Ethiopia - Country Commercial Guide
Market Opportunities

Overview of best prospect sectors, major infrastructure projects, significant government procurements and business opportunities.

Last published date: 2020-07-20

The 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 most promising commercial opportunities in Ethiopia are in agriculture and agro processing, infrastructure, energy, aviation, healthcare, and tourism.

Government Tenders
The Government of Ethiopia (GOE) and its public institutions are the leading buyer and market for 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. U.S. companies heavily rely on high level advocacy support to win government tenders or overturn unfair or non-transparent tender awards associated with irregularities in the tender process. 

The GOE welcomes tender bid proposals accompanied by financing options. Bidders who do not include 100% financing options are usually at a competitive disadvantage. Also, there have been reported issues of lack of transparency and fairness in the tender evaluation process. Therefore, bidders should 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. EXIM’s capacity to finance U.S. exports was limited to only $10 million as it did not have a full board. In 2019, the full financing capacity of the U.S. ExIm bank was restored through U.S. Senate confirmation of three members of its board of directors. The U.S. International Development Finance Corporation (DFC), the successor agency of the Overseas Private Investment Corporation, with increased capacity, has shown enhanced interest in financing projects in Ethiopia with U.S. equity investment.

Agriculture
Ethiopia is endowed with abundant agricultural resources and has diverse ecological zones for agricultural production. Investment licenses can be obtained from the Ethiopian Investment Commission and land can be leased for up to 99 years from regional and city administration bureaus. Recently, land allocation, compensation, and relocation have posed significant issues for the GOE in terms of equity and transparency. In addition, significant regional autonomy in Ethiopia means that respect for land rights varies across the country. U.S. companies should do their due diligence in advance of making investments requiring land use and/or relocation.

Energy
Energy is one of the most significant sectors for Ethiopia’s economic growth and development. We expect power generation to increase significantly in the medium run. Ethiopia possesses significant renewable energy potential (renewable sources already account for over 90% of Ethiopia’s energy production), especially hydroelectric, and seeks to exploit these resources by increasing the installed capacity of renewable energy sources. The GOE issues tenders for several renewable energy projects with the tender evaluation process focusing on quality and project experience.

Aviation
Aviation is a high-growth sector with increasing demand for air transportation, both passenger and cargo, expanding at an average 20% growth rate.

Africa Continental Free Trade Area 
The Africa Continental Free Trade Agreement (AfCFTA), which entered into force in May 2019, unites the 54 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 U.S. Ambassador to the African Union Jessica Lapenn. Ambassador Lapenn also serves as the 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 African Continental Free Trade Area (AfCFTA), that entered into force in May 2019. The AfCFTA aims to unite Africa’s economy, harmonize regulations, and reduce tariffs and other barriers to trade. As of mid 2020, 54 AU member states have signed the AfCFTA, and 30 countries have completed the ratification process. The AfCFTA’s chapters will shape the trade and investment landscape on key issues for U.S. companies operating in Africa including on goods and services, intellectual property rights, investment, competition policy, and digital trade. The U.S. Mission to the AU (USAU) supports the AfCFTA by providing technical assitance to the AU and by facilitating U.S. private sector engagement with the AU on the AfCFTA. 

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-specfic departments that each have procurment needs and offer business opportunities. The departments of the AU are Peace and Security, Political Affairs, Infrastructure and Energy, Social Affairs and Health, Human Resources, Sciences and Technology, Trade and Industry, Rural Economy and Agriculture, and Economic Affairs. 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 raninging 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. The AU is currently undergoing reforms and organizational restructuring, opening up multiple opportunities for U.S. firms to compete for management consulting and other contracts related to the reorganization. 

The Procurement function of the AU is undertaken by the Procurement Division within the Directorate of Administration & Human Resources Management (AHRM) of the AUC and the Procurement Units of AU Organs and Institutions. The Procurement Unit of each entity has the responsibility for the coordination of procurement function and management of suppliers.

UNECA also offers unique business opprotunities 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 decisionmakers 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, https://au.int/en/bids. 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: tender@africa-union.org 

For more information on U.S.-AU economic and commercial affairs, contact: Pren-Tsilya Boa-Guehe, Economic Officer, U.S. Mission to the African Union, Tel: (+251) 11-130-6174, Email: Boa-GueheP@state.gov