Ethiopia is Located in the north-eastern part of Africa, commonly known as the Horn of Africa, at the cross-roads between Africa, the Middle East and Asia. The country has a relatively stable political and economic environment.
The country has a large population and thus potentially one of the largest domestic markets in Africa. By virtue of its membership of the Common Market for Eastern and Southern Africa (COMESA), embracing 19 countries with a population of over 400 million, Ethiopia also enjoys preferential market access to these countries.
Ethiopia qualifies for preferential access to European Union market under the EU’s Everything-But-Arms (EBA) initiative and to USA markets under the African Growth and Opportunities Act (AGOA). Accordingly, most Ethiopian products can enter into these markets quota and duty free. Furthermore, a broad range of manufactured goods from Ethiopia are entitled to preferential access under the Generalized System of Preference (GSP) of the USA. No quota restrictions are placed on Ethiopian exports falling under 4800 products currently eligible under the GSP.
The Ethiopian economy is based on agriculture, which in 2008/09 contributed approximately 43% of the gross domestic product (GDP) and 86% of foreign currency earnings. The country is among the top performing economies in Sub-Saharan Africa. For the last six consecutive years (2003/4-2008/09) real GDP grew by an average of 11.5 percent per year.
Ethiopia is endowed with abundant natural resources. Altitude in Ethiopia ranges from 125 meters below sea level in the Danakhil depressions of the Afar region to 4,620 meters above sea level in the Amhara region. Thus the country has 18 major and 49 sub agro-ecological zones, each with its own agricultural and biological potential. It possesses one of the largest and most diverse genetic resources in the world. Besides, it has the soils and the climate suitable for the production of a variety of food crops.
The labour law of Ethiopia, prepared in conformity with international labour norms and standards, provides adequate provisions for the conclusion and termination of employment contracts with safeguards that do not infringe the rights of investors. Labour cost in Ethiopia is relatively low compared to the African average. The number of skilled workers and technicians is increasing steadily as a result of an increase in the number of universities, colleges, and vocational and technical training schools in the country.
The Ethiopian Government has made commendable efforts, through legislative and procedural reforms, to improve the investment climate of the country and thereby attract more foreign direct investment. In line with market-oriented economic policy, the investment regime has been liberalised through a series of Government legislations. Since 1992, the investment code has been revised three times to ensure the participation of more foreign investments in various sectors of the economy.