Import and Export

This section contains articles on the import/export trade to and from Ethiopia.

Import trade (except a few items - you may check the investment regulations page) in Ethiopia is
exclusively reserved for domestic investors. Engaging in an export business in Ethiopia is a good business
venture; export from the country is growing and the government also encourages the sector. Ethiopia's
main export product is coffee; the country is credited to be the birth place of coffee and it has long been
its major export product. Not only that, coffee plays a central role in the Ethiopian social fabric.

Ethiopia imports a wide range of goods: from heavy machinery and steel to chewing gum. A large
number of Ethiopian businesses are engaged in import activities. Even though the growing
manufacturing industries will provide substitutes for some goods, Ethiopia will very likely continue to
import most of the goods it's importing now. Participating in the import trade in Ethiopia may be a good
idea for a domestic trader; a foreign exporter also can make use of the growing import to Ethiopia and
sell its goods to Ethiopian Importers. Construction machinery and vehicles, steel, chemicals, and recently
cement are goods that are imported to Ethiopia in huge quantities.

2merkato provides a list of Ethiopian importers in different sectors on its Business Directory Page.
Therefore, foreign companies that are interested to do business with Ethiopian Importers can
communicate via the business directory; those who wish to find agents or representatives to their
products in Ethiopia, you can communicate via the Agencies Section in our business directory.

 Regulations on Import/Export Trade

 Procedures on Import/Export Trade

 Payment System in Import/Export Trade

 Statistics on Import/Export Trade

The Ethiopian Ministry of Trade is the government organ responsible for trade related activities in
Ethiopia. It's located in Addis Ababa near Hilton Hotel on the way to Kazancis to Filwuha. It is a must
place to visit for those who're planning to be involved in business in general and import trade in
particular.

Its full address is:

Ministry of Trade,
Location: Addis Ababa, Ethiopia
Phone: +251 11 5518025-29, 
Fax: +251 11 5515411/5514288
Import and Export Regulations in Ethiopia

Published on 20 August 2013

Category: Import and Export

The import export trade has been growing steadily in Ethiopia. However, for successive years the import
trade has outweighed the export trade. One can find import and export regulations in this article.

 Import Regulations

 Export Regulations

Import Regulations

One can find here information on import regulations in Ethiopia: who can import, what the foreign
exchange requirements are,  and what import ban or restrictions exist.

Who can import to Ethiopia? According to Regulations No. 270/2012 or 270/2005 EC

(Download), Import trade (excluding LPG, bitumen, and raw materials imported by foreign investors
who are in the manufacturing industry) in Ethiopia is exclusively reserved for domestic investors.

A businessperson who wants to engage in import trade in Ethiopia must be registered with the Ministry
of Trade, which regulates imports, and obtain a trading license. Obtaining a trading license is easy and
takes a much lesser time than it used to some years ago. The necessary regulations and procedures to
obtain a trading license are found in our starting a business section.

Foreign Currency

Importers should get licenses to secure the necessary foreign currency. Any purchase worth more than
USD 5000 should be processed either through letter of credit (LC) or Cash Against Document (CAD). Click
the link to find out more on how an importer can secure foreign currency: foreign exchange directive 

Importers who secured foreign currency should use Ethiopian Shipping and Logistics Services Enterprise
(for Sea Transport) or Ethiopian Air Lines (in case of Air Transport) to transport their cargo. If these
carriers do not call a specific port, the carriers give the importers a waiver. However, the Ministry of
Industry has recently sent a list of manufacturers to the National Bank of Ethiopia who are exempted
from the requirement to use ESLSE.

Import Ban or Quantitative Import Restrictions

Except for items which are socially and morally harmful (e.g. drugs, weapons and pornographic
materials), no import ban or quantitative import restrictions exist. (Source: Foreign Affairs and
International Trade Canada - www.international.gc.ca)

However:

1. Some imports must meet the standards of the previous Quality and Standards Authority of
Ethiopia (QSAE) who split into four entities. Now the regulatory body is named as Ethiopian
Standards Agency.  Details are available on the Agency's Web site: ethiostandards.org. Goods
 which have standards which are considered mandatory/compulsory Ethiopian Standards should
be inspected before shipment by an internationally recognised third party inspection body.

