Employing in
Ethiopia

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Expanding into
Ethiopia

Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all the registration procedures that need to be done and the documentation required.

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The Federal Democratic Republic of Ethiopia is in a rapidly-developing transition phase and among the fastest growing globally. A programme of privatisation of state-owned institutions and liberalisation of the finance sector is pushing it towards becoming a market economy.

Ethiopia is a landlocked nation on the Horn of Africa, sharing borders with East African neighbours Eritrea, Somalia, Kenya, South Sudan and Sudan. Ethiopia also has a short border with Djibouti, and uses the Port of Djibouti for access to global sea routes through the Gulf of Aden, Arabian Sea and into the Indian Ocean.

Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework.

This can be best utilised when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.

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Country EOR Guide - Bradford Jacobs

Download our Guide to Ethiopia

Learn all about expanding into Ethiopia and see what we can do to make your expansion easier.

DOWNLOAD GUIDE

Download our Guide to Ethiopia

Learn all about expanding into Ethiopia and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs
DOWNLOAD GUIDE

Hiring Staff
in Ethiopia

The Federal Republic of Ethiopia is one of Africa’s most upwardly mobile economies, in a region that is increasing its economic footprint globally. Ethiopia and its East African neighbours, Kenya and Tanzania are all in Africa’s top 10 economies for Gross Domestic Product (GDP).

Ethiopia’s development is driven by a programme combining privatisation with a more liberal financial sector. This is allied to growth in the industry and services sectors and increases in consumer spending and investment. Support comes from the African Development Bank (ADB) 2023-27 Ethiopia Strategy Plan, which targets agro-industrialisation, economic and financial governance, monetary policies and debt management.

The ADB estimated that Africa will out-perform the rest of the world in the two years till 2025, with Gross Domestic Product growth averaging at least 4%. Ethiopia is among the five fastest growing, alongside Rwanda, Côte d’Ivoire, Benin and Tanzania.

Ethiopia’s economy is built around agriculture, forestry and fisheries; manufacturing, predominantly for the domestic market; finance; trade; services including tourism; power and resources; transport, telecommunications and a relatively under-developed mining sector, which nevertheless has considerable gold reserves.

Country:
Federal Democratic Republic of Ethiopia
Local Currency:
Ethiopian Birr (ETB)
Time Zone:
GMT+3
Country Dial Code:
+251
Tax Year:
July 8 – July 7 of the following year; different fiscal years can be allowed
VAT:
15%
National Minimum Wage:
There is no national minimum wage. Institutions in the public sector can set minimum wages for their workers.
Taxpayer Identification Numbers:
Issued by the Ethiopian Customs and Revenue Authority (ECRA) to all individual and corporate taxpayers.
Main trading partners:
China, Saudi Arabia, US, Switzerland, Russia, India, UAE, Ukraine, Somalia, Germany, Türkiye and Morocco.

Hiring Staff
in Ethiopia

The Federal Republic of Ethiopia is one of Africa’s most upwardly mobile economies, in a region that is increasing its economic footprint globally. Ethiopia and its East African neighbours, Kenya and Tanzania are all in Africa’s top 10 economies for Gross Domestic Product (GDP).

Ethiopia’s development is driven by a programme combining privatisation with a more liberal financial sector. This is allied to growth in the industry and services sectors and increases in consumer spending and investment. Support comes from the African Development Bank (ADB) 2023-27 Ethiopia Strategy Plan, which targets agro-industrialisation, economic and financial governance, monetary policies and debt management.

The ADB estimated that Africa will out-perform the rest of the world in the two years till 2025, with Gross Domestic Product growth averaging at least 4%. Ethiopia is among the five fastest growing, alongside Rwanda, Côte d’Ivoire, Benin and Tanzania.

Ethiopia’s economy is built around agriculture, forestry and fisheries; manufacturing, predominantly for the domestic market; finance; trade; services including tourism; power and resources; transport, telecommunications and a relatively under-developed mining sector, which nevertheless has considerable gold reserves.

