The top reasons why U.S. companies should consider doing business in Ethiopia are:
- Large and growing domestic market. Ethiopia is the second most populous country in Africa, with over 70% of the population under the age of 30. The country experienced a sustained period of economic growth that helped to expand the purchasing power of its growing middle-classer of its growing middle-class market.
- Low production costs. Land, labor, and energy costs are low relative to other African and global markets.
- Economic Reforms. Ethiopia is the early stages of market liberalization and privatization of SOEs. This is creating new opportunities for U.S. firms in areas previously closed to international participation.
- Strong reputation of U.S. goods and services. U.S. companies and their products are well regarded among Ethiopians for their quality and dependability.
Primary U.S. exports to Ethiopia include aircraft, aircraft parts, trucks, vehicle/vehicle parts, agricultural equipment, computer equipment, food products, and machinery (non-electrical).
The GOE and its public institutions are the leading buyers of U.S. products. The GOE invests heavily in large social and economic infrastructure projects, including power generation, industrial zones and parks, housing construction, water and irrigation, roads and railways, airports and dry ports, telecommunication, and internet networks, as well as fertilizer factories. There are prospects for U.S. companies to participate in government tenders. However, the GOE’s ability to effectively manage the tender and procurement process may be limited by a lack of internal capacity – the result sometimes being canceled tenders or questionable awards, and a tendency to prioritize price over value.
U.S. businesses that are interested in bidding on federal tenders can access the tender documents by signing up online or getting help through FCS offices. Bidders who do not include 100% financing options are usually at a competitive disadvantage. Additionally, there have been reported issues of lack of transparency and fairness in the tender evaluation process. Bidders should therefore consider working with the Commercial Service Ethiopia and using the U.S. Commerce Department advocacy process (see export.gov) to develop a strategy for bidding prior to the tender evaluation process.
The U.S. International Development Finance Corporation (DFC), the successor agency of the Overseas Private Investment Corporation (OPIC), can potentially assist financing projects with U.S. equity investment.
Africa Continental Free Trade Area
The Africa Continental Free Trade Agreement (AfCFTA), which entered into force in January 2021, unites the 55 African countries that have signed the agreement into one common trade area. Ethiopia has ratified the AfCFTA, facilitating trade across the continent between Ethiopia. The AfCFTA creates an opportunity for U.S. companies to use Ethiopia as a regional trade hub to reach neighboring markets.
African Union & UN Economic Commission for Africa Opportunities
The African Union (AU), headquartered in Addis Ababa, Ethiopia, serves as the region’s preeminent intergovernmental organization, representing Africa’s 55 member states. The United States has been accredited to the AU as an observer since 2006 and is currently represented by Chargé d’Affaires (CDA) to the African Union Mikael Cleverley. CDA Cleverley also serves as the Acting U.S. Permanent Representative to the UN Economic Commission for Africa (UNECA), a leading provider of technical assistance and partner to the AU.
As enshrined in its long-term strategy Agenda 2063, the AU has the mandate to pursue continental integration as one of its top priorities. To achieve this goal, the AU launched the AfCFTA in January 2021 with the aim of uniting Africa’s economy, harmonizing regulations, and reducing tariffs and other barriers to trade.
With an annual budget of $647 million, the AU offers a variety of business opportunities in areas ranging from peacekeeping operations to medical equipment and supplies, energy and power, information technology, construction, furniture, consultancy, and more. The AU’s work is overseen by sector-specific departments that each have procurement needs and offer business opportunities. These departments require substantive consultancy support to assist in their policy formulation efforts. Consultancy contracts can range from $2,000 to $450,000 to support activities such as policy analysis and formulation, developing online reporting mechanisms, hiring and recruitment, organizing seminars and continent-wide conferences, and more. Although U.S. companies tend to submit bids primarily for consultancy contracts, USAU encourages U.S. companies to submit bids for the AU’s wide array of offerings.
In addition to providing business opportunities for its headquarters and main campus located in Addis Ababa, the AU has business opportunities for its institutions and regional centers across the continent such as the African Centers for Disease Control and Prevention (Africa CDC) in Ethiopia, the African Union-Interafrican Bureau for Animal Resources (AU-IBAR) in Kenya, the African Union Development Agency (AUDA) in South Africa, and more.
The AU, with UN approval, leads peacekeeping operations across the continent, the largest of which is the AU Mission to Somalia (AMISOM). Peacekeeping operations require diverse services and commodities ranging from information technology, electronic and communications equipment, construction materials, vehicles, medicines, foodstuffs, furniture, and office supplies. The AU also hosts dozens of high-level and sector-specific conferences annually, both in Addis Ababa and in other African capitals of its member states, requiring significant hospitality and conference support services. These could present a variety of opportunities for American businesses looking to provide goods and services for peacekeeping operations.
UNECA also offers unique business opportunities with $200 million in contracts awarded annually. U.S. companies have historically been suppliers of high-quality goods and services to the UN system, including telecommunications, financial services, construction, and food production. UNECA and the 22 UN agencies located in Addis Ababa use the UN’s centralized procurement system.
To inform U.S. companies of AU and UNECA procurement guidelines, USAU holds an annual seminar on doing business with the AU and UN. U.S. commercial service providers are invited to attend these seminars held in June to discuss AU and UN procurement needs, processes, requirements and eligibility criteria. The seminar, which includes AU and UN decision makers on procurement, widens the vendor base of quality service providers for the AU and UN agencies. U.S. companies interested in bidding on African Union contracts can find a list of open tenders and the AU’s procurement manual on the AU’s website. For additional information on AU procurement, contact: Carine Toure Yemitia, AU Commission Head of Procurement, Travel, and Stores Division, Tel: (+251) 11 551 7700 – Ext 4305, Email: email@example.com