Ethiopia - Market OpportunitiesEthiopia - Market Opportunities
The primary U.S. exports to Ethiopia include aircraft, aircraft parts, trucks, vehicle and machinery car parts, medical equipment, as well as construction and agricultural equipment. The most promising commercial opportunities in Ethiopia, are in agriculture and agro processing, infrastructure, energy, aviation, healthcare, and tourism sectors.
The Government of Ethiopia (GOE) and its public institutions are the number one buyers as the economy is based on huge public investment. GOE invests heavily in large social and economic infrastructure projects, including power generation, industrial zones and parks, housing construction, water and irrigation, roads and railways, airports and dry ports, telecommunication and internet networks as well as fertilizer factories. There are prospects for U.S. companies to participate in government tenders for these mega projects. U.S. companies heavily rely on high level advocacy support to win government tenders or overturn unfair or non-transparent tender awards associated with potential corruption or irregularities in the tender process. There has been an increase in these cases over the past year.
The GOE welcomes tender bid proposals accompanied by financing options. Bidders who do not include 100% financing options are usually at a competitive disadvantage. Also there have been reported issues of lack of transparency and fairness in the tender evaluation process. Therefore bidders should consider working with CS Ethiopia and using the U.S. Commerce advocacy process (see export.gov) to develop a strategy for bidding prior to the tender evaluation process. The U.S. Export-Import Bank (EXIM) is now offering long-term financing for Ethiopia, which makes U.S. exports more competitive in the Ethiopian market. EXIM’s capacity to finance U.S. exports is currently limited to only $10 million as it does not have a full running board with one board member missing. The U.S. Overseas Private Investment Bank (OPIC) has shown renewed interest in financing projects in Ethiopia with U.S. equity investment.
Ethiopia is endowed with abundant agricultural resources and has diverse ecological zones for agricultural production. Investment licenses can be obtained from the Ethiopian Investment Commission and land can be leased for up to 99 years from regional and city administration bureaus. Recently, land allocation, compensation, and relocation have posed significant issues for the GOE in terms of equity and transparency. U.S. companies should do their due diligence in advance of making investments requiring land use and/or relocation.
Energy is one of the most significant sectors for Ethiopia’s economic growth and development. GTP II targets an increase in power generation capacity from its current near 4000 MW to over 17,000 MW by 2020. Ethiopia possesses significant renewable energy potential, especially hydroelectric, and seeks to exploit these resources by increasing installed capacity of renewable energy sources. The GOE has recently issued tenders for several renewable energy projects with the tender evaluation process focused on quality and project experience.
Light Manufacturing and Industrial Parks
Thousands of Ethiopian goods are eligible for duty-free access to the U.S. market under the African Growth and Opportunity Act (AGOA). The GOE offers incentives for priority export sectors, particularly in textiles, garments, leather, horticulture/floriculture and agro processing. The GOE has established duty-free industrial parks such as the Bole Lemi industrial park, just outside of Addis Ababa, and the recently inaugurated Hawassa Industrial Park to produce textile and garment products for export under AGOA. The GOE actively seeks foreign direct investment in local manufacturing as a means of import substitution and eventual reduction of its trade deficit as a national development priority.
The GOE has developed a list of approximately 200 electronic services for development in coming years. This is also an opportunity for U.S. companies with Information and Communications Technology (ICT) expertise to partner with local companies for market access in this sector.
Mining is also an important sector that GOE plans to attract FDI. The GOE identified gold, tantalum, iron, potash and coal as priority minerals.
Opportunities in privatized public enterprises
Nearly all tenders issued by the Privatization and Public Enterprises Supervising Agency (PPESA) are open to foreign participation. Most of the 280 public enterprises sold since 1994 have been SMEs in the trade and service sectors. However, there are also several examples of large privatized enterprises, such as four breweries acquired by foreign entities, including Heineken (Holland) and Diageo (UK).
The Tripartite Free Trade Area (TFTA) launched in June 2015 will unite Africa's largest market in eastern and southern Africa, bringing together the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC), and the Southern African Development Community (SADC). Ethiopia has ratified the TFTA, facilitating trade between 26 countries, with a combined GDP of more than $1.2 trillion dollars and a population exceeding half a billion. This is another opportunity for U.S. companies to use Ethiopia as a regional trade hub to reach neighboring markets.
African Union Opportunities
The African Union (AU), headquartered in Addis Ababa, Ethiopia, replaced the Organization of African Unity in 2002 and serves as the region’s preeminent intergovernmental organization, grouping Africa’s 55 member states. The United States has been accredited to the AU as an observer since 2006, currently represented by Ambassador Mary Beth Leonard leading the U.S. Mission to the African Union. As enshrined in its long term strategy Agenda 2063, the AU has the mandate to pursue continental integration as one of its top priorities. In pursuit of this goal, the AU is coordinating ongoing member state negotiations for a Continental Free Trade Area (CFTA), with an agreement on trade in goods and services expected in December 2017.
The AU is currently in the early stages of an extensive organizational restructuring, opening up multiple opportunities over the next few years for U.S. firms to compete for management consulting and other contracts related to the reorganization. The AU hosts dozens of high-level and sector-specific conferences each year, both in Addis Ababa and in other African capitals, requiring significant hospitality and other support services.
U.S. companies interested in bidding on African Union contracts can find a list of open tenders and the AU’s procurement manual on the AU’s website. For additional information on AU procurement, contact: Carine Toure Yemitia, AU Commission Head of Procurement Travel and Store Division, Tel: +251 (0) 11 551 7700 – Ext 4305, Email: email@example.com
For more information on U.S.-AU economic and commercial affairs, contact: Meredith Metzler, Economic Officer, U.S. Mission to the African Union, Tel: (+251) 11-130-6174, Email: MetzlerMT@state.gov
Ethiopia Trade Development and Promotion