2. Medicines and medical supplies must be registered with the Drug Administration and Control
Authority (DACA) of Ethiopia. No drug, whether produced locally or imported, shall be put into
use unless it is duly registered by the Authority. DACA has banned the importation of drugs from
some foreign drug manufacturing companies who do not follow Good Manufacturing Practice.

3. No person shall import into Ethiopia any plant or plant product, including seeds as legally
specified, not duly authorized for import by the Minister of Agriculture. All imported plants and
other articles liable to be infested or infected with plant pests are subject to quarantine.

Top

Export Regulations

According to Regulations No. 270/2012 or 270/2005 EC (Download), export trade of raw coffee, chat, oil
seeds, pulses, hides and skins bought from the market and live sheep, goats and cattle not raised or
fattened by the investor is exclusively reserved for domestic investors. Foreign investors cannot be
involved in export trade of these items from Ethiopia.

Businesses that wish to export from Ethiopia should know the export procedures needed to obtain
export permit by commercial banks; should prepare Application for Quality Testing and Certification to
obtain Export Authorization Certificate from the Quality and Standards Authority of Ethiopia; should fill
the Customs declaration. We have included all these export procedures in Ethiopia and also the VAT
registration for exporters from Ethiopia and VAT rate applied on goods exported from Ethiopia.

Export permit by commercial banks

Documents required for Export Permit Approval: 

(taken From Dahsen Bank)

 Duly signed contract by seller & buyer

 Undertaking letter of our customer that consignment will be settled within a maximum of 90
days from date of the Foreign Exchange Permit for Cash Against Document (CAD) mode of
payment and Authenticated message of L/C opened for Letter Credit mode of Payment.

 Seller's invoice

 Export License Valid for the year

 Tax registration certificate (TIN certificate)

 Export permit application form duly filled, signed & stamped (as appropriate) by the customer.

 NBE (National Bank of Ethiopia) issues delinquent list of exporters periodically. Customer’s name
should not appear in the delinquent exporters list of NBE for the period. If the name appears,
there should be subsequent list indicating the given customer has cleared all outstanding items
at NBE.
In regards to payment, the exporters should:

 Know thoroughly the foreign counterpart’s (buyer’s) financial soundness, reliability, integrity,
full address, etc.

 Sales/Purchase contract should exist between the two parties (importer and exporter).

 (LC Mode of Payment) Go through text of L/C opened in their favor and make sure that
compliance can be met without doubt. Otherwise, amendments need to be requested from
opener as soon as L/C has been received or at the earliest - long before shipment of
consignments.

 (CAD Mode of Payment) Follow up the payment, as nonpayment or even delay of remittance
above 90 days will put name of exporter in delinquent list freezing further exports until
proceeds are received.

Application for Quality Testing and Certification:

When export products are ready, make arrangements for suitable packaging and apply to the Quality
and Standards Authority of Ethiopia for quality testing, and acquire the Export Authorization Certificate.

Customs Declaration:

To avoid costly delays, the exporter declares all facts about the export consignment, and all supporting
original documents should be forwarded to the Customs Clearing Agents to enable customs formalities
and authorization of the dispatch of the export goods. Accordingly, the exporter must hand over the
Export Permit, the copy of the Customs Declaration Annex form, the Ethiopian Customs Declaration
form, the Certificate of Origin, and the special movement forms/certificates (the EURI Movement
Certificate and the GSP form A) to the clearing agents.

Exporters, VAT and VAT Registartion

According to the Value Added Tax Proclamation (285/2002) and the Regulation by the Council of
Ministers on VAT (Regulation 79/2002), all exports of goods and services are liable to VAT at the zero
rate. This means that VAT is charged at 0% (or no VAT has to be charged). However, more importantly
an exporter is entitled to reclaim the VAT on all the goods and services purchased to produce the
exports.

But since this still means an exporter is still making taxable supplies even at a zero rate, the law requires
the exporter to register if the turnover exceeds the registration limits.

Top

Import and Export Procedures in Ethiopia

Published on 20 August 2013

Category: Import and Export

This page presents information about Ethiopian import and export procedures.

