This article was first published in the 42nd Edition of our magazine, released June, 2025
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In the first half of June 2025, came the cheerful update. Or the chilling news to some. The Ethiopian Investment Board has issued Directive No. 1082/2025, further removing barriers for foreign investors to be involved in trade sectors. The directive was a redefinition of Directive No. 1001/2024, which was met by major grievances when unveiled in March last year. Complaints mainly stemmed from local investors who felt betrayed by the government. Now they have to lock horns with international giants for the market.
When it all began
Multiple Ethiopian industries were, for a very long time, hard-walled to global players. Ethiopian policymakers protected local actors from the Goliaths. However, the investment board was convinced that the age-old facilitation through protection had failed. Let alone the anticipated sustainable economic growth, the restricted trade sector was stricken with inefficiency, low quality, and unlawful proceedings. Disappointed in the shielding strategy, the deregulating Directive 1001/2024 was issued. A year after that, Directive No. 1082/2025 followed. As the first liberalization had burdensome constraints, the new reorder is applauded for being a considerate stride.
The new directive in light of the previous one
Entry barriers alleviated:
Export: The previous one required the foreign company to have procured a USD 10 million worth of coffee annually for the 3 years prior. Optionally bring forth a USD 12.5 mil minimum purchase order. Exempting livestock, varying financial thresholds were set for oilseed, khat and pulse, poultry, hide and skin, and forest produce.
The new directive replaces the figures with a requirement for a due diligence report. This includes clearance from involvement in illicit activities and sanctions. It also needs to report its overall capacity and integrity.
Import: The first directive allows the import of goods if they measure up to one of the three conditions: being an authorized agent of the goods; being an exporter of at least 50% of their domestic production; manufacturer of the goods.
The latest directive stamps out the quantitative and systemic restraints. A due diligence report is only required.
Note that fertilizer and petroleum imports stay closed to foreign businesses.
Retail: In the earlier order, companies are required to build large-scale infrastructures ranging from 2000 sq m. - 10,000 sq. m. Binding agreements with the state and staged implementation are also compulsory.
The updated directive replaces the frameworks with a minimum paid-up capital of USD 2.5 mil. Alongside, verification and assessment are required with flexibility aimed at benefiting smaller but esteemed single-brand companies.
Wholesale: The previous directive assigned the Ministry of Trade to provide certain marketing infrastructure regulations.
The latest directive rips off the requirements and installs a due diligence report on the company's integrity, capacity, and proficiency.
Yes, it sounds like a picnic for global players. Ideally.
Pitfalls
The new directive is welcomed as being open to the international community, which eyes Ethiopia’s market advantages. But, after the round of applause dies down, it all comes down to effective application. The commission needs to make its accreditation processes transparent and prompt. Otherwise, it would be another spring of complaints and a project that was never built.
How is this a spring for local companies?
Trade globalization through initiatives like the WTO hasn’t been a big success. They are usually denounced for stringent agreements that lead local businesses to shrink. They are also criticized for depriving local businesses of funds and failing to deliver promised technical support. In dealing with businesses head-on, local players have better bargaining power.
