Ethiopia’s Market Liberalization in Import, Retail, Wholesale and Export Trade
In 2024, the Ethiopian Investment Board (EIB) issued a directive titled ‘Directive to Regulate Foreign Investors’ Participation in Restricted Export, Import, Wholesale and Retail Trade Investments No. 1001/2024’ (“2024 Directive”). It is to be noted that this directive opened the export, import, wholesale and retail trade sectors to foreign investment. These sectors were previously reserved for domestic investors. The EIB has recently repealed the 2024 Directive and has replaced it with a new directive on ‘Foreign Investors’ Participation in Restricted Export, Import, Wholesale and Retail Trade Investments Number 1082/2025’ (“New Directive”).
Despite the liberalization of export, import, wholesale and retail trade sectors to foreign investors under the 2024 Directive, flow of foreign investment into these sectors were not as anticipated. The New Directive stipulates that the measures introduced under the 2024 Directive were inadequate to facilitate the mobilization of foreign capital into Ethiopia. While there are various reasons for limited interest in these sectors, some of the requirements under the 2024 Directive included as preconditions to invest in these investment areas have apparently been important factors for the limited interest. With a view to addressing some of this problem, the EIB has issued the New Directive.
This legal update provides high-level summary of the changes introduced under the New Directive.

I. Import Trade
Like the 2024 Directive, the New Directive stipulates that all import trade businesses (except fertilizer and petroleum) are open to foreign investors. The New Directive has removed some preconditions previously included under the 2024 Directive, including requirement to export at least 50% of its produce to overseas market (where the investor in import trade is also manufacturer in Ethiopia) and to annually import commodities worth of at least 10,000,000 (Ten Million) US Dollars (where the investor is neither a manufacturer nor an agent of a manufacturer).
The New Directive stipulates that an investor is allowed to engage in retail trade provided that it submits a due diligence report. The due diligence report can be prepared by the investor or a recognized national or international verification agency. The report should cover at least the following matters: verification on whether the investor is included in any sanctions or comparably restrictive list acceptable by the Government of Ethiopia; evaluation on the investor’s involvement in illicit activities in contravention of internationally accepted standards, particularly including any experience in money laundering, drug trafficking and terrorism financing; and assessment on investor’s business integrity and financial standing.
II. Retail Trade
In the same way as the 20204 Directive, the New Directive opens the retail trade sector to foreign investment. Preconditions for investing in the sector outlined under the 2024 Directive have now been removed and replaced with other requirements. Under the 2024 Directive, an investor in retail trade was required to carry out retail trade on land/building having either a floor area of at least 2000 square metres (and commitment to set up few supermarkets), or a floor area of at least 5000 square meters (and commitment to establish a couple of hypermarkets) or a floor area of at least 10, 000 square meters (and commitment to complete the construction for the required retail space). These requirements are abolished under the New Directive.
The New Directive requires a minimum paid-up capital of at least USD 2.5 million, which can be contributed in cash and in-kind. In addition, an investor is also required to submit a due diligence report, prepared by a recognized national or international verification agency recommended by the Ethiopian Investment Commission (EIC). As such, while the due diligence report for import, export and wholesale trade can be prepared by the investor itself or by a recognized national/international verification agency, the due diligence report for retail trade can only be conducted by national or international verification agency specifically recommended by EIC.
That said, the New Directive stipulates that reputable single brand retail trades operating on a smaller capital may be allowed to engage in retail business based on the EIB’s decision on case-by-case basis without having to meet the USD 2.5 million paid-up capital.
III. Wholesale Trade
The New Directive provides that any foreign investor is allowed to engage in wholesale trade in all business sectors except fertilizers. The wholesale trade can be for the purpose of resale of products imported from abroad using import trade permit, or products which are purchased from domestic manufacturers.
While the 2024 Directive required investors to commit to build modern marketing infrastructure and provide streamlined logistics service facilities for its wholesale operations as a precondition to engage in the sector, the New Directive has removed this requirement. That said, the New Directive requires investors to submit a due diligence report discussed under section I above.
IV. Export Trade
The 2024 directive permitted investors to engage in export of raw coffee, khat, oilseeds, pulses, hides and skins, forest products, poultry and livestock bought on the market. However, the New Directive does not allow foreign investors to engage in export trade of hides and skins, forest products, poultry and livestock while allowing their participation in other export areas. The 2024 Directive required investors to demonstrate history of procurement from Ethiopia ranging from USD 500,000 to 10 million, or if no prior history of procurement to submit purchase order contract ranging from USD 750,000 to 12.5 million depending on the type of the item to be exported in order to engage in export trade. However, the New Directive removes these preconditions and instead requires that an investor seeking to engage in export trade should submit a due diligence report discussed under section I above.
Concluding Remarks
By removing some of the market entry preconditions under the 2024 Directive, the New Directive appears to introduce simplified process in contrast to its predecessor for foreign investment in import, retail, wholesale and export trade. It is important to note that the fulfilment of the conditions included under the New Directive is in addition to meeting minimum capital and/or competence/standards requirements under other relevant laws. The introduction of some the changes under the New Directive is one important step in creating a favourable environment for flow of foreign capital in these sectors even though such capital flow would evidently depend on a range of factors, including macroeconomic stability and institutional/bureaucratic efficiency.