Foreign Investors Investment Participation in Restricted Expenditures, Revenues, Wholesale and Retail Businesses (Directive No. 1001/2016)
Summary
This directive outlines the conditions and requirements for foreign investors participating in previously restricted expenditure, revenue, wholesale, and retail business sectors in Ethiopia. It aims to gradually open these sectors to foreign investors with experience and capacity, while promoting domestic investment and ensuring fair competition. The directive details specific eligibility criteria, including capital requirements, market access, and operational commitments for various sub-sectors like coffee export, oilseed export, pulses export, hides and skins, forest products, livestock, and retail businesses (supermarkets, hypermarkets, malls). It also establishes responsibilities for relevant government bodies in implementing and overseeing these new investment opportunities.
Who's affected
Foreign investors seeking to engage in export, import, wholesale, and retail businesses that were previously restricted, as well as domestic businesses and government bodies involved in regulating and facilitating these sectors.
Action required
Foreign investors should review the specific requirements for the business sectors they intend to enter and ensure they meet the outlined capital, experience, and contractual obligations before applying for an investment license.
Key points
5- The directive opens previously restricted sectors to foreign investment under specific conditions.
- Stricter capital and experience requirements are in place for certain export and retail activities.
- Government bodies have defined roles in facilitation, regulation, and monitoring.
- The directive aims to balance foreign investment with the development of domestic capabilities.
- Compliance with contractual obligations is crucial for maintaining licenses.
Show 2 more
Requirements
8- Specific capital investment thresholds for participation in different export sub-sectors (e.g., coffee, oilseeds, pulses).
- Demonstration of prior export experience and market access for certain goods.
- Commitment to specific annual export volumes for foreign investors without prior experience.
- Requirements for import business participation, including being a manufacturer, agent, or having a detailed import plan.
- For wholesale trade, commitment to developing modern marketing networks and logistics.
- For retail trade, specific requirements for floor space (2000 sqm for supermarkets, 5000 sqm for hypermarkets, 10000 sqm for malls) and the number of outlets to be opened within three years.
- Provisions for joint committees to monitor implementation and take corrective actions.
- Government bodies are required to establish detailed institutional systems for implementation, create transparent and fair domestic market systems for export products, strengthen tax collection for import businesses, and establish mechanisms to control anti-competitive practices in wholesale and retail.
Show 5 more
Rights and permissions
3- Foreign investors have the right to participate in previously restricted expenditure, revenue, wholesale, and retail business sectors under the conditions specified in the directive.
- The right to obtain investment and business licenses upon meeting the stipulated requirements.
- The right to have their investment and business licenses renewed if they fulfill their contractual obligations.
Restrictions
5- Foreign investment is restricted in certain sub-sectors of expenditure, revenue, wholesale, and retail businesses, with specific conditions for entry.
- Minimum capital and experience requirements are stipulated for foreign investors in various sectors.
- Restrictions on import businesses, excluding fertilizers and fuel wholesale.
- Specific criteria for the size and number of retail outlets (supermarkets, hypermarkets, malls) that foreign investors can establish.
- The directive implies that failure to meet contractual obligations can lead to the suspension or cancellation of investment and business licenses.
Show 2 more
Penalties
1- Failure to meet the contractual obligations of an investment or business license may result in the suspension or cancellation of the license and associated rights and benefits.
Objectives
5- To gradually open previously restricted sectors (expenditure, revenue, wholesale, retail) to foreign investors with proven experience and capacity.
- To promote domestic investment and ensure fair competition within these sectors.
- To facilitate the transition of foreign investment into value-adding sectors.
- To establish a sustainable national economy based on domestic capabilities.
- To specify the fields in which foreign investors can participate in restricted sectors, establish implementation conditions, and outline facilitation and control roles for relevant bodies.
Show 2 more
Organizations
8- Ethiopian Investment Commission
- Ethiopian Investment Board
- Ministry of Trade and Regional Integration
- Ministry of Industry
- Ministry of Revenues
- Ministry of Agriculture
- Customs Commission
- National Bank of Ethiopia
Show 5 more
Legal references
4- Investment Regulation No. 474/2012
- Investment Proclamation No. 1180/2020
- Trade Registration and Licensing Proclamation No. 980/2016 (as amended)
- Business Premises Registration Directive No. 17/2011