Country:
Federal Democratic Republic of Ethiopia
Local Currency:
Ethiopian Birr (ETB)
Time Zone:
GMT+3
Country Dial Code:
+251
Tax Year:
July 8 – July 7 of the following year; different fiscal years can be allowed
VAT:
15%
National Minimum Wage:
There is no national minimum wage. Institutions in the public sector can set minimum wages for their workers.
Taxpayer Identification Numbers:
Issued by the Ethiopian Customs and Revenue Authority (ECRA) to all individual and corporate taxpayers.
Main trading partners:
China, Saudi Arabia, US, Switzerland, Russia, India, UAE, Ukraine, Somalia, Germany, Türkiye and Morocco.

The Main Sectors of the Ethiopian Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Manufacturing and Industry

Manufacturing lags behind agriculture in Ethiopia’s economic sectors, with the Ministry of Trade and Industry hoping to increase the sector’s share of employment to 15% by 2030 by creating five million new jobs.

Textiles and garments manufacturing, food and beverages processing and construction are key elements of a sector which is nevertheless hampered by various factors. These include shortages of raw materials and electricity and water supplies. The creation of industrial parks is yet to have significant impact on the sector.

The sector grew significantly in the two decades up to 2023 and is Ethiopia’s second-largest employer after the agriculture sector. Performance is mixed however as many elements of the sector come under State-owned Enterprises (SoEs) and consequently both domestic and foreign suppliers face restrictions.

The telecoms sector has been opened to fresh competition with a new service provider and Ethiopia is emerging as a potential leading Business Process Outsourcing (BPO) hub for the Sub-Sahara region. The Digital Ethiopia 2025 Strategy highlights developing cyber security, digital healthcare and telecoms as key targets. Distribution, transport and logistics support the growing number of supermarket chains and general wholesale and retail activities.

As Ethiopia began to emerge from the COVID pandemic, the tourism sector was knocked back by civil conflict between Ethiopian and Eritrean forces against the Tigray Peoples’ Liberation Front, affecting the northern areas of Ethiopia. The conflict lasted for two years from November 2020. The resulting humanitarian crisis severely reduced the confidence of tour companies and governments in advising travel to the country as a whole. Before the combination of COVID and conflict, Ethiopia attracted over 800,000 tourists in 2019 and US$3.5 billion in revenue, according to the World Bank.

Tourist numbers dropped to 500,000 in 2020 with revenue down to US$2.28 billion, with the civil war costing US$2 billion and many tour companies ending operations. Tourist sites that remained unscathed by conflict, included the rock-hewn Christian Orthodox churches at Lalibela. Ethiopia’s other tourist attractions include the ruins of the ancient city of Aksum, the Simien Mountains National Park, the Omo River National Park and Lake Tana. The potential is undermined, according to the United Nations Development Programme, by the lack of coherent planning, under-investment and poor infrastructure.

Mining

Ethiopia’s gold reserves were estimated at 200 tons in early 2022, to make the country a prime target for Foreign Direct Investment into the sector, with other reserves valued at a potential US$150 million. According to a report from the Extractive Industries Transparency Initiative (EITI), gold mining and production accounts for 93% of the activity in what is an unbalanced sector. In addition to the gold reserves, the EITI estimates Ethiopia has 360 million tons of coal and close to 70 million tons of iron.

Despite additional reserves of opal, other gemstones and tantalum, it is only gold that is mined in significant quantities. Ethiopia’s Ministry of Mines and Petroleum highlights the untapped potential for incoming mining investors and developers by emphasising the government is introducing more attractive policies and regulations.

The National Bank of Ethiopia (NBE) was established in 1963 and is responsible for issuing notes and coins; setting the cost of credit; administering international reserves and fixing foreign exchange rates; regulating interest rates; set limits on the debt of commercial banks; supervising loans to commercial banks and acting as the government’s financial agent. In its October 2022 quarterly report the NBE announced holding US$30 billion of deposits. At that time, 30 banks were operating in Ethiopia with 8,250 branches.

