Ethiopia Liberalizes Coffee Exports, Allowing Foreign Investors Direct Access

The Ethiopian government has taken a significant step towards liberalizing its economy by allowing foreign investors to directly engage in the export, import, wholesale, and retail trade of coffee and other commodities. The Ethiopian Investment Commission (EIC) issued a new directive that permits foreign companies to purchase Ethiopian coffee directly from farmers and processors, a move that was previously restricted to local businesses.

Under the new regulation, eligible foreign traders who have bought at least $10 million of coffee annually for the past three years can apply for permits to buy coffee directly from Ethiopian farmers. This change is part of the Ethiopian government's broader efforts to encourage foreign investment in sectors that were previously reserved for domestic investors.

The EIC commissioner stated that while the government wanted local businesses to grow, the expected results were not achieved, prompting the decision to involve foreign companies. Ethiopia, the biggest coffee producer in Africa, is making progress towards becoming the leading grower of coffee on the continent.

Why this matters: The liberalization of Ethiopia's coffee exports has the potential to boost the country's economy and attract more foreign investment. By allowing foreign investors to directly participate in the coffee trade, Ethiopia aims to increase competitiveness, improve quality, and integrate domestic investors into the global value chain.

In addition to coffee, the new directive allows foreign investors to engage in the export trade of other commodities such as khat, oilseeds, pulses, hides and skins, forest products, poultry, and livestock, subject to certain requirements like minimum annual export values. Foreign investors can also participate in import trade investments, except for fertilizer and petroleum, and engage in wholesale trade investments, except for fertilizer.

The Ethiopian Ministry of Trade and Regional Integration announced that the country's retail sector is now open to foreign investors who meet the government's conditions. This move is part of Ethiopia's broader economic reform efforts aimed at boosting the private sector's contribution to the country's overall economy.

The new directive aims to strike a balance between protecting domestic investors and gradually opening up these sectors to foreign participation. By liberalizing its coffee exports and other trade sectors, Ethiopia is taking a crucial step towards attracting foreign investment, boosting its economy, and positioning itself as a major player in the global coffee market.

Key Takeaways

• Ethiopia allows foreign firms to directly buy coffee from farmers, boosting exports.
• Foreign investors can now participate in export, import, wholesale, and retail trade.
• Ethiopia aims to increase competitiveness, quality, and integrate domestic firms globally.
• Retail sector now open to foreign investors meeting government conditions.
• Reforms aim to boost private sector contribution to Ethiopia's economy.