‎Ethiopia Slashes Capital Thresholds For Foreign Investors

‎The Ethiopia Investment Board has lowered the capital requirements for foreign investors seeking to enter previously restricted sectors—such as the export, import, wholesale, and retail trades—by more than half, revising a directive issued less than eighteen months ago.

‎The amended directive, effective June 12, 2025, signals a recalibration of the country’s investment strategy amid slowing foreign capital inflows and rising calls for equitable treatment of local and international players.

‎The preamble of the earlier directive, in force from March 2024 until last week, had acknowledged a shift in policy allowing previously restricted sectors to open gradually to capable foreign investors.

‎The revised version goes further, stating that the Board, which is chaired by the Prime Minister, deems it necessary to introduce new revisions that reinforce investor confidence and facilitate the mobilization of additional foreign capital by creating, as far as practical, procedures that promote equal treatment of foreign and domestic investors and ensuring that transparent, simplified, and predictable procedures are adopted for all permit requirements.”

‎While the new directive retains provisions from the previous version permitting foreign investors to participate in the export of raw coffee, sesame seeds, pulses, oilseeds, khat, leather, poultry, and even live livestock—traditionally sensitive sectors—it introduces a notable shift in retail trade requirements.

– Advertisement –

‎Foreign investors can now participate in retail trade with a paid-up capital of USD 2.5 million—a significantly reduced threshold compared to earlier informal benchmarks. A due diligence report prepared by a recognized national or international verification agency detailing the investor’s integrity and capacity is another requirement.

The directive also stresses that any non-cash asset contributed to the paid-up capital of the investment enterprise in accordance with this provision should be evaluated by a professional assigned by the Ethiopian Investment Commission (EIC).

‎The directive also allows for exceptions, putting the investment board to issue a decision on a case-by-case basis, particularly favoring reputable single-brand retailers with smaller capital.

‎Previously, foreign entrants with at least three years of trading history had to meet stringent turnover requirements. For instance, raw coffee exporters were required to generate at least USD 10 million annually, sesame exporters USD 5 million, oilseed and pulse traders USD one million, and those in leather, gum, or poultry needed at least USD 500,000.

‎The new directive lifts those trading history and turnover limitations entirely.

‎“Without prejudice to the requirements imposed by other laws in relation to minimum capital, competence, or standards, any foreign investor can engage in the export trade of raw coffee, oilseeds, khat, pulses, hides and skins, forest products, and poultry and livestock bought on the market,” it reads.

However, it also stipulates that foreign investors must present a comprehensive due diligence report—prepared either internally or by a recognized national or international verification agency—confirming their integrity, financial capacity, and absence from sanctions or criminal watchlists before engaging in export trade of select commodities.

‎The directive emphasizes that these revisions aim to restore investor trust and attract more foreign capital by fostering an environment of fairness and clarity.

EIC data shows that within the fourteen months the previous directive was in effect, just over 150 foreign investors—primarily from China and the UAE—formally expressed interest in newly liberalized sectors.

‎However, the Commission declined to specify how many of these companies have actually launched operations.

‎The amended directive also reaffirms institutional mandates, aiming to eliminate ambiguity in regulatory oversight.

‎“All appropriate bodies shall establish a comprehensive institutional framework to facilitate the implementation of this Directive,” it states.

‎Regarding wholesale and retail trade, the Ministry of Trade and Regional Integration is tasked with setting up an oversight structure to curb anti-competitive behavior and protect consumer rights. The EIC will receive foreign investment applications, ensure compliance, register businesses, issue permits, and coordinate implementation jointly with the Ministry.

‎Furthermore, a permanent joint committee—comprising the EIC, ministries of Trade, Industry, Revenue, Agriculture, as well as the Customs Commission, National Bank of Ethiopia, and other designated bodies—will monitor the directive’s implementation and evaluate whether its objectives are being met.

The Board will appoint the chair of this committee.