Reforms announced in October 2022 will allow foreign banks to open subsidiaries and branches and invest equity, improving competition and offering significant opportunities for foreign involvement. Ethiopia is in the early stages of introducing Fintech into the finance sector. In March 2022, the NBE allowed mobile network operators to offer mobile money services under the Digital Ethiopia 2025 programme. In May 2023 the Ministry of Finance, the Ethiopian Investment Holdings and FSD Africa signed a cooperation agreement to establish the Ethiopian Securities Exchange, which will become the 30th Stock Exchange on the continent.

Ethiopia’s 10-year economic plan, started in 2021, has agriculture as the priority with annual growth anticipated at 6.2% until 2030. The plan aims to improve agricultural productivity and production processes, to increase export revenue and reduce the volume of imports. Ambitious targets include introducing high-end technology to make the sector climate-resistant, utilising electricity from renewable sources and employing energy-saving processes. Large- and small-scale irrigation projects are also part of the strategy. The plan sets out to address some of the shortcomings highlighted by the United Nations Development Programme. These include: storage, logistics and marketing support; poor electricity and telecoms infrastructure reaching rural areas. The low level of private sector funding leaves room for foreign investment.

Ethiopia’s livestock sector is one of the largest in Africa, while forestry and fisheries are also important components of the sector. Cash crops aimed at the export market include coffee, sugarcane, oilseeds, beeswax and khat. The subsistence sector, often from smallholdings, produces wheat, barley, oats, sorghum, maize and millet, chickpeas, beans and lentils.

The Main Sectors of the Ethiopian Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Manufacturing and Industry

Manufacturing lags behind agriculture in Ethiopia’s economic sectors, with the Ministry of Trade and Industry hoping to increase the sector’s share of employment to 15% by 2030 by creating five million new jobs.

Textiles and garments manufacturing, food and beverages processing and construction are key elements of a sector which is nevertheless hampered by various factors. These include shortages of raw materials and electricity and water supplies. The creation of industrial parks is yet to have significant impact on the sector.

The sector grew significantly in the two decades up to 2023 and is Ethiopia’s second-largest employer after the agriculture sector. Performance is mixed however as many elements of the sector come under State-owned Enterprises (SoEs) and consequently both domestic and foreign suppliers face restrictions.

The telecoms sector has been opened to fresh competition with a new service provider and Ethiopia is emerging as a potential leading Business Process Outsourcing (BPO) hub for the Sub-Sahara region. The Digital Ethiopia 2025 Strategy highlights developing cyber security, digital healthcare and telecoms as key targets. Distribution, transport and logistics support the growing number of supermarket chains and general wholesale and retail activities.

As Ethiopia began to emerge from the COVID pandemic, the tourism sector was knocked back by civil conflict between Ethiopian and Eritrean forces against the Tigray Peoples’ Liberation Front, affecting the northern areas of Ethiopia. The conflict lasted for two years from November 2020. The resulting humanitarian crisis severely reduced the confidence of tour companies and governments in advising travel to the country as a whole. Before the combination of COVID and conflict, Ethiopia attracted over 800,000 tourists in 2019 and US$3.5 billion in revenue, according to the World Bank.

Tourist numbers dropped to 500,000 in 2020 with revenue down to US$2.28 billion, with the civil war costing US$2 billion and many tour companies ending operations. Tourist sites that remained unscathed by conflict, included the rock-hewn Christian Orthodox churches at Lalibela. Ethiopia’s other tourist attractions include the ruins of the ancient city of Aksum, the Simien Mountains National Park, the Omo River National Park and Lake Tana. The potential is undermined, according to the United Nations Development Programme, by the lack of coherent planning, under-investment and poor infrastructure.

