investor intending to buy an existing enterprise to operate it as it stands or buys shares in an existing enterprise needs to obtain prior approval from the Investment Authority.
In addition to those mentioned above, the amendment reserves the following areas of investments for domestic investors: retail trade and brokerage; wholesale trade (excluding supply of petroleum and its by-products as well as wholesale by foreign investors of their products locally produced); import trade (excluding LPG, bitumen and upon approval from the Council of Ministers, material inputs for export products); export trade of raw coffee, chat, oilseeds, pulses, hides and skins bought from the market and live sheep, goats and cattle not raised or fattened by the investor; construction companies excluding those designated as grade 1; tanning of hides and skins up to crust level; hotels (excluding star-designated hotels), motels, pensions, tea rooms, coffee shops, bars, night clubs and restaurants excluding international and specialized restaurants; travel agency, trade auxiliary and ticket selling services; car-hire, taxi-cabs transport services; commercial road transport and inland water transport services; bakery products and pastries for the domestic market; grinding mills; barber shops, beauty saloons, and provision of smith, workshop and tailoring services except by garment factories; building maintenance and repair and maintenance of vehicles; saw milling and timber making; custom clearance services; museums, theaters and cinema hall operations; printing industries.
Another important change made by the 2002 amendment is the red
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