Ethiopia Market Entry

Ethiopia Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

A reliable local representative or partner is absolutely essential, especially in the case of deliveries of investment units and participation in tenders. The Ethiopian intermediary is also a requirement in defense and security industry supplies for Ethiopian state institutions. The representative office can help with the search for partners, but it is possible to contact the local chamber of commerce directly. Cooperation can only be started after a thorough vetting of the Ethiopian representative, in addition to being vetted by the local chamber of commerce, also by checking the references of other partners and, if possible, also bank information.

According to cheeroutdoor.com, all imports into Ethiopia can only be carried out by Ethiopian citizens or companies registered in Ethiopia with the appropriate license from the Ethiopian authorities. In order to release currencies for the payment of imports, the company must submit a total of three price offers to the Ethiopian bank (requirement for tenders), whereby the most favorable price does not have to be selected if it provides a written justification.

Only the import of narcotics and pornography is expressly prohibited. The import of arms and ammunition is limited to the state sector represented by the Ministry of Defense and its licensed companies.

Import documents: certified copies of the import invoice, bills of lading, Export Declaration, contract, inspection of the quality and completeness of the goods before shipment.

Customs System: Ethiopia is a member of the World Customs Organization (WCO) and the Customs Cooperation Council (CCC). Customs duties are determined from the value on the delivery invoice including transport, most often from the CIF value.

All goods must pass Pre-shipment Inspection (PSI) through the Ethiopian Revenues and Customs Authority (ERCA). Inspections of the goods should ensure that the quality and quantity of the goods are in accordance with the conditions specified in the contract. According to the Central Bank regulation, an import permit is only issued to an importer who uses the services of the state-owned monopoly Ethiopian Shipping and Logistics Service Enterprise.

Ethiopia is among the beneficiaries of the European Union’s initiative for the most heavily indebted poor countries (HIPC) Everything but Arms, which means that EU imports from the least developed countries are realized without any trade barriers (tariffs, quotas). Another advantage for Ethiopia is the initiative of the US African Growth and Opportunity Act (AGOA), which means the introduction of duty-free importation of almost all goods to the US from sub-Saharan African countries (currently most used in textile exports). The application of AGOA benefits was unilaterally suspended by the US on 01/01/2022 due to the political and humanitarian situation in Ethiopia.

Forms and conditions of operation on the market

A condition for establishing an office or representative office is registration and obtaining a license with the Ethiopian Investment Commission, ([email protected]).

Temporary registration is possible – a typical example is registration for the purpose of implementing a won tender, or permanent registration – for the purpose of a company’s investment in the country.

The Ethiopian Commercial Code offers 4 basic registration frameworks:

  1. exclusive ownership

2nd branch

  1. joint venture
  2. business organization – either in the form of a private limited liability company (PLC.) or a joint-stock company

More information: www.investethiopia.gov.et

Marketing and communication

The tradition of quality and reasonable prices of Czech products still persists in Ethiopia, but it is gradually being pushed out by competition from India, Turkey and China. A prerequisite for success is a high-quality and, above all, reliable Ethiopian representative. Regular participation in the annual trade fairs in Addis Ababa should be considered – marketing and advertising are still in their infancy in Ethiopia. The most important means are leaflets and advertisements in newspapers, radio and television. The quality of the campaigns is also different due to the client’s often low budget.

Issues of intellectual property protection

Intellectual property protection is weak in Ethiopia and is frequently violated. You can defend yourself by registering a production brand and campaigning in local media. The protection of intellectual property is one of the main topics in Ethiopia’s several times interrupted and renewed negotiations with the WTO.

Public procurement market

Tenders are published in the press, especially in the English-language government newspaper The Ethiopian Herald. The closing date is often postponed. Repeated tendering is not an exception. Some state-owned companies do not even issue tenders publicly, and for smaller contracts they directly approach 2-3 pre-selected or previously proven companies and choose from their offers. Private companies do not have to issue public tenders at all, unless it involves the use of state funds. Medical devices and medicines must be registered in the country in advance.

Foreign companies that are not established in Ethiopia, or do not have a competent representative, have a very difficult position when penetrating the Ethiopian market. We work with bid bonds (approx. 1-3% of the value of the contract), mostly in the form of bank guarantees, and with performance bonds (approx. 10% of the value), which causes significant problems because it is money tied up in the long term.

Information on published tenders can be obtained from paid internet portals, e.g.: www.africagateway.info, www.tendersinfo.com, www.dgmarket.com

Payment terms, payment ethics and resolution of commercial disputes

The place and method of resolving the dispute must be agreed in detail in advance already in the terms of the contract. It is ideal to use rules agreed upon under international law.

The risks are the complexity of the procedures and the regulatory framework (customs, taxes), the language, the difficulty of establishing contact with distributors, the inflexibility of the state apparatus and its bureaucratic procedures and, last but not least, the complicated land transport from the port of Djibouti.

In Ethiopia, the usual payment term is an irrevocable letter of credit (L/C), confirmed by the exporter’s bank and payable immediately against the documents. By law, a letter of credit must be opened for a contract exceeding USD 5,000.

