1. The Role of the Government to Support &
Promote Private Sector Development in
Africa
The Case of Ethiopia
Entrepreneurship and Economic
Development in Africa
Embassy of Ethiopia
10 march 2012
SOAS, London

2. The National Development Path
• Ethiopia is a country endowed with diverse natural
resources, 2nd largest populous country in Africa;
• Ethiopia is on a fast track development, it has
registered 11 % GDP growth over the past 7 years;
• It aims to join middle income countries by 2025-
meet MDGs Goals by 2015;
• The country’s successive 5 year development plans
have given due emphasis to Private sector
development;
• Ethiopia has advanced a free market economy in the
past two decades;
• Private sector is an engine of the economy;

3. • Agriculture is the main stay of its economy, which
constitutes 40 % of employment and more than 60 %
of exporter earner;
• It is the major source of private sector development;
• Ethiopia is a country of small holder farmers
managing their own private property;
• Hence, entrepreneurship is a deep rooted culture;
• The current 5 year plan emphasises on SME and
industrialization;
• This constitutes of an expansion of the private
sector both in the urban and rural areas;

4. Legal and administrative
frameworks
• The constitution protects Private property;
• Ownership of multiple businesses is allowed;
• Relaxation of quota and tariff restrictions on trade;
• Investment Code – with a number incentives;
• Micro finance – one of the largest micro- finances is
found Ethiopia (provision of seed money for small
businesses and farmers)
• Protection of local businesses;
• Intellectual Property Rights;
• Almost non-existent corruption;

5. Support structures
• Associations: leather, textile, major exporters
association, Chambers of Commerce;
• Centres of Excellence: metallurgy, Leather, textile,
agriculture, horticulture support centres, commodity
exchange market
• Privatization: more than 60 companies are out there
for privatization
• Education: TVET #253and higher learning institutions
#32;
• SMEs: from MSEs to SMEs;
• Dialogue: high-level dialogue with the private sector;

6. Investment Incentives
• 100% duty free privilege for construction equipment and 15%
worth of spare parts to be allotted to the initial stage of
investment;
• Exemption from income tax – 2 to 7 years tax holiday;
• Loss carry forward- investors that suffer losses during the
income tax holiday period, by the end of the term, get
extension for half of the term;
• Bank loans – on a 30-70% basis;

7. • Remittance – investment profits, dividends, payments to loads to
foreign banks and buying of technology transfer;
• Encourages increased flow of the Diaspora

8. Export Incentives
• Export Credit Guarantee Scheme
• Duty Drawback Scheme
• Foreign Exchange Retention Scheme
• Franco Valuta Import Facility
• Bonded Manufacturing Warehouse Scheme

9. Outcomes has become the major source of
• The private sector
employment;
• Competitiveness and growth;
• Youth employment on the rise;
• Backward and forward linkages;
• Work ethics and innovation;
• Flourishing of towns;
• Poverty headcount reduced by half in the past 10
years;
• Local capacity
development, engineering, business, agro-
processing;
• On the right path to meet MDGs Goals and target of
being a Middle Income Country.

10. Thank You
Hirut Zemene
Trade & Investment Minister Counsellor
Embassy of Ethiopia
e: hirut@ethioembassy.org.uk