About Ethiopia

Geography, people and political system

Ethiopia, formally known as the Federal Democratic Republic of Ethiopia, is the oldest independent country in Africa. The country's economy is based on agriculture, which accounted for approximately 47% of GDP in 2007, along with various industries (i.e. food processing, beverages, textiles, leather, chemicals, metals processing and cement), and services. Ethiopia's export commodities include coffee, qat, gold, leather products, live animals and oilseeds, with Germany, Saudi Arabia, Djibouti, China, Italy, Japan and the Netherlands listed as the country's primary export partners.

Approximately 83.1 million people live in Ethiopia, of which 2.3 million reside in Addis Ababa, the country's capital, and surrounding areas (United Nations, 2007). Major Ethiopian languages include Amharic, Oromo, Tigrinya and Somali, with Christianity and Islam considered the dominant religions.

Strong Economic Growth and Attractive Investment Climate

A stable economic environment is one reason why foreign investors invest in Ethiopia. The macro-economic environment is stable, experiencing double-digit growth since 2003. Stable exchange rates, government commitment to the private sector, safe and secure working and living environments and the absence of corruption have also contributed to the favourable investment climate. As well, all major economic sectors have been liberalized and remittance from invested capital is permitted out of the country.

Government guarantees as stated in Ethiopia's Investment Code (1991) is provided to foreign investors, in addition to providing constitutional protection from expropriation. Ethiopia is a member of the Multilateral Investment Guarantee Agency (MIGA) and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. The country provides one-stop professional services for foreign investment through the Ethiopian Investment Agency (EIA).

Tax incentives are also provided to foreign investors. All imported investment capital goods (plant machinery, construction materials, etc.) are 100 percent exempted from customs duty charges, including spare parts worth up to 15 percent of the imported investment capital goods. In addition, exemption is provided for import of raw materials needed for the production of export goods. Products and services developed in Ethiopia are also exempt from paying export taxes on goods leaving the country.

Situated in north eastern Africa, Ethiopia covers over 1.13 million square kilometres. Ethiopia has easy access to the major ports of the Horn. Ethiopia is a member of the Common Market for Eastern and Southern Africa (COMESA), which provides it with preferential tariff rates on exports to 33 member countries. Ethiopia's participation in the WTO is currently under negotiation.

Ethiopia's labour force boasts 10,000-plus new university graduates each year. Graduates come from a range of disciplines, which include business, management, economics, accounting, law and engineering. Technical and vocational education and training schools are also attended in Ethiopia. Private universities and colleges are also popular in Addis Ababa and regional cities.

Infrastructure standards are good in Ethiopia, with three international and 18 domestic airports providing flight services to over 45 cities on four continents and domestic flights to 26 destinations. Capital investments in airport infrastructure are on-going, with a modern air cargo terminal and maintenance hanger approaching completion at Bole International Airport in Addis Ababa. Road infrastructure is also a priority, with an expanding road network and international highways linking Ethiopia with bordering countries. Travellers may also connect to regional cities via a 500-mile rail service, which links Addis Ababa to the port of Djibouti.

An established telecommunication network connects cities with smaller towns. International communications are maintained through two satellite earth stations, which provide telephone, Internet and other communication services in Ethiopia.

Ethiopia's power supply consists of hydropower and promising geothermal energy resources, which includes nine hydro-electric power plants. The total electricity generated is less than two percent of the potential power supply; further developing the country's power supply is an area of government focus. Industrial towns are connected to the country's power grid and electricity is relatively affordable. Foreign investors are allowed to participate in power generating projects, however grid transmission and distribution remains the government's domain.