General Information

As an African country with a fast economic growth, the Federal Democratic Republic of Ethiopia (Ethiopia) much welcomes foreign direct investment. 53% of the 600 million US dollars foreign direct investment comes from China. In general, it has advantages such as political, social and macro-economic stability, good governance and attractive, zero tolerance for corruption, lowest crime rates in Africa, commitment to support private sector development, simple and transparent investment approval procedures, and competitive incentive packages.

Geography and Demography

Ethiopia is located in North Eastern Africa, which geographically close to East and South Africa, Middle East and Europe. It has an area of 1.14 million km2 with about 95 million people, bordering with 6 countries. Addis Ababa is the capital of Ethiopia, where located the headquarters of African Union and United Nations Economic Commission for Africa. English is one of the official working languages and the medium of instruction in secondary and higher education in Ethiopia.

Economy

Benefiting from the peace and stability throughout the country, Ethiopian economy maintains a free market economy. Its economic growth keeps fast while the inflation rate and government budget deficit is low. The annual average GDP growth rate maintains over 10% for the last 11 years. The inflation rate is single digit and the government budget deficit is lower than 3% of its GDP. The exchange rate is also stable in Ethiopia and 1 US Dollars equals 21.2751 Birr (on October 14, 2015).

Market Scale and Value

As a whole, the Ethiopian market reaches about 800 million US dollars, with annual increment of 20-35%. A 2012 estimate by Frost & Sullivan suggests the Ethiopian pharmaceutical market could witness growth rates of “slightly over 14%”to reach an approximate value of just under US$ 1 billion by 2018[1]. After relying on imports for a long time, the domestic pharmaceutical markets in Ethiopia are also growing. Its proximity to major external markets is another attraction for investment. Middle East market is one of the active markets. Common Market for Eastern and Southern Africa (COMESA) comprises 19 countries and more than 430 million people. The US’s the African Growth and Opportunity Act (AGOA) and the Generalized System of Preferences (GSP) and European Union’s Everything but Arms (EBA) initiative respectively strengthen Ethiopia’s external markets.

Labor force

The abundant, trainable and industrious labor force is available in Ethiopia and the labor cost is relatively inexpensive even compared to regional average, as a daily laborer earns 3 US dollars per day and a fresh university graduate earn 110 to 200 US dollars per month.

Infrastructure

With the massive investment, the infrastructural facilities in Ethiopia improve constantly. 72,000 km of new roads and expressway links all kebele administrations with capital city Addis Ababa. 2,300 km railway line is in construction progress. Ethiopian Airline is the biggest passenger and cargo airline in Africa. More than 10,000 km fiber optics has been constructed. There are more than 24 million mobile subscribers and every year there is millions of additions of mobile and internet users. Gilgel Gibe III Dam is expected to be used next year and the Grand Ethiopian Renaissance Dam in 2 years. Ethiopia has the cheapest electricity in the world. Green and clean power including wind, solar and geothermal energy sources is also under construction.

[1] National Strategy and Plan of Action for Pharmaceutical Manufacturing Development in Ethiopia (2015–2025): Developing the Pharmaceutical Industry and Improving Access (Abridged Version), July 2015, Ministry of Health and Ministry of Industry, Federal Democratic Republic of Ethiopia, pp.1-2.