Series: Understanding Ethiopia’s Business Landscape
Learn the step-by-step process of registering a business in Ethiopia. Our expert-led discussion covers everything from paperwork to filing, helping you navigate the business registration process with ease.
References:
Resource 1: https://investethiopia.gov.et/"
Resource 2: https://www.mor.gov.et/"
[Speaker 1] (0:00 - 0:03)
All right, welcome back for another deep dive.
[Speaker 2] (0:03 - 0:04)
Yeah, glad to be back.
[Speaker 1] (0:04 - 0:27)
This is part two of our series, Understanding Ethiopia's Business Landscape. Brought to you, of course, by Start Ethiopia. Of course.
Last time, we kind of got into the potential, you know, what's brewing over there? Yeah. But now we're getting down to the nitty gritty.
You know, you're ready to start your business, and the first thing you need to know is how to register.
[Speaker 2] (0:27 - 0:34)
Absolutely. Yeah, absolutely. Yeah, if you want to be a part of this vibrant, expanding economy in Ethiopia, you got to know the rules of the game.
[Speaker 1] (0:34 - 0:53)
And, you know, registration, it can be a little bit of a headache. You hear that everywhere, right? You know, bureaucratic adventures.
But our goal today is to kind of give you a roadmap, like an insider's guide, you know, what to expect, and maybe even, you know, give you some tips on how to avoid some headaches.
[Speaker 2] (0:53 - 0:55)
Hopefully. So... Let's get into it.
[Speaker 1] (0:56 - 0:57)
Let's unpack this. So, first things first.
[Speaker 2] (0:58 - 1:02)
First step is, you have to decide what kind of structure you want for your business.
[Speaker 1] (1:02 - 1:02)
Okay.
[Speaker 2] (1:03 - 1:06)
So, in Ethiopia, the most common types are sole proprietorships.
[Speaker 1] (1:07 - 1:07)
Yeah.
[Speaker 2] (1:07 - 1:09)
There's private limited companies. We call them PLCs.
[Speaker 1] (1:10 - 1:10)
Okay.
[Speaker 2] (1:10 - 1:11)
And partnerships.
[Speaker 1] (1:11 - 1:15)
All right. So, it's not just about picking a name, right? Like, each one of these has different...
[Speaker 2] (1:16 - 1:17)
Big implications.
[Speaker 1] (1:17 - 1:17)
Yeah.
[Speaker 2] (1:17 - 1:18)
Legal and tax implications.
[Speaker 1] (1:18 - 1:19)
Legal and tax implications.
[Speaker 2] (1:19 - 1:19)
Yeah.
[Speaker 1] (1:20 - 1:34)
So, you got to think, you know, what are your goals? You know what I mean? Yeah.
What kind of scale are you looking at? How much are you investing? And how much risk are you willing to take on, you know, personally?
[Speaker 2] (1:34 - 1:35)
Yeah. That's a big one.
[Speaker 1] (1:35 - 1:41)
You know? Are you a lone wolf? Or are you going to have some partners?
You know what I mean?
[Speaker 2] (1:41 - 1:48)
Exactly. And like you said, you know, each of these has implications down the line, everything from taxes to, like you said, personal liability.
[Speaker 1] (1:48 - 1:48)
Yeah.
[Speaker 2] (1:48 - 2:03)
So, for example, with a sole proprietorship, very simple to set up. But you, as the owner, you are personally liable for everything. So, you know, if your venture is high risk, you really got to think about that.
[Speaker 1] (2:03 - 2:04)
Okay.
[Speaker 2] (2:04 - 2:10)
Whereas a PLC, private limited company, a little more complex to set up. But you're not... Your personal liability is protected.
[Speaker 1] (2:11 - 2:11)
Okay.
[Speaker 2] (2:11 - 2:13)
And it can actually attract more investment.
[Speaker 1] (2:14 - 2:15)
Okay.
[Speaker 2] (2:15 - 2:16)
So, thinking long term.