Advance payment is not normally accepted by the Ethiopian authorities (even for smaller importers). Large (financially strong) global suppliers sometimes provide loans, or L/C with longer term. The payment morale of established Ethiopian importers (and therefore the state) is and has been mostly good in the past. However, as of 2018, payment delays of up to half a year are occurring due to a critical shortage of hard currency in Ethiopia.

Visas, fees, specific conditions for traveling to the territory

Only citizens of Djibouti and Kenya are exempt from visa requirements. For others, visas are issued by Ethiopian embassies and consulates abroad, tourist visas can only be obtained electronically (issuance of visas on arrival at the airport is suspended from June 2021). The relevant Ethiopian Embassy in Berlin for the Czech Republic is: Embassy of the Federal Democratic Republic of Ethiopia Boothstrasse 20a, D-12207 Berlin tel.: +49 30 77 20 600 fax: +49 30 77 20 624 e-mail: [email protected] -online.de, website: http://aethiopien-botschaft.de/

Tourist (single-entry) and business (single-entry or multiple-entry) visas are issued for a period of 30 days with the possibility of extension to 90 days. The visa can be extended by applying at the immigration office in Addis Ababa. In the same way, it is necessary to proceed before departure in case of exceeding the period of stay beyond the period of validity of the visa (for which, of course, there is a fine).

Required documents: passport valid for 6 months after the validity of the visa, completed questionnaire, photograph, international vaccination card with confirmed vaccination against yellow fever, return ticket and proof of solvency. A letter from the inviting organization is also required for the issuance of a business visa. It is recommended to always verify the currently required documents at the relevant Ethiopian embassy. (see also aethiopien-botschaft.de)

Visitors to Ethiopia are required by law to declare all imported currency (the amount is not limited) on a Currency Declaration Form. Given that the export of currencies is limited (max. 3,000 USD per person), it is advisable to fill in this foreign exchange declaration in case of importing a large amount of currencies and thus avoid difficulties during their re-export. Export of local currency above 200 ETB is not allowed.

Compared to other African countries, Ethiopia is relatively safe – with the exception of the vast border areas between Ethiopia and Somalia (Ogaden), the entire Sudanese border and Gambella, and the border with Kenya. Pickpocketing and street robberies are not excluded (the area around the Piazza or the Merkato market is famous), but it is possible to avoid them by taking the necessary precautions. Information about the current security situation in the country is available on the website of the Ministry of Foreign Affairs of the Czech Republic, or directly on the website of the Embassy of the Czech Republic in Addis Ababa. Due to Ethiopia’s active participation in the peacekeeping mission in Somalia, a long-term higher state of alert was declared due to the possibility of Al Shabab attacks.

Employment of citizens from the Czech Republic

A residence permit is granted based on a work permit issued by the Ethiopian Investment Commission (EIC). The procedures are administratively very demanding. The situation is not made easier by the widespread belief that there is enough domestic labor. The rapidly growing population generates a large amount of labor, but without the necessary qualifications. Senior positions may be occupied by foreigners without restriction, others only with the permission of the EIC (if local power is not available). Local labor costs are low even compared to other African countries.

Many established international drugs are available in Ethiopia, but due to the different trade names, it is necessary to know their composition. Cash payment is required for medical treatment in both private clinics and government hospitals. In case of more serious difficulties, it is recommended to fly out of the country. Travel insurance covering health risks is essential. In case of health problems, it is possible to visit the Korean Hospital in Addis Ababa, Dejazmach Balcha Memorial Hospital, established by the Russian Red Cross Society, or the Nordic Medical Centre.

Fairs and events

One of the main organizers of trade fairs in Ethiopia is the Addis Ababa Chamber of Commerce and Sectorial Associations (AACCSA), which is planning the following trade fairs in the near future:

International Medical Trade Fair (May 12-16, 2022), Addis Ababa exhibition center

– the fair focuses on the healthcare sector, its aim is to mediate the exchange of experience and information and attract investments in the field

Ethiopia agro-food Addis Ababa (June 2-4, 2022)

– fair focusing on agriculture, engineering, food industry, processing and packaging technology

plastprintpack Ethiopia (June 9-11, 2022), Ethiopian Skylight Hotel, Addis Ababa

– a fair focused on plastics, printing and packaging technologies

4th Ethiopia International Trade Exhibition 2022 (July 7-9, 2022), Millennium Hall, Addis Ababa

– events presenting new technologies, innovative solutions for industry and services

Ethio Poultry Expo (October 27-29, 2022), Ethiopian Skylight Hotel, Addis Ababa

– an event focusing on the behavior of poultry and its processing

Ethiopia International Trade Fair (November 17-20, 2022), Addis Ababa exhibition center

– a general fair where producers of consumer goods, engineering products, chemicals and fertilizers, medical equipment, food technologies, etc. are presented.

ETHIO HEALTH (March 2023), Millennium Hall, Addis Ababa

– a fair focusing on the healthcare sector, pharmaceuticals, wellness

Ethiopia Market Entry