Ethiopia’s market-oriented economic development strategy embraces wide reforms, with inducements to both domestic and foreign private investments. The private sector is encouraged to invest in most areas of the economy. Even those economic areas hitherto exclusively reserved for the government, namely defense industries, hydropower generation, and telecommunications services are now open for private, domestic and foreign investors. The Agriculture, Manufacturing, Mining, Power, Telecommunications and Tourism sectors provide wide range of investment opportunities while investors are also encouraged to look for opportunities in the government privatization programs. Foreign investors may invest on their own or jointly with domestic investor(s).
Forms of Investment
1. Joint Ventures
A foreign investor can team up with a domestic investor or company for a joint investment, usually in the form of a partnership, private limited company or a share company. Under the Investment Proclamation No.280/2002, a foreign investor requires a minimum equity capital of USD 60,000(except in consultancy services and publishing) to enter into a joint venture partnership with a domestic investor. The minimum equity capital can be raised either in cash or in kind, in the form of capital goods such as machinery, equipment or other tangible assets, imported specially and exclusively to establish the enterprise. There is no restriction at all in share ownership in a joint venture.
The minimum capital requirement for foreign investors investing in areas of engineering, architectural, accounting and audit services, project studies or business and management consultancy services or publishing is only USD25,000 per project when it is made jointly with a domestic investor.
2. Wholly Foreign Owned Investments
A foreign investor, who intends to invest on his/her own, except in consultancy services and publishing, is required to invest not less than USD 100,000 in cash and/or in kind as an initial investment capital to start business. The minimum capital required of a foreign investor investing in consultancy services and publishing is USD 50,000, which may be in cash and/or in kind.