[Speaker 1] (2:17 - 2:19)
So, it's really about what your goals are.
[Speaker 2] (2:19 - 2:20)
Exactly.
[Speaker 1] (2:20 - 2:24)
Yeah. Right. Okay.
Okay. Okay. So, let's say we've decided what kind of structure we want.
[Speaker 2] (2:24 - 2:24)
Okay.
[Speaker 1] (2:25 - 2:26)
What's next?
[Speaker 2] (2:26 - 2:30)
So, next, you got to think of a name. You can't have a business without a name.
[Speaker 1] (2:31 - 2:31)
Right.
[Speaker 2] (2:31 - 2:33)
So, name reservation is important.
[Speaker 1] (2:33 - 2:34)
Okay.
[Speaker 2] (2:34 - 2:38)
And you have to go through the Ethiopian Intellectual Property Office for that.
[Speaker 1] (2:38 - 2:40)
Okay. So, that's the EIPO.
[Speaker 2] (2:40 - 2:41)
That's the EIPO.
[Speaker 1] (2:41 - 2:41)
Okay.
[Speaker 2] (2:42 - 2:45)
And this is, you know, you don't want to get step on anybody's toes, right?
[Speaker 1] (2:45 - 2:45)
Yeah.
[Speaker 2] (2:45 - 2:47)
You don't want two businesses with the same name.
[Speaker 1] (2:47 - 2:47)
No.
[Speaker 2] (2:47 - 2:52)
So, it's about securing your identity, making sure your brand is protected.
[Speaker 1] (2:52 - 2:56)
Yeah. It's like, you know, getting your domain name before you even make a website, right?
[Speaker 2] (2:56 - 2:56)
Exactly.
[Speaker 1] (2:56 - 2:58)
It's like, I got that name. Nobody can use it.
[Speaker 2] (2:58 - 2:59)
That's it. Yeah.
[Speaker 1] (2:59 - 3:04)
All right. So, you've got your structure. You've got your name.
Right. And now comes the fun part. Paperwork.
[Speaker 2] (3:04 - 3:05)
Yes. The paperwork.
[Speaker 1] (3:06 - 3:06)
Yeah.
[Speaker 2] (3:06 - 3:07)
Everybody loves paperwork.
[Speaker 1] (3:07 - 3:12)
Everybody loves it. Yeah. So, gathering your documents.
This is a key part of the process.
[Speaker 2] (3:12 - 3:12)
Okay.
[Speaker 1] (3:13 - 3:25)
So, essentials, of course, you need proof of identity for all the owners. If you're doing a PLC, you're going to need the Articles of Association, which is kind of like your company's constitution.
[Speaker 2] (3:25 - 3:25)
Okay.
[Speaker 1] (3:25 - 3:30)
It lays out the ground rules, how it operates, shareholder's rights, all that good stuff.
[Speaker 2] (3:30 - 3:31)
Yeah. You're really spelling everything out.
[Speaker 1] (3:31 - 3:32)
Exactly.
[Speaker 2] (3:32 - 3:32)
Okay.
[Speaker 1] (3:32 - 3:36)
Now, if you're a foreign investor, there's a few extra steps.
[Speaker 2] (3:36 - 3:36)
Okay.
[Speaker 1] (3:36 - 3:38)
You need to create an investment plan.
[Speaker 2] (3:38 - 3:39)
Okay.
[Speaker 1] (3:39 - 3:44)
And submit it to the Ethiopian Investment Commission, the EIC.
[Speaker 2] (3:44 - 3:45)
The EIC. Okay.
[Speaker 1] (3:45 - 3:49)
And this is pretty important. They want to know what you're bringing to the table.
[Speaker 2] (3:49 - 4:00)
So, you've got to detail your financial investment. How many jobs you're going to create, technology, are you transferring any technology, are you contributing to the Ethiopian economy.
[Speaker 1] (4:00 - 4:02)
Okay. So, they want to know that you're serious.