1. Import Procedures

2. Export Procedures

Import Procedures

One can find info on import procedures in Ethiopia in relation to the pre-shipment inspection on
goods; applications submitted to commercial banks in Ethiopia to obtain import permit; modes of
payment allowed for import, documentation requirements to effect payment and document checking
and verification.

An importer who wishes to import goods to Ethiopia should pay through commercial banks. All
payments above USD 2000 should be made through Letter of Credit or Cash Against Document.
Preshipment inspections apply for all imports from China. 

Go to our  Starting A Business section to find out more on the procedures to start import business. 

Pre-shipment Inspection:

Goods imported are not required to be inspected prior to shipment except when they are imported
from China or if the importer and the supplier have an agreement for pre-shipment inspections.

Pre-shipment Inspection on goods imported from China:

The Ministry of Trade has made arrangements with China Inspection and Quarantine Bureau (CIQ) so
that the latter would carry out the inspections prior to shipment and issue the quality certificates.

Requirments,

1. Pre-shipment Inspection requirement on all goods purchased from China implemented in

effect since January 1, 2007

2. Pre-shipment inspection certificate is one of the documents required to effect import

payment from China.

3. Pre-shipment Inspection certificate requirement is mandatory for all import purchases made
from China in excess of USD 2,000

4. Banks are required to insert requirement in the LC and also to insure that purchase order
transmitted clearly depict to have CIQ inspection requirement.

5. Banks can not accept documents without CIQ certificate if goods are imported from China.

Import Payment

Foreign exchange can be availed by banks to any importer provided they can present one of these

1. Import License issued by Ministry of Trade

 2. Industry License issue by Ministry of Industry (If applicable)

3. Investment License issued by Investment Agency

Applications submitted for import should be accompanied by the Proforma Invoice / contracts from
suppliers stating

1. The type of commodity

2. Quantity of the commodity

3. Price per unit

4. FOB amount

5. Freight if any

6. Other charges

7. No insurance payment is allowed for payment in Foreign Exchange, so the importer should
make insurance arrangement locally.

Mode of payment allowed for import

1. Letter of Credit

2. Cash against document

3. Advance payment up to USD 5000

Documentation requirements to effect payment:

It is important that the required sets of documents that should be presented by the supplier to
demand payment should be mentioned in the LC or Purchase order. The following are mandatory for
payment and always mentioned in the LC or Purchase order:

1. A final invoice (commercial invoice) attested by the chamber of commerce of the country of

the supplier

2. Original sets of Bill of lading, Airway Bill, Truck way bill, Railway Manifest (depending on the
mode of transportation)

3. Country of origin invoice attested by the chamber of commerce of the country of the supplier

4. Packing list

5. Certificate of quality where appropriate

Importers who wish to import using CAD

1. Should first get approvals of the their Bank on the purchase order they wish to pass to the
supplier
 2. The purchase order should clearly sate document requirements and certificate to be attached.

3. Shipping documents normally required for import payments

4. Payment can only be released on CAD provided the importers get the prior approval from its
bank.

On Document checking and verification

1. Banks shall have the responsibility to check documents and insure that goods shipped are in
accordance with the L/C term or the purchase order issued (in case of CAD) which should
clearly sate the list of documents that should presented .

2. If the documents presented are in compliance with the letter of credit terms pr the purchase
order approved (in case of CAD) then the documents shall be accepted and the payment will
be released. If not, it will be kept in suspense pending receipt of clarification and
amendments.
Export Procedures

Businesses that wish to export from Ethiopia should know the export procedures needed to obtain
export permit by commercial banks; should prepare Application for Quality Testing and
Certification to obtain Export Authorization Certificate from the Quality and Standards Authority of
Ethiopia; should fill the Customs declaration. We have included all these export procedures in Ethiopia
and also the VAT registration for exporters from Ethiopia and VAT rate applied on goods exported
from Ethiopia.

