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Investment Opportunities and Conditions in Ethiopia _______________________________ Ethiopian Investment Agency February 2009 1 2 Ethiopia at a glance ____________________ Area .....……….. 1.14 million km2 Geographical Location……..within 15o North of the Equator, at cross roads b/n Africa, Asia and the Middle East Time Zone………GMT + 3 Hours Population ..…... Over 74 million Capital City …. Addis Ababa, seat of the Federal Government, AU, UNECA Rainy seasons ….. Receives big rain during June, July & August and small rain during February and March Political System... Federal Democratic Republic 3 Main Investment Opportunities in Agriculture: ---------------------------------------------------• Food Crops : wheat, maize, beans, peas, lentils, soybeans, chick peas, pulses, etc •Oil crops : rapeseed, linseed, groundnuts, sunflower, niger seed and cotton seed •Beverage Crops : coffee and tea. • Cotton : over 322,000 ha of land • Feed stocks for bio-diesel: jatropha, palm oil, castor oil • Feed stocks for ethanol: sugarcane, sugar beet, potatoes, corn, etc. 4 Opportunities (Cont…) •Horticulture : Major horticultural crops grown include: citrus, banana, mango, papaya, avocado, guava, grapes, pineapple, passion fruit, apples, potatoes, cabbages, cauliflower, okra, eggplant, tomato, celery, cucumber, onion, asparagus, watermelon, sweet melon, carrots, green beans, strawberries, herbs. •Floriculture: Highland and Lowland world class flowers and roses •Livestock Population : No. 1 in Africa 42 million heads of cattle 25.5 million heads of sheep 24.4 million heads of goats 53 million chickens 2.3 million camels 7 Million equines 5 Opportunities (Cont…) Beeswax A leading producer of honey and beeswax in Africa (3.3 million beehives) Livestock • Modern Commercial breading, production & processing of meat, milk and egg •Animal feed processing • Ostrich, civet cat and crocodile farming. 6 Textile & Garments/Apparel ______________________________ •Spinning, weaving and finishing of textile fabrics •Production of garments •Industrial sites are ready in all towns and cities 7 Tannery and Leather Products Cattle Hides Heavy leather Leather products: footwear hand bags Goats Goat Skins Light Leather (Bovine) saddle & harness garments l.goods Sheep Sheep skins Light leather (S&G) upholstery • Industrial sites are ready for shoe and leather projects 8 Food and Beverage Products _________________________________ •Processing and preserving of meat products • Processing and preserving of fish and fish products • Processing and preserving of fruits and vegetables • Integrated production and processing of dairy products • Production of crude and refined edible oil • Production of flour and bakery products, spaghetti, and macaroni • Manufacturing of starch and starch products, • Processing of animal feeds • Sugar production • Brewing and wine making, etc. 9 Construction _________________________________ • Rental of construction machinery • Comprising of first grade construction contracting • Real estate development 10 Tourism _____________________________ Historic routes •Blue Nile falls •City of Gondar- Famous for its medieval castles and the design and decoration of its churches •Lalibela –Known as the “Eighth wonder of the World” -it is a legendary city curved from solid rock •Axum – the site of Ethiopia’s most ancient city where the original Ark of the Covenant is claimed to be housed. It is famous for its seven monolithic stella all hewn from single pieces of granite. •Attractive historical and archeological sites, scenic landscape and cultural heritage •Seat of AU, ECA, and offices of other multilateral and bilateral institutions •Exceptional climate with temperatures ranging from 10 to 25 deg.c. 11 Tourism Cont… ___________________ Islamic Shrines •Mosque of Mohammed Al Negashi •Ancient city of Harar – An Islamic city with unique Muslim architectural designs which is one of UNESCO’s prestigious world heritage sites. •Mosque of Sheih Nur Hussein •Great Caves of Sof Omar _______________________________________________ Therefore, opportunities for private investment in hotels, lodges, international restaurants and tour operations ________________________________________________________________ 12 Market ___________________ •Domestic market with over 74 million people • COMESA 20 member countries 380 million people • AGOA and GSP • EBA • Middle East 13 Labour Force ____________________________________ •Abundant & trainable labour force • Labour cost in Ethiopia is cheap even compared to African average daily laborer …… $2/day Salaries of fresh university graduates…. $110/month $200/month •English