[Speaker 2] (4:02 - 4:03)
They want to see you're serious. Yeah. Okay.
[Speaker 1] (4:03 - 4:04)
That makes sense.
[Speaker 2] (4:04 - 4:04)
Yeah.
[Speaker 1] (4:06 - 4:21)
So, step four. So, we're going down the list here. If you're a foreign investor, you've got to register with the EIC.
Right. What should people keep in mind? What's the EIC's main focus?
[Speaker 2] (4:22 - 4:26)
So, the EIC is really focused on attracting foreign investment.
[Speaker 1] (4:26 - 4:27)
Okay.
[Speaker 2] (4:27 - 4:28)
That's their main goal.
[Speaker 1] (4:28 - 4:28)
Okay.
[Speaker 2] (4:30 - 4:35)
And they're kind of like a point of contact. They're there to help guide you through the process.
[Speaker 1] (4:35 - 4:36)
A helping hand.
[Speaker 2] (4:36 - 4:37)
A helping hand.
[Speaker 1] (4:37 - 4:37)
Exactly.
[Speaker 2] (4:39 - 4:47)
And they've been recognized as a leading FDI destination in Africa.
[Speaker 1] (4:47 - 4:48)
Wow.
[Speaker 2] (4:48 - 4:50)
So, they're really working hard to make it easy for investors to come in.
[Speaker 1] (4:51 - 4:52)
They're making moves.
[Speaker 2] (4:52 - 4:52)
They're making moves.
[Speaker 1] (4:53 - 5:00)
Okay. All right. So, we've picked a structure.
We've got our name. We've got our paperwork. We've registered with the EIC if we're a foreign investor.
[Speaker 2] (5:00 - 5:00)
Yeah.
[Speaker 1] (5:00 - 5:01)
What's next?
[Speaker 2] (5:01 - 5:04)
All right. So, next we're going to apply for a business license.
[Speaker 1] (5:04 - 5:07)
All right. So, this is like the official green light.
[Speaker 2] (5:07 - 5:09)
The official green light. You are good to go.
[Speaker 1] (5:09 - 5:11)
Yeah. You can operate your business.
[Speaker 2] (5:11 - 5:11)
That's it.
[Speaker 1] (5:11 - 5:13)
And who do we go to for that?
[Speaker 2] (5:13 - 5:14)
That's through the Ministry of Trade.
[Speaker 1] (5:15 - 5:15)
Ministry of Trade.
[Speaker 2] (5:15 - 5:20)
Oh. And basically, they're just going to verify everything, make sure you are who you say you are.
[Speaker 1] (5:20 - 5:21)
Right.
[Speaker 2] (5:22 - 5:32)
You've got your structure. You've got your name. Start day.
Ethiopia really emphasizes get your paperwork right because this is where things can get held up.
[Speaker 1] (5:32 - 5:33)
This is where the headaches come from.
[Speaker 2] (5:33 - 5:37)
That's it. Yeah. A little attention to detail pays off big time.
Totally.
[Speaker 1] (5:38 - 5:39)
Okay. So, we're licensed.
[Speaker 2] (5:39 - 5:40)
We're licensed.
[Speaker 1] (5:41 - 5:47)
Next is the best part of owning a business, taxes.
[Speaker 2] (5:47 - 5:48)
Everybody's favorite, taxes.
[Speaker 1] (5:49 - 5:49)
Yes.
[Speaker 2] (5:50 - 5:57)
Yes. So, this is important for every business. Doesn't matter how big or small, foreign or domestic, you've got to register with the tax authority.
[Speaker 1] (5:58 - 5:58)
Okay.
[Speaker 2] (5:58 - 6:05)
That's the Ministry of Revenues. And what you're getting here is your tax identification number, your TIN.
[Speaker 1] (6:06 - 6:06)
TIN.
[Speaker 2] (6:06 - 6:11)
That's like your social security number for businesses, basically. Okay. That's how they track you.
