Ethiopia - Selling to the Government Ethiopia - Selling to the Government
In Ethiopia, the Government of Ethiopia (GOE) and its public institutions are the foremost buyers of foreign goods and services. This is due to the Ethiopian economy being largely dominated by large public investments in infrastructure and the State-Owned Enterprises (SOEs) being very active in many areas of business. Public Procurement and Property Disposal Service (PPPDS) http://www.pppds.gov.et/ carries out procurement from the international market for public institutions. Government procurement is conducted by a competitive bidding process and authorization of the bidding company is required to be eligible for participation.
The Ethiopian government often finances public works projects through borrowing from Multilateral Development Banks, such as the World Bank. Please refer to the “Project Financing” Section in “Trade and Project Financing” for more information.
There are two types of government tenders, national and international. National tenders are restricted to local companies’ participation, while international tenders are open for all including foreign companies. U.S. companies that do not have a local office in the country should have a local agent to successfully bid on international tenders. Local agents have on occasion represented competing foreign companies resulting in inadequate support to U.S. companies in international tenders. It is advisable for U.S. companies to carefully select their local partners based on a thorough due diligence investigation. The U.S. Foreign Commercial Service office in Addis Ababa can provide support in helping U.S. companies select a local partner.
Bureaucratic procedures, delays in the decision-making processes and repeated cancelation of tenders often impede participation in tenders and expose bidding companies to unnecessary costs and delays. In tenders involving large infrastructure projects, bidders presenting attractive financing options enjoy a strong preference.
Though the GOE plans to privatize a number of public companies, certain sectors will remain dominated by SOE market leaders. These areas include energy (a partial monopoly), fabrication and heavy engineering, defense contracting, and telecommunications (monopoly). Businesses operating in these sectors may be required (either by law, or by market realities) to partner with these entities.
The GOE established a consumer goods trading company called ALLE, with the aim of containing consumer inflation and controlling the monopolistic effect of a few dominant private importers on consumer goods prices. The company has more than 3,000 registered retailers and plans to increase its annual turnover to more than $300 million by 2021.
When negotiating with Ethiopian SOEs or government entities, U.S. companies are recommended to identify linkages between their products and long-term GOE targets under the GTP II. Projects that advance GTP II priorities are much more likely to find a positive reception from government leaders. The Ethiopian government may also be receptive to products or services that mitigate the scarcity of foreign exchange, either by supporting exports or meeting a demand that would otherwise be met through imports.
Ethiopia is not a member of the World Trade Organization (WTO) and is not a party to a free trade agreement (FTA) with the United States, which contains commitments on government procurement. In June 2018, Under Secretary of Commerce for International Trade Gil Kaplan led a visit to Ethiopia by members of the President’s Advisory Council on Doing Business in Africa (PAC-DBIA), a private sector group advising the United State government on enhancing the U.S. commercial presence on the continent. During the visit, the Under Secretary signed a memorandum of Understanding (MOU) with the Ethiopian Government to broaden U.S. participation in Ethiopian priority projects, including infrastructure projects.
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies.
The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Click here for more information: https://2016.export.gov/advocacy/
Multilateral Development Banks and Financing Government Sales
Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). Please refer to the Project Financing Section in Trade and Project Financing for more information. A helpful guide for working with the MDBs is the Guide to Doing Business with the Multilateral Development Banks.
The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.