Geography
A major part of Ethiopia lies on the Horn of Africa, which is the easternmost piece of the African landmass.
Its geographic position ranges from deserts along its eastern fringe, the Choke and Mandebo Mountains goes in its focal center, and tropical backwoods in the southern scopes.
Ethiopia is dominated by a complex of mountains, levels and lakes, all partitioned by the Great Rift Valley that is encompassed by swamps and steppes.
Demographics
Ethiopia is a predominantly agricultural country – more than 80% of the population lives in rural areas. Infant, child, and maternal mortality have fallen sharply over the past decade, but the total fertility rate has declined more slowly and the population continues to grow.
Total population: 49.1%
Male: 57.2% | Female: 41.1%
Economic overview
The economy of Ethiopia is concentrated in the services and agriculture sectors.
Improved agriculture production was mostly a result of the adaptation of improved seeds and chemical fertilizer, according to International Food Policy Research Institute.
Ethiopia is ranked 27th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages with an increase in investment freedom and improvements in judicial effectiveness and monetary freedom offsetting declines in business freedom, labor freedom, and trade freedom.
The economy of Ethiopia is a mixed and transition economy with a large public sector. The Ethiopian government is in the process of privatizing many of the state-owned businesses and moving toward a market economy. However, the banking, telecommunication and transportation sectors of the economy are dominated by government-owned companies.
The telecommunication, financial and insurance services, air and land transportation services and retails are considered as strategic sectors and also the fastest – growing economies in the world and is Africa’s second most popular country.
The government pursued a contractionary fiscal policy stance, prioritizing spending in pro-poor and growth-enhancing sectors, including education, health, agriculture, and roads.
Financial Services
The African financial services sector has greatly benefited from international banks playing a role in private equity and expansion deals.
Key sectors in Ethiopia
Telecom Services
Telecommunications is another restricted sector in Ethiopia.
Experts estimate that mobile phone penetration in Ethiopia hovers between 10 and 15 percent. Internet penetration is below 1 percent largely due to poor infrastructure and very high prices.
Heavy construction
Ethiopia’s infrastructure spending, as a percentage of GDP, is the highest in Africa. The Ethiopian government rightfully makes the delivery of infrastructural services, such as transport and energy, a focus of its development plan.
Heavy construction sectors, including cement and steel, are the ancillary beneficiaries of this infrastructure build.
Tax in Ethiopia
Direct Tax
The Direct Taxes are divided into five categories:
- Personal income tax,
- Rental tax,
- Withholding tax,
- Business profit tax and
- Other taxes. (Income From Rent Of Patent And Copyright, Income From Winning Lottery, Income From Share In Company…etc)
Indirect Tax
The Value Added Tax (VAT)
The VAT rate is 15 percent of the value of every taxable transaction by a registered person and all imports of goods and services other than those VAT exempted items in Ethiopia. Taxable transactions which shall be charged with zero percent are: export of goods or services to the extent provided in the regulations. The rendering of transportation or other services directly connected with international transport of goods or passengers as well as the supply of lubricants and other consumable technical supplies taken on board for consumption during international flights.
Excise Tax
Excise Tax is payable on a range of consumer goods, whether produced locally or imported, e.g., alcohol, tobacco, salt, fuel, television sets, cars, carpets and toys. Its rates vary from 10% percent on receivers, garments and textiles of any type and fabrics to 100 percent on perfumes, vehicles above 1,800 cc and alcoholic drinks. It is payable in addition to VAT.
Export Tax
Export Tax is levied on raw and semi-processed hides and skins, and wet-blue cow hide, pickled sheep skins with wet-blue sheep and wet blue goat skins at flat rate of 150%
Investing in Ethiopia
Political and Social Stability
Ethiopia is the oldest independent country in Africa, and is among the most stable countries in the region and is most know for its social stability and least crime rate, as well as strong public institutions.
Growing Economy
Ethiopia was the 12th fastest growing economy in the world, managing to grow faster than other African countries.
Through an ordinated fiscal policy and a tight monetary policy, the Government has brought down inflation to single digits.
Ethiopia is raked higher than its regional peers (Kenya, Rwanda and South Africa) for its conducive macroeconomic environment
Excellent Climate and Fertile Soils
By land size, Ethiopia is the 27th largest country in the world and given its diverse topography and geographical location, it is suitable for the production of some of the world’s most coveted food crops – cereals, pulses, oil seeds, a wide range of fruits and vegetables, coffee, tobacco, sugar cane, tea and spices, among others.
Ethiopia is also among the world’s largest producers of coffee, and the 3rd largest producer of Arabica beans in the world. Ethiopia also is among the top non-EU exporter of cut-flower to the EU market and the 2nd largest flower exporter from Africa.
Strong Guarantees and Protections
Private property is protected by the Constitution and the investment law.
A foreign investor has the right to make remittances out of Ethiopia in convertible foreign currency at the prevailing rate of exchange.
Abundant and Affordable Labor
Ethiopia’s labor law is in line with international conventions and has the second largest labor force in Africa.
The country’s minimum wage is among the lowest in Africa, with only 5 countries – Burundi, Uganda, Egypt, Gambia and Malawi.
Regional Hub with Access to a Wide Market
Ethiopia is the second largest market in Africa, and is also part of the Common Market for Eastern and Southern Africa (COMESA) comprising 19 member countries and over 400 million people.
Addis Ababa is home to key international organizations such as the African Union (AU) and the United Nations Economic Commission for Africa.
Ethiopian products have duty-free, quota-free access to the U.S. and EU markets under the African Growth and Opportunities Act (AGOA) and the Everything But Arms (EBA) initiative, respectively.
Improved Economic Infrastructure
Power production has increased steadily over the last ten years, with 99% sourced from clean energy in the form of hydropower. Cheapest electricity rate in Africa and the whole world.
Tourism
Ethiopia has an excellent network of national parks, UNESCO World Heritage Sites and other tourist attractions.
National parks include the scenic Simien and Bale Mountains, with their wealth of endemic wildlife, while historical sites range from the atmospheric rock-hewn churches of Lalibela to the towering steal of Aksum and castles in Gondar.
Ethiopia is also known as the origin of the human kind and also the origin of coffee.