How to Export Agribusiness Products from Ethiopia

Last updated March 14, 2015

Are you entering an export agribusiness sector of Ethiopia? If so, whether you are a foreign or domestic investor, you have unarguably chosen an emerging market in Africa to be your investment development arena and export platform. In fact, country study reports show that Ethiopia is the largest producer in the continent of many export products such as sesame seed and the largest supplier of cut flowers to EU. With a range of emerging sectors such as pulses, oilseeds, coffee, tea, spices, aromatics and livestock, agribusiness products constitute the major export commodities from Ethiopia to an array of destinations such as the EU, the Middle East, Asia and USA.

The export sector you are entering may be one of the emerging sectors where there exist opportunities for investment. Or a new one altogether but with huge promises and potentials within the grasp of new entrants like you. However, harnessing the opportunities and potentials for your agribusiness development cannot be an easy task if you do not know the basics of exporting from Ethiopia. To do this, follow the steps outlined below.

1

Understand what counts as ‘export’ and related terms in Ethiopia

Terms commonly used in the trade world are often given official meanings in the relevant laws of different countries or territories. To start an agribusiness export activity in Ethiopia, you need to understand what the terms underlying your operation in the country officially mean. For instance, the Revised Export Trade Duty Incentive Scheme Establishing Proclamation No 543/2007 includes definitions for the below terms. For exhaustive understanding of all the terms, refer this and all other relevant customs and investment laws of Ethiopia.

  • Commodity: goods re-exported in the same condition or goods produced for foreign market and shall include goods used for packing and containing export trade commodities
  • Export: sending commodities to a place outside Ethiopia, and includes the loading of the same on a carrier proceeding to a foreign port.
  • Exporter: a person or organization licensed to engage, in supplying locally produced commodities to foreign market.
  • Indirect Exporter: a person or organization supplying raw material to producer without processing it.
  • Indirect Producer Exporter: a person or an organization supplying its products to producer exporter or exporter in the form of raw material or finished goods.
  • Producer: producer exporter or indirect producer exporter.
  • Producer Exporter: a person or organization engaged in producing and supplying commodities to foreign market.
  • Raw material: goods that are mixed with or fixed to other goods in the production process to bring about commodities for export, and includes goods to be used for packing and containing export commodities.
2

Examine whether the export agribusiness sector you wish to enter is open for your investment

The investment regime of Ethiopia includes domestic, foreign and joint venture investment made by foreign and domestic investors. However, be aware that not all sectors or export trade activities are open for all investment regimes or investor types. Therefore, you need to check the areas open/restricted according to the relevant provisions of the Investment Proclamation No. 769/2012 and its implementing Regulation No 270/2012, both as amended in 2014. These include: 

  • Areas reserved for the government or joint investment with the government
  • Areas reserved for domestic investors
  • Areas allowed for foreign investors
  • Investment to be undertaken jointly with the government

As you can notice from the laws, agribusiness is by and large open for both domestic and foreign investors with the exception of few areas not allowed for foreign investors. For example, export of raw coffee, whole sale and retail businesses.

3

Have appropriate certificates before starting to export

As a new entrant into the sector, you need fulfill legal requirements to start investment. Before engaging in exporting, obtain official documents. These include: 

  1. Investment permit certificate
  2. Business registration certificate
  3. Export permit certificate (for flower export sector)

Note that, according to the agricultural investment guide by EIA and EKN (2008), export permit certificate is required if you enter the flower export sector. However, you are advised to check from the Ethiopian Investment Commission or Ethiopian Revenue and Customs Authority whether or not this requirement still holds true.

4

Decide whether you wish to benefit from export incentives

You can gain entitlements and benefits from export incentives provided by the government as long as you are engaged in an investment area allowed for you and a priority area entitled for investment.

There are three export incentive schemes established by Proclamation No 543/2007. These are: 

  1. Duty Draw-Back Scheme
  2. Voucher Scheme
  3. Bonded Manufacturing Warehouse Scheme
5

Become a beneficiary of export incentives

Select from the export incentive schemes in the previous step the one that is appropriate for you to become a beneficiary.

For information on the schemes and how to become a beneficiary of incentives under either one of the schemes appropriate for you, refer the guide articles on each scheme published in the AGRIBiz.et website.

6

Have good orientation on exporting

Exporting can be daunting particularly if you are a new entrant. To gain basic knowledge, surf on the internet for information on foreign markets.

Discuss your export ideas with existing investors and professional experts engaged in the sector you are entering. Besides, consult organizations that can help you. Some of these include:

  • Chambers of Commerce and Sectoral Associations such as Addis Ababa CCSA
  • Private sector associations such as Ethiopian Pulses, Oilseeds, and Spices Processors-Exporters Association (EPOSPEA) or Ethiopian Horticultural Producers and Exporters Association ((EHPEA)
  • Projects such as Agribusiness Support Facility (ABSF) that offer information and advisory services
  • Agriculture consular or trade officers of embassies of other countries in Addis Ababa
  • Ethiopian embassies in other countries
7

Assess and build your company’s export capacity

Exporting can be daunting particularly if you are a new entrant. To gain basic knowledge, surf on the internet for information on foreign markets.

