The Ethiopian Investment Commission (EIC) has issued 40 new investment permits to foreign companies, allowing them to engage in retail, wholesale, export, and import trade. This move marks a major step in liberalizing Ethiopia’s economy, which has historically restricted foreign access to key trade sectors.
New Investment Rules Take Effect
Zeleke Temesgen, the EIC’s Director General, confirmed the update during a press briefing at the Invest in Ethiopia 2025: High-Level Business Forum. He stated that the permits follow five months of policy revisions and legal drafting aimed at opening up previously closed sectors.
“Since the directive was approved, 40 foreign businesses in export, import, retail, and wholesale have been licensed to operate in what were previously prohibited sectors,” Zeleke said.
While the EIC has not yet released the names of the approved companies, Zeleke described the liberalization effort as a “significant step forward” for Ethiopia’s economy.
What the New Directive Allows
The new rules let foreign investors trade in raw coffee, khat, oilseeds, pulses, hides and skins, forest products, poultry, and livestock sourced from local markets.
On the import side, foreign companies can now enter almost any sector — except for fertilizer and petroleum, which remain restricted for national security and strategic reasons.
Some of the newly licensed sectors include:
- Electric vehicles
- Edible oils
- Livestock production
- Paraffin oil
- Khat export
Minimum Requirements for New Entrants
Foreign companies that have never operated in Ethiopia must present a market and purchase order contract worth at least USD 500,000 to export eligible products.
Meanwhile, foreign-owned manufacturing businesses that rely on Ethiopian raw materials must disclose their supply chains and provide proof of production practices. This aims to prevent misreporting and ensure supply transparency.
“We’ve lost significant opportunities due to restrictions on foreign wholesale and retail businesses,” Zeleke said. “With this liberalization, we’re now seeing real benefits.”
Security and Perception Challenges
When asked about security concerns, Zeleke acknowledged ongoing challenges but emphasized that the perception of risk often overshadows the reality on the ground.
“There are real security concerns in some areas,” he said. “But Addis Ababa is safe, and the government is working hard to restore peace across the country.”
He added that misperceptions—even among Ethiopians living abroad—are harming the country’s investment image and need to be corrected through awareness efforts.
Legal Reforms Support Business Climate
Zeleke also pointed to major changes in Ethiopia’s legal framework to support these reforms. The government has been reviewing and updating more than 85 outdated laws, some dating back to the 1970s and 1980s.
“This is a critical part of improving Ethiopia’s ease of doing business,” he said.
Legal predictability and transparency are key to attracting long-term investors, and these updates are designed to create a more stable, investor-friendly environment.
Foreign Direct Investment Trends
China remains Ethiopia’s top foreign investor, with 4,510 active projects, making it the leader in both capital and project volume. Other notable investors include companies from India, Turkey, and the United Arab Emirates, according to the EIC.
In the 2023/24 fiscal year, Ethiopia attracted USD 3.92 billion in foreign direct investment (FDI) — a figure that could grow as the country continues to open its markets and improve business regulations.
What This Means for Ethiopia’s Economy
The recent move to open retail and wholesale sectors to foreign investors reflects Ethiopia’s shift toward a more open-market economy. This approach not only brings in capital but also introduces new technologies, job opportunities, and trade networks.
Ethiopia, Africa’s second most populous country, has long been seen as a promising investment destination. However, security concerns and tight market controls have kept some foreign players away. The latest reforms aim to change that by making the market more transparent, competitive, and accessible.