Export permit by commercial banks

Documents required for Export Permit Approval: 

(taken From Dahsen Bank)

 Duly signed contract by seller & buyer

 Undertaking letter of our customer that consignment will be settled within a maximum of 90
days from date of the Foreign Exchange Permit for Cash Against Document (CAD) mode of
payment and Authenticated message of L/C opened for Letter Credit mode of Payment.

 Seller's invoice

 Export License Valid for the year

 Tax registration certificate (TIN certificate)

 Export permit application form duly filled, signed & stamped (as appropriate) by the
customer.

 NBE (National Bank of Ethiopia) issues delinquent list of exporters periodically. Customer’s
name should not appear in the delinquent exporters list of NBE for the period. If the name
appears, there should be subsequent list indicating the given customer has cleared all
outstanding items at NBE.

In regards to payment, the exporters should:

 Know thoroughly the foreign counterpart’s (buyer’s) financial soundness, reliability, integrity,
full address, etc.

 Sales/Purchase contract should exist between the two parties (importer and exporter).

 (LC Mode of Payment) Go through text of L/C opened in their favor and make sure that
compliance can be met without doubt. Otherwise, amendments need to be requested from
opener as soon as L/C has been received or at the earliest - long before shipment of
consignments.

 (CAD Mode of Payment) Follow up the payment, as nonpayment or even delay of remittance
above 90 days will put name of exporter in delinquent list freezing further exports until
proceeds are received.
Application for Quality Testing and Certification:

When export products are ready, make arrangements for suitable packaging and apply to the Quality
and Standards Authority of Ethiopia for quality testing, and acquire the Export Authorization
Certificate.

Customs Declaration:

To avoid costly delays, the exporter declares all facts about the export consignment, and all
supporting original documents should be forwarded to the Customs Clearing Agents to enable
customs formalities and authorization of the dispatch of the export goods. Accordingly, the exporter
must hand over the Export Permit, the copy of the Customs Declaration Annex form, the Ethiopian
Customs Declaration form, the Certificate of Origin, and the special movement forms/certificates (the
EURI Movement Certificate and the GSP form A) to the clearing agents.

Exporters, VAT and VAT Registartion

According to the Value Added Tax Proclamation (285/2002) and the Regulation by the Council of
Ministers on VAT (Regulation 79/2002), all exports of goods and services are liable to VAT at the zero
rate. This means that VAT is charged at 0% (or no VAT has to be charged). However, more importantly
an exporter is entitled to reclaim the VAT on all the goods and services purchased to produce the
exports.

But since this still means an exporter is still making taxable supplies even at a zero rate, the law
requires the exporter to register if the turnover exceeds the registration limits.

 
Import and Export Business in Ethiopia: Methods of Payment

Written by Administrator

Published on 24 March 2009

Category: Import and Export

Importer or exporter who is engaged in import or export business in Ethiopia need to know what type
of import export payments in Ethiopia are possible while doing import or export trade in Ethiopia or
with Ethiopian businesses. Moreover, it should be known that which type of payment is preferable
and under what conditions. This article contains, methods of payment practised in international
import export business and especially what is practised or allowed in Ethiopia and it specifically deals
with Letter of Credit (LC), Cash against Document (CAD), Telegraphic Transfer (TT) and Advance
Payment. It also contains documents to be included in a letter of credit and specifically in an
LC opened through Ethiopian banks.

 Methods of Payment

o Letter of credit

o Cash Against Document

o Telegraphic Transfer

o Advance Payment

 Types of L/C

o IrrevocableVsRevocable

o ConfirmedVsUnconfirmed

o Straight VsNegotiable

o Sight VsUsance

 Documents to be included in L/C

 Transaction Steps of L/C

Letter of credit (L/C)

 It is a written commitment to pay, by a buyer's or importer's bank to the seller's or exporter's

bank. LC guarantees payment.

 A supplier or exporter that has sold to an Ethiopian Importer on LC basis should present to the
bank these four sets of documents: Original sets of CLEAN Bill of lading, Shipping Document
(Airway Bill, Truck way bill or Railway Manifest), Commercial Invoice that’s verified by the
chamber of commerce of the supplier’s country, Packing List and Certificate of Origin that’s
 verified by the chamber of commerce of the supplier’s country. If the goods are imported from
China, a CIQ certificate (pre shipment inspection certificate carried out by China AQSIQ)
should be presented along with the other four documents.