Discuss your export ideas with existing investors and professional experts engaged in the sector you are entering. Besides, consult organizations that can help you. Some of these include:

  • Chambers of Commerce and Sectoral Associations such as Addis Ababa CCSA
  • Private sector associations such as Ethiopian Pulses, Oilseeds, and Spices Processors-Exporters Association (EPOSPEA) or Ethiopian Horticultural Producers and Exporters Association ((EHPEA)
  • Projects such as Agribusiness Support Facility (ABSF) that offer information and advisory services
  • Agriculture consular or trade officers of embassies of other countries in Addis Ababa
  • Ethiopian embassies in other countries
8

Prepare market strategy

A market strategy is a critical stepping stone to help you with directions and sound plans to enter new countries and increase your market power in the longer term. Accomplish important tasks to come up with a good marketing strategy. According to an export guide by the Dutch Chamber of Commerce (2015), some important tasks that can apply in any country including Ethiopia include:

  1. Market research of export market
  2. Write export (marketing) plan
  3. Identify ways on how to approach the export market
  4. Determine the export price. It is crucial to make sure you have correct costing.
  5. Determine effective forms of promotion

Identify potential new customers in the targeted market

9

Arrange adequate transport logistics

Follow important steps and procedures to put adequate transport arrangement in place. Some of these may include:

  1. Arrange transport yourself or through specialized transporters
  2. Select a transport agent or transport company
  3. Determine your conditions of sales
  4. Decide which export documents are required
10

Decide whether you wish to trade at Ethiopia Commodity Exchange Market

The Ethiopia Commodity Exchange (ECX), launched in 2008, trades commodities such as coffee, sesame seeds, maize, wheat, and haricot beans. The Government of Ethiopia launched ECX to increase transparency in commodity pricing, alleviate food shortages, and encourage the commercialization of agriculture (Us Department of State).

If you are entering the export sectors traded by ECX, you can therefore consider whether you seek its transport facilitation services. In that case, understand and fulfill membership and other requirements. Check from ECX at Mexico Square in Addis Ababa.

11

Settle juridical matters

Export involves some important juridical issues you need to deal with. Do the following to settle issues prior to exporting.

  1. Determine the type of agreements you need to make with your client
  2. Define role of your client. For instance, import, agent, or distributor.
  3. Determine your general sales conditions
12

Decide whether you need to take on insurance

Insurance is a vital instrument to deal with possible risks related to your export. Assess which insurances you really require. These may include:

  1. Transport
  2. Liability
  3. Creditors

After you have defined your requirements, take on insurance.

13

Fulfill customs and tax requirements

You need to consider requirements to deal with customs and tax authorities. For instance consider the following:

  1. What import tariffs are applicable in the export country
  2. Which export documents and licenses are required
  3. What customs procedures you are required to arrange
Notes
Take note that this article was prepared by Amare Molla, Information Hub Coordinator for ABSF, and as such does not necessarily reflect the views and opinions of the institutions involved in funding or managing the AGRIbiz.et website. The article is written with utmost care by referring available and reliable information sources. It is also thoroughly reviewed by Gertjan Becx, the ABSF project coordinator, and other experts of the project. Despite that, you are advised to check the accuracy of the information as the requirements and procedures for investment in the export sector of Ethiopia may change over time with, for instance, changes in related laws, regulations and directives of the tax authority.
Tips
You are advised to use very useful market information which can be found on line at different websites. Some are accessed on registration or subscription basis. Other may be available and accessible for free (such as www.faostat.org) or against charge. You can subscribe one that suites interest. If you wish to supply the EU market, the CBI Access Guide is a very useful source of information on legislation and non-legislation requirements that exporters from developing countries like Ethiopia should notice. In total, CBI supports 48 developing countries from in 27 sectors. It is available at http://www.cbi.eu/.
References
EIA and EKN (Ethiopian Investment Agency and Embassy of the Kingdom of the Netherlands). 2008. Agricultural Investment in Ethiopia: a Guide for New Investors. EIA, Addis Ababa. Dutch Chamber of Commerce. http://www.kvk.nl. Accessed on January 27, 2015. Export Trade Duty Incentive Scheme Establishing Proclamation No 249/2001. The Revised Export Trade Duty Incentive Scheme Establishing Proclamation No 543/2007.

2 responses to “How to Access Agribusiness Development Credit in Ethiopia”

  1. abooook says:

    It is a very good explanation, but the reference is outdated. Proclamation No 249/2001 is repealed by Proclamation No 543/2007 and the repealing law itself i.e. p543/2007 is also repealed by Proclamation No. 768/2012 Export Trade Duty Incentive Schemes Proclamation before THREE YEARS AGO. It need to be re-written based on the new law i.e. Proclamation No. 768/2012