Ethiopian Investment Board Lifts Restrictions On Logistics Industry Reserved Exclusively for Ethiopians, Opens Sector for Joint Venture
A landmark decision by the Ethiopian investment board has decided to reverse a major regulation that restricts foreign investors from engaging in parts of Ethiopia’s Investment Incentives and Investment Areas reserved for domestic investors by lifting the restriction in logistic industry which was exclusively reserved for Ethiopian nationals.
Accordingly, the board, which comprises of key ministries and the National Bank of Ethiopia and is led by PM Abiy Ahmed, has lifted the restrictions imposed under Article 3.1(b) of the Investment Regulation No. 270/2012, “including the provision of bonded warehouse, consolidation and de-consolidation services, and allow joint venture participation of international logistics service providers holding up to 49% or less stakes,” according to a statement from the board which was exclusively obtained by Addis Standard.
Article 3.1(b) of the Investment Regulation states that “packaging, forwarding and shipping agency services” are “exclusively reserved for Ethiopian nationals.”
“Improving Ethiopia’s logistics sector performance has been one of the key areas identified under the Second Growth and Transformation Plan (GTP II). The Logistics sector matters in several critical ways: as a supporting industry to the manufacturing sector, to improve investment attraction/retention and for increasing the country’s international trade performance by enhancing export competitiveness. However, to date, no significant improvement in cost or speed to market has been achieved. The country’s low performance against its peers under international benchmarks is a key testament in this regard,” the board’s statement said.
The statement added that “National Logistics Strategy has been approved last week by the Council of Ministers. In addition, the Ethiopian Investment Commission, in cooperation with the relevant government agencies and through the support of the World Bank Group has spearheaded several studies and consultations with industry stakeholders with the aim to identify the key binding constraints facing the sector and provide policy recommendations. These initiatives have recognized that in addition to its role as a supporting industry to other sectors of the economy, the logistics sector can be developed as a thriving and productive cluster that serves as another pillar of industrialization and driver of growth.”
A 2014 Regulation No. 313-2014 of the Council of Ministers has provided for the establishment of the Ethiopian Investment Board and the Ethiopian Investment Commission, “two public institutions which have respective mandates, powers and duties with regard to investment. It provides that the Commission will have the objective to implement transparent and efficient investment administration system and thereby encourage and expand investment.”