 The two most basic types of L/C are Revocable-credit L/C and Irrevocable-credit L/C, which
comes in two versions: Confirmed irrevocable letter of credit and Non-confirmed irrevocable
L/C.

Cash Against Documents (CAD)

 A transaction in which the buyer assumes the title for the goods being purchased upon paying
the sale price in cash. It’s quicker than LC, but not as safe; Ethiopian exporters are advised to
use CAD if they have a very good relationship with the buyer and know that the credentials of
the buyer make it trustworthy.

 A supplier or exporter that has sold to an Ethiopian Importer on CAD basis should present to
the bank these four sets of documents: Original sets of CLEAN Bill of lading, Shipping
Document (Airway Bill, Truck way bill or Railway Manifest), Commercial Invoice that’s verified
by the chamber of commerce of the supplier’s country, Packing List and Certificate of Origin
that’s verified by the chamber of commerce of the supplier’s country. If the goods are
imported from China, a CIQ certificate (pre shipment inspection certificate carried out by
China AQSIQ) should be presented along with the other four documents.

Telegraphic Transfer (TT)

 It’s a method of payment in which funds are transferred via telegraph or cable. It’s most
common in business conducted in developing countries, where other types of infrastructure,
such as computerized payments, may not be available; however, in Ethiopia all imports, of
which value is more than USD 2000, are required to be done via LC or CAD. But in there are
instances where banks allow up to USD 5000 for TT transfer

Advance Payment

 An advance payment, or simply an advance, is the part of a contractually due sum that is paid
in advance for goods or services, while the balance included in the invoice will only follow the
delivery. It is called a prepaid expense in accrual accounting. In Ethiopia an advance payment
of up to USD 5000 may be allowable and can be done through Telegraphic Transfer. However,
the receiver's bank should provide guarantee for it.

Top

Types of L/C

1. Revocable L/C Vs Irrevocable L/C

Irrevocable L/C

If this type of L/C is once opened, it can not be changed or cancelled or amended without the consent
of all parties (including the beneficiary or the seller).
Revocable L/C

A revocable L/C may be amended or cancelled by the Issuing Bank at any moment and without prior
notice to the Beneficiary. The cancellation is usually made at the request and on the instructions of
the applicant.

Top

2. Confirmed L/C Vs Advised (Unconfirmed L/C)

Confirmed L/C

It is a type of L/C in which the Confirming Bank promises to pay.When an exporter exports to a
country with economical or political instability or if the exporter is unfamiliar with the Issuing Bank,
the exporter should require that the L/C be confirmed by a first-class bank. If L/C is confirmed, the
confirming bank is liable for the payment. The payment is assured even if the importer or the issuing
bank defaults. However, under normal circumstances, an unconfirmed LC may be preferred to avoid
the charges that would be paid by both the buyer and seller for confirmation.

Advised L/C (Unconfirmed L/C)

Is opened by an issuing bank in which the advising bank does not add its confirmation to the credit.
The promise to pay comes from the issuing bank only.

Top

3. Straight L/C Vs Negotiation L/C

Straight L/C

It can only be paid in the country of the Paying Bank.

Negotiation L/C

It can be presented and paid to any bank.

Top

4. Sight L/C VsUsance L/C

Sight L/C

The Beneficiary is paid as soon as the Paying Bank has determined that all necessary documents are in
order.

Usance L/C

Usance time can be between 30 and 180 days after the bill of lading date. This is a form of delayed
payment, and should be avoided.

Top

Documents to be included in L/C

Documents that are to be included in the L/C are always based on negotiation of the parties. It is
preferable not to include documents that must be signed or authorized by the buyer's representative
or a document that may never be produced (say, a certificate, which should be issued by a foreign
agency) and to keep the list of the documents as short as possible.

It is not necessary to mention all documents required by the contract in the L/C. Most likely, it is
required to present a commercial invoice, a transport document (Original sets of Bill of lading, Airway
Bill, Truck way bill or Railway Manifest), Country of origin invoice and others. What is required in
Ethiopia is mentioned above.