Mining

Ethiopia’s gold reserves were estimated at 200 tons in early 2022, to make the country a prime target for Foreign Direct Investment into the sector, with other reserves valued at a potential US$150 million. According to a report from the Extractive Industries Transparency Initiative (EITI), gold mining and production accounts for 93% of the activity in what is an unbalanced sector. In addition to the gold reserves, the EITI estimates Ethiopia has 360 million tons of coal and close to 70 million tons of iron.

Despite additional reserves of opal, other gemstones and tantalum, it is only gold that is mined in significant quantities. Ethiopia’s Ministry of Mines and Petroleum highlights the untapped potential for incoming mining investors and developers by emphasising the government is introducing more attractive policies and regulations.

The National Bank of Ethiopia (NBE) was established in 1963 and is responsible for issuing notes and coins; setting the cost of credit; administering international reserves and fixing foreign exchange rates; regulating interest rates; set limits on the debt of commercial banks; supervising loans to commercial banks and acting as the government’s financial agent. In its October 2022 quarterly report the NBE announced holding US$30 billion of deposits. At that time, 30 banks were operating in Ethiopia with 8,250 branches.

Reforms announced in October 2022 will allow foreign banks to open subsidiaries and branches and invest equity, improving competition and offering significant opportunities for foreign involvement. Ethiopia is in the early stages of introducing Fintech into the finance sector. In March 2022, the NBE allowed mobile network operators to offer mobile money services under the Digital Ethiopia 2025 programme. In May 2023 the Ministry of Finance, the Ethiopian Investment Holdings and FSD Africa signed a cooperation agreement to establish the Ethiopian Securities Exchange, which will become the 30th Stock Exchange on the continent.

Ethiopia’s 10-year economic plan, started in 2021, has agriculture as the priority with annual growth anticipated at 6.2% until 2030. The plan aims to improve agricultural productivity and production processes, to increase export revenue and reduce the volume of imports. Ambitious targets include introducing high-end technology to make the sector climate-resistant, utilising electricity from renewable sources and employing energy-saving processes. Large- and small-scale irrigation projects are also part of the strategy. The plan sets out to address some of the shortcomings highlighted by the United Nations Development Programme. These include: storage, logistics and marketing support; poor electricity and telecoms infrastructure reaching rural areas. The low level of private sector funding leaves room for foreign investment.

Ethiopia’s livestock sector is one of the largest in Africa, while forestry and fisheries are also important components of the sector. Cash crops aimed at the export market include coffee, sugarcane, oilseeds, beeswax and khat. The subsistence sector, often from smallholdings, produces wheat, barley, oats, sorghum, maize and millet, chickpeas, beans and lentils.

Commercial Laws in
Ethiopia

Tax and Labour Authorities

The Ethiopian Customs and Revenue Authority (ECRA):  The ECRA is responsible for collecting revenue from customs duties and domestic taxes. It also implements measures to combat smuggling, tax evasion and avoidance.

The Ministry of Labour and Social Affairs (MOLSA):  The Ministry includes the Employment and Peaceful Industrial Relations Directorate and the Overseas Employment and Workers Safety Directorate.

The Confederation of Ethiopian Trade Unions:  The CETU is affiliated with the World Federation of Trade Unions. The CETU has around three quarters of a million members, but is considered to be largely controlled by the government. The Labour Relations Decree of 1952 authorised trade unions.

Commercial Laws in
Ethiopia

Tax and Labour Authorities

The Ethiopian Customs and Revenue Authority (ECRA):  The ECRA is responsible for collecting revenue from customs duties and domestic taxes. It also implements measures to combat smuggling, tax evasion and avoidance.

The Ministry of Labour and Social Affairs (MOLSA):  The Ministry includes the Employment and Peaceful Industrial Relations Directorate and the Overseas Employment and Workers Safety Directorate.

The Confederation of Ethiopian Trade Unions:  The CETU is affiliated with the World Federation of Trade Unions. The CETU has around three quarters of a million members, but is considered to be largely controlled by the government. The Labour Relations Decree of 1952 authorised trade unions.

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