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Investment  Incentives & Guarantee

To encourage private investment and promote the inflow of foreign capital and technology into Ethiopia, the following incentives are granted to investors (both domestic and foreign) engaged in new enterprise and expansion in areas qualified for investment incentives.

Guarantees to Investors

Ethiopia provides the following guarantees to foreign investors

1.Repatriation of Capital and Profits

Capital repatriation and remittance of dividends and interest is guaranteed to foreign investors under the investment proclamation.
Any foreign investor has the right, in respect of an approved investment, to make the following remittances out of Ethiopia in convertible currency at the prevailing rate of exchange on the date of remittance.

- Profit and dividends accruing from investment
- Principal and interest payments on external loans
- Payments related to technology transfer agreements
- Proceeds from the sale or liquidation of an enterprise;
- Proceeds from the sale or transfer of shares or of partial ownership of an enterprise to a domestic investor;
- Compensation paid to a foreign investor
- Expatriates employed in an enterprise may remit in convertible foreign currency, salaries and other payment accruing from their employment in accordance with its foreign exchange regulation or directives of the country.

2.Investment Guarantees and Protections

The constitution of the Federal Democratic Republic of Ethiopia protects private property. The investment proclamation also provides investment guarantees against measures of expropriation and nationalization, that only may occur when required for public interest and in compliance with the requirements of the law.

 3.Other Guarantees

Ethiopia is a member of the World Bank affiliated Multilateral Investment Guarantee Agency /MIGA/ which issues guarantees to investors against non-commercial risks such as expropriation. Moreover, Ethiopia is at any time ready to conclude bilateral investment promotion and protection agreements with any country. Ethiopia has recently concluded such agreements with a number of developed countries. Ethiopia has also signed the World Bank treaty, ''the Convention on Settlement of Investment Disputes between States and nationals of other states /ICSID/

Market Access

Domestic Market

With a population of about 77 million, Ethiopia provides a steady and growing domestic market, which is one of the largest in Africa.

Regional Market

Ethiopia is a member of the Common Market for Eastern and Southern Africa (COMESA) agreement embracing 20 countries in Eastern and Southern Africa. Exports and imports with member countries enjoy preferential tariff rates.


Everything but Arms of the European Union (EBA)

Ethiopia is a beneficiary of Everything but Arms (EBA) of the European Union.

African Growth and Opportunity Act (AGOA) and the Generalized System of Preference (GSP)

Under the African Growth and Opportunity Act (AGOA) program, Ethiopia is entitled to duty-free and quota-free U.S. market access and essentially all export products of Ethiopia are eligible for duty-free and quota-free U.S. market access.

 Major Investment Incentives

To encourage private investment and promote the inflow of foreign capital and technology into Ethiopia, the following incentives are provided to investors /both domestic and foreign/ engaged in new enterprises and expansion projects in areas qualified for investment incentives.

1. Customs Import Duty

-         One hundred percent exemption from the payment of import customs duties and other taxes levied on imports is granted to all investment capital goods, such as plant and machinery, equipment etc. Spare parts worth up to 15% of the value of the imported investment capital goods, provided that the goods are not produced and not available locally in comparable quantity, quality and price are also treated in the same manner.

-          Investment capital goods imported without the payment of import customs duties and other taxes levied on import may be transferred to another investor enjoying similar privileges.

-          Exemptions from customs duties or other taxes levied on imports are granted for raw materials necessary for the production of export goods.

2. Exemptions From Payment of Export Customs Duties

Ethiopian products and services destined for export are exempted from the payment of any export tax and other taxes levied on exports.

3. Income Tax Holiday

Any income derived from an approved new manufacturing and agro-industry investment or investment made in agriculture shall be exempted from the payment of income tax for the periods on depicted in the following table depending upon the area of investment selected, the volume of export to be made, and the location in which the investment is undertaken.

Profit tax holiday is granted subject to council of Ministers Regulation on the basis of the investment proclamation No.280/2002 as follows: