Ethiopia unveils new directive that permits engagement of foreign investors in retail, wholesale, import and export trade, the business areas that had been exclusively preserved for local companies for years.
The directive issued in March by the Ethiopian Investment Board, chaired by Prime Minister Abiy Ahmed officially announced on Thursday by Hanna Arayaselassie, Commissioner of the Ethiopian Investment Commission.
According to Hanna, from now on, foreign investors can engage in export trade investment of raw coffee, chat, oilseeds, pulses, hides and skins, forest products, poultry, and livestock.
To engage in exporting raw coffee, investors must procure from Ethiopia an average of at least $10 million worth raw coffee annually for the last three consecutive years and contractually agree to attain the export of at least $10 million worth of the commodity within the permit year, she said.
The Ethiopian Reporter reported that opening up the import, export, and wholesale and retail trade sectors can have several potential disadvantages weakening local businesses as Ethiopian small and medium-sized enterprises should compete with larger, more established foreign companies.
Similarly, this could lead to increased market concentration, exacerbate the chronic unemployment, one of the most difficult macroeconomic challenges plaguing the economy, the report says.
Prime Minister Abiy’s administration has been pursuing since he assumed office six years ago, the latest policy shift marks a major departure from an investment regime that had been in place for decades.
Since Abiy took office in 2018, various economic reforms, including the liberalization of telecom services, have taken place. And the liberalization of the retail, wholesale, import and export businesses, according to the investment commission, is part this homegrown economic reform.
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