Starting a Business · Ethiopia
Starting a Business - Ethiopia
Foreign investors may establish wholly-owned companies in most sectors in Ethiopia, subject to a minimum capital of USD 200,000 and a mandatory investment permit from the Ethiopian Investment Commission (EIC). Certain sectors remain reserved for Ethiopian nationals or carry higher entry thresholds, but the government has progressively liberalised since 2020, most recently opening retail and wholesale trade to foreigners via a directive effective June 2025. The multi-step registration process—spanning the EIC, National Bank of Ethiopia, and tax authority—typically takes several weeks to a few months.
Investment Proclamation No. 1180/2020 is the primary FDI law, establishing the EIC as the one-stop facilitation body for foreign investors. Commercial registration and licensing is governed by Proclamation No. 980/2016 (amended 1150/2019) and the 2021 Commercial Code.
A wholly foreign-owned venture requires a minimum paid-up capital of USD 200,000 (USD 100,000 for architectural, engineering, or technical consultancy services). Joint ventures with Ethiopian partners require USD 150,000 (USD 50,000 for technical services). Entry into retail trade—opened to foreigners in June 2025—requires USD 2.5 million.
100% foreign ownership is permitted in most manufacturing, agro-processing, and service sectors. Small-scale domestic trade and certain media activities remain reserved for Ethiopian nationals. Banking was opened in 2023 under Proclamation No. 1360/2025 allowing foreign banks to acquire up to 49% of domestic banks or establish wholly owned subsidiaries subject to National Bank of Ethiopia approval.
The typical sequence for a foreign investor is: (1) apply for an Investment Permit from the EIC; (2) complete commercial registration with the EIC (which issues the Commercial Registration Certificate); (3) register incoming capital with the National Bank of Ethiopia and obtain an EIC capital registration certificate within one year; (4) obtain a business license from the EIC or Ministry of Trade; (5) register for a Tax Identification Number (TIN) with the Ethiopian Revenue and Customs Authority (ERCA); and (6) open a corporate bank account.
Ethiopian Investment Board Directive No. 1001/2024 opened import, export, wholesale, and retail trade to foreign investors for the first time, with a revised directive effective June 12, 2025 cutting capital thresholds by more than half and removing prior trading-history requirements. Special Economic Zones under Proclamation No. 1322/2024 offer additional customs and tax incentives.
The National Business Portal (NBP), expanded by the Ministry of Innovation and Technology in March 2025, allows online submission of applications for investment permits, business licenses, construction permits, and tax registration. Practical timelines for a straightforward wholly foreign-owned company typically range from four to twelve weeks, depending on sector and document completeness.
Machine-assisted translation · verified 5/24/2026 · orientation, not legal advice. English version →