Manufacturing business in Ethiopia offers huge opportunities and potentials in a range of well-developed world class export sectors such as textiles and garments, leather and leather products, food staffs and pharmaceutical and metal and engineering products.
Area:1.104 million square kilometers
Arable land: 513,000 square kilometers (45%)
Irrigated land: 34,200 square kilometers (3%)
Population: 107 million in 2022 (CSA Population Projections for Ethiopia 2007-2037)
Working age Population: 50.7%
Population Under age of 15: 40.1 million
GDP: $111 Billion (2020/2021 NBE annual report)
Per Capita GDP $1,091.8 (2020/2021 NBE annual report)
REASON FOR INVESTMENT IN ETHIOPIAN MANUFACTURING SECTOR
GROWING POPULATION AND RISING CONSUMER SPENDING
The total population of Ethiopia is over 107 million in 2022 (CSA Population Projections for Ethiopia 2007-2037) of which 22.5% of the total population is residing in urban areas. Ethiopia’s population will rise to 119 million and 131 million in 2027 and 2032, respectively. Ethiopia is the second populous countries in Africa (next to Nigeria) and thus potentially one of the largest domestic markets in Africa.
Young and Trainable Labor Force
- Ethiopia’s labor law, which regulates worker-employer relations, is in line with international conventions.
- Ethiopia has a young and trainable labor force and a supportive government policy that facilitates labor sourcing for industries.
Competitive Incentive Packages
- Customs duty payment exemption on capital goods and construction materials, and on spare parts whose value is not greater than 15% of the imported capital goods’ total value;
- Investors have the right to ask a refund of customs duty paid on inputs (raw materials and components) when buying capital goods or construction materials from local manufacturing industries.
- Income tax exemption of up to 6 years for manufacturing and agro-processing.
- Additional 2-4 years income tax exemption for exporting investors located within industrial parks and 10-15 years exemption for industrial park developers;
- Carry forward of losses for half of the tax holiday period;
- Several export incentives, including the Duty Draw-Back, Voucher, Bonded Factory, and Manufacturing Warehouse, and Export Credit Guarantee schemes.
- In addition, the government guarantees the remittance of profit, dividends, principals, and interest payments on external loans, and the provision of land at competitive lease prices.
If the Investment is made with in Industrial Parks and 80% of the product is for Export or Supply Input to Producer Exporter:
- Additional 2 years income tax exemption if industrial park is in Addis Ababa or Special zones of Oromia surrounding Addis Ababa, or
- Additional 4 years income tax exemption if industrial park is located in other areas.
If the Investment is made out of the industrial parks and 60% of the product is for Export or Supply Input to Producer Exporter:
- The investor is eligible for additional 2 years income tax exemption
Ethiopia’s Gross Domestic Product (GDP) stands at USD 107 bn (2019/2020) and it is among the fastest growing global economies. An average growth of 8.2% per annum has been achieved over the past five years (2015/16-2019/20).
Ethiopia is considered as one of the most stable countries in Africa. It is a diplomatic and political hub and hosts the headquarters of the African Union (AU) as well as United Nations Economic Commission for Africa (UNECA). Ethiopia is also a key proponent of peace on the continent and is regularly involved in conflict resolution in the region.
HUGE NATURAL RESOURCE
Ethiopia has vast land and huge natural resource base for developing new areas and improving existing ones. The country has suitable growing conditions for production of a range of inputes for ago processing plants.