is the medium of instruction in secondary & higher education – A number of international and community schools are available 14 Ethiopia’s Business Environment ___________________________________ Investment Policy and Incentives •No restriction on the modality of participation • No discrimination between domestic and foreign investors • Exemption from the payment of customs duty : Duty free importation of capital goods and construction materials Duty free importation of spare parts whose value is not greater than 15% of the total value of capital goods to be imported •Income tax exemption : 2 up to 7 years for manufacturing or agroprocessing and agricultural investments • Carry forward of losses : half of the tax holiday period 15 Ethiopia’s Business Environment (cont) ___________________________________ Export Incentive Scheme •Duty Draw-Back scheme •Voucher scheme •Bonded Manufacturing Warehouse scheme •Export Credit Guarantee scheme 16 Ethiopia’s Business Environment(Cont) ________________________________________________ Investment Guarantee and Protection •Constitution and Investment Law protect private property •Repatriation of Capital and Profit •Multilateral Investment Guarantee Agency (MIGA) •Bilateral Investment Promotion & Protection Treaties (BIPPT) •International Convention for the Settlement of Investment Dispute(ICSID) 17 Ethiopia’s Business Environment(Cont) ____________________________________________ One-stop shop services Time frame •Issuance of investment permit ……………………. 4 hours •Principal commercial registration …………………. 4 hours • Issuance of work permits………………..……….… 1 hour • Issuance of business license ……………………….. 4 hours 18 Ethiopia’s Business Environment(Cont) ___________________________________________ One-stop shop services Time frame • Technology transfer agreement registration ……….…….. ….4 hours • Issuance of certificate to foreign investors to be considered as domestic investors ……… …………………..………….. 1 hour • Pre-approval and post approval services to foreign investors (facilitation & after care services) 19 Trend of Approved Investment Projects 12000 10000 Number of Projects 8000 6000 4000 2000 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year of Investment 20 Sources of Foreign Investment projects July 1992 to January 2008 Others 2% Africa 13% Middle East 14% North America 20% Sources of Foreign Investment projects July 1992 to January 2008 Asia 26% Europe 25% 21 Inflow of Italian Investment projects by Year 80 70 60 Number of projects 50 40 30 20 10 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Year of Investment 2002 2003 2004 2005 2006 2007 2008 22 Inflow of Italian Investment Projects by Sector Others 9% Construction 8% Manufacturing 35% Hotels & Tourism 11% Agriculture 11% Real estate & renting activities 26% 23 Inflow of Italian Investment in Million Birr 1,400 1,200 Capital in Million Birr 1,000 800 600 400 200 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year of Investment 24 Percentage Distribution of Italian Investment Projects by Region SNNPR 5% Multiregional 7% Others 5% Oromia 15% Addis Ababa 68% 25 Percentage Share of Ethiopian Export by Destination (2007/2008/) Germany 9.5% Others 30.3% Saudi Arabia 7.9% United States of America 7.2% Netherlands 6.9% Djibuti 3.7% Japan 6.2% Sudan 3.9% Somalia 4.9% China 5.0% Italy 5.2% Switzerland 5.5% United Arab Emirates 3.8% 26 Major Commodities Exported to Italy __________________________________________ • Coffee • Textile & Textile Products/Garment • Pulses • Leather & Leather Products, Shoes • Mineral Products 27 Why invest in Ethiopia? ____________________________________ •Political and Social stability •Macro-economic stability •Strategic location •Simple investment procedures •Abundant, cheap & trainable labour force •Competitive investment incentives •Lowest crime rate in Africa •Zero tolerance for corruption 28 Why Invest in Ethiopia (Cont) _____________________________ • Welcoming attitude to FDI • Wide market opportunities • Transparent laws & regulations • Adequate guarantees & protection • Enormous investment opportunities • Ethiopia’s exceptional climate(more than 50% of the country consists of highlands, with average annual temperatures below 200c) •“Ethiopia is safe, peaceful, stable and very nearly free of corruption .Among LDCS, Ethiopia is the country with the lowest levels of corruption.” UNCTAD and ICC, An investment guide to Ethiopia, Geneva,2004 29 Our Contact Address __________________________ Ethiopian Investment Agency P.O.Box 2313 Addis Ababa, Ethiopia Tel. 251-11-5510033(pbx), 251-11- 5539474(Direct) Fax:251-11-5514396 E-mail:[email protected] Website:www.investethiopia.org 30 THANK YOU 31