Ethiopia Mining General Business

Overview of the Legal System

Ethiopia is the oldest independent country in Africa and is among the most stable countries in that region
It is a federal country divided into nine national regional states and two chartered cities
Its economy revolves around agriculture; it is one of Africa’s leading coffee producers
The IMF ranks it among the five fastest growing economies in the world
In 2017/18 the economy grew at a rate of 7.7%
The annual inflation rate in Ethiopia rose to 10.9% in January 2019 from 10.4% in the previous month. It is the highest inflation rate since October. Inflation Rate in Ethiopia averaged 16.15% from 2006 until 2019, reaching an all-time high of 64.20% in July of 2008 and a record low of -4.10% in September of 2009.
According to Ethiopian Investment Commission, in the first six months of the 2017/18, more than USD 2.2 billion investment capital came to Ethiopia in the form FDI, showing a 22% increment from last year.
Major investors include China, Turkey and India
Sectors attracting the most FDI include Agriculture (particularly horticulture) and leather goods

Is an autonomous government institution accountable to the county’s Investment Board
Has recently been restructured with a view to becoming more effective at attracting FDI and improving the services provided to investors
Its functions include:
- Advising the government on policy measures needed to create an attractive investment climate for investors
- Promoting the country’s investment opportunities and conditions to foreign and domestic investors
- Providing investors with information on sector-specific business opportunities, business incorporation procedures and related regulations, as well as employment regulations
- Issuing investment permits, business licences and construction permits
- Registers all enterprises and technology transfer agreements

Corporate income tax- 30%
Capital gains tax - 15% for immoveable assets and 30% for shares and bonds
Withholding tax levied on imported goods:
- 3% on the sum of cost, insurance and freight
- 2% in the case of business entities, non-governmental organisations, private non-profit institutions and government agencies
Withholding tax on:
- dividends 10%
- interest 5%
- royalties 5%
VAT- 15%
Tax on interest- 5%
Excise tax- excise tax is assessed on 18 classes of goods, ranging from 10% for textiles and electronics to 100% for alcoholic beverages

Ethiopia operates a floating exchange rate
The National Bank of Ethiopia (NBE) is responsible for foreign exchange control
All outgoing and some incoming foreign currencies are regulated
Foreign investors must obtain NBE approval in order to open foreign exchange accounts in commercial banks in Ethiopia
Foreign investors have the right to make the following remittances out of Ethiopia in convertible foreign currency:
- Profits and dividends accruing from investments
- Principals and interest payments on external loans
- Payments related to technology agreements
It has a commodity exchange, currently it does not have a stock exchange

A judgment obtained in a foreign jurisdiction can only be enforced in Ethiopia if a written application to this effect is set up
Ethiopia is not a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958
It is a signatory to the Multilateral Investment Guarantee Agency
It has signed but not ratified the International Centre for the Settlement of Investment Disputes
An award by an international tribunal may not always be enforced in Ethiopia