The list of additional documents depends up on the agreement made between the seller and the
buyer. The list may include:

 Certificate of origin

 Certificate of quality

 Weight certificate

 Pre-shipment inspection certificate

 Packing declaration

 Packing list

 Fumigation certificate, and so on.

It is also necessary to specify how many original documents and how many copies are to be
presented. The description of goods stipulated in the L/C must correspond with the description given
in the invoice.

Top

Transaction Steps of L/C

The following are a Typical Letter of Credit Transaction steps of a confirmed irrevocable letter of
credit.

 After the exporter and buyer agree on the terms of a sale, the buyer arranges for its bank to
open a letter of credit that specifies the documents needed for payment. The buyer
determines which documents will be required.

 The Buyer's Bank issues, or opens, its irrevocable letter of credit includes all instructions to the
seller relating to the shipment.

 The Buyer's Bank sends its irrevocable letter of credit to a Exporter’s Bank and requests
confirmation. The Exporter may request that a particular local bank be the Confirming Bank,
or the Foreign Bank may select a correspondent bank in the Exporter’s country.

 The Confirming Bank prepares a letter of confirmation to forward to the Exporter along with
the irrevocable letter of credit.
  The Exporter reviews carefully all conditions in the letter of credit. The Exporter's freight
forwarder is contacted to make sure that the shipping date can be met. If the exporter cannot
comply with one or more of the conditions, the customer is alerted at once.

 The Exporter arranges with the Freight Forwarder to deliver the goods to the appropriate port
or airport.

 When the goods are loaded, the Freight Forwarder completes the necessary documentation.

 The Exporter (or the Freight Forwarder) presents the documents, evidencing full compliance
with the letter of credit terms, to the Confirming Bank.

 The Confirming Bank reviews the documents. If they are in order, the documents are sent to
the Buyer's Bank for review and then transmitted to the Buyer.

 The Buyer (or the Buyer's Agent) uses the documents to claim the goods.

 A draft, which accompanies the letter of credit, is paid by the Buyer's Bank at the time
specified or, if a time draft, may be discounted to the Confirming Bank at an earlier date.

Investment

Foreign and Domestic Investment has been steadily growing in Ethiopia. The Federal and Regional
Governments encourage investment; they provide land, incentives such as tax holidays, an improved
bureaucracy at the Federal and Regional Investment offices, etc. The Government itself has been
investing heavily to improve the country's infrastructures and as a result the road network has improved
greatly in the last few years and this helps investment. The Government is also focusing on the housing
sector and low cost condominiums are being built in the capital and regional cities. Private investors,
both Ethiopian and Non-Ethiopian Nationals, undertake investment activities in the agriculture,
construction and manufacturing sectors. Flower farms, cement factories, steel smelting and rolling mills
are becoming more and more common in Ethiopia.

One of the things potential investors need before they start investing is information. They want to find
ways to invest in Ethiopia and know how things work. This is the right place to find info on Investment in
Ethiopia.
One can find Frequently Asked Questions About Investment in Ethiopia below.

Under Investment Regulations, you can find the different proclamations and regulations and their
amendments (if any) and the highlights of these documents.

On Investment Procedures page, you can see who needs investment permit to invest in Ethiopia and
how to apply for the permit and the procedures to follow and the documents needed to secure the
permit for domestic and foreign investors.

The Ethiopian Government provides these investment incentives:

1.

1. Exemption from Income Tax

2. Exemption from The payment of customs duty

The details of these incentives are found on the Investment Incentives page.

The page on major investment areas in Ethiopia informs potential investors where and what to invest.
This page has the various types of forms of investment available in Ethiopia.

The Ethiopian Investment Commission has been set up by the government as the responsible organ to
facilitate investment in Ethiopia. The head office is located on Bole Road, very near to Dembel City
Center and adjacent to the Oromia Regional Government Building.

Its full address is:

Ethiopian Investment Commission 

P.O Box: 2313, Addis Ababa, Ethiopia
Telephone:+251 11 5539474/+251 11 5510033
Fax: +251 11 5514396
E-mail:  ethiopian.invest@ethionet.et
Website: http//www.investinethiopia.org