[Speaker 1] (6:12 - 6:13)
The all-important TIN.
[Speaker 2] (6:14 - 6:15)
The all-important TIN.
[Speaker 1] (6:15 - 6:21)
So, we get the TIN from the Ministry of Revenues. Is there any other kind of tax stuff we need to think about?
[Speaker 2] (6:21 - 6:26)
Right. So, depending on what kind of business you have, you might have to register for value added tax.
[Speaker 1] (6:26 - 6:27)
Okay.
[Speaker 2] (6:27 - 6:27)
VAT.
[Speaker 1] (6:28 - 6:28)
VAT. VAT. Okay.
[Speaker 2] (6:29 - 6:35)
And the Ministry of Revenues, they've been modernizing, trying to streamline things, so it should be relatively painless.
[Speaker 1] (6:35 - 6:36)
Okay. Good.
[Speaker 2] (6:36 - 6:37)
But yeah, you've got to make sure you register.
[Speaker 1] (6:37 - 6:46)
All right. So, we're officially registered. We've got our TIN, maybe our VAT.
Right. We're ready to go. What if we want to grow?
[Speaker 2] (6:47 - 6:47)
Yeah.
[Speaker 1] (6:48 - 6:49)
What if we want to hire people?
[Speaker 2] (6:49 - 6:54)
All right. So, if you're going to hire employees, you've got to register with the National Social Security Agency.
[Speaker 1] (6:54 - 6:54)
Okay.
[Speaker 2] (6:56 - 7:05)
This makes sure you're compliant with all the labor laws, and it ensures that your employees are taken care of. You know? They get their benefits.
[Speaker 1] (7:05 - 7:06)
Okay.
[Speaker 2] (7:06 - 7:08)
It creates a good, responsible business environment.
[Speaker 1] (7:08 - 7:14)
All right. So, that's step seven. Social Security, check that off the list.
What about the actual money?
[Speaker 2] (7:14 - 7:21)
Right. So, once you've got everything set up, you're going to need a place to put it. So, opening a business bank account is essential.
[Speaker 1] (7:21 - 7:24)
Yeah. That's how you actually manage everything. Exactly.
[Speaker 2] (7:25 - 7:28)
And start Ethiopia. They actually help with this step, too.
[Speaker 1] (7:28 - 7:29)
Mm-hmm.
[Speaker 2] (7:29 - 7:30)
They know how important it is.
[Speaker 1] (7:30 - 7:31)
It's like they've done this a few times.
[Speaker 2] (7:31 - 7:32)
Yeah. A few times.
[Speaker 1] (7:32 - 7:43)
Okay. So, we've got everything. We've got our structure, our name, paperwork, EIC, license, TIN, VAT, Social Security, bank account.
[Speaker 2] (7:43 - 7:43)
Right.
[Speaker 1] (7:43 - 7:46)
What else? Is there anything else we need to think about?
[Speaker 2] (7:46 - 7:52)
All right. So, there's one more thing. Depending on what kind of business you're in, you might need some extra permits and licenses.
[Speaker 1] (7:52 - 7:52)
Ah.
[Speaker 2] (7:52 - 7:58)
So, it really depends on your sector. Could be health and safety, environment, all kinds of stuff.
[Speaker 1] (7:58 - 8:01)
All right. So, do your research, figure out what applies to you.
[Speaker 2] (8:01 - 8:02)
Exactly.
[Speaker 1] (8:02 - 8:02)
Yeah.
[Speaker 2] (8:02 - 8:03)
Be proactive.
[Speaker 1] (8:03 - 8:03)
Yeah.
[Speaker 2] (8:03 - 8:05)
Because it's going to save you a lot of headaches later.
[Speaker 1] (8:05 - 8:19)
All right. So, there you have it. A complete step-by-step guide to registering your business in Ethiopia.
Part two of our series, Understanding Ethiopia's Business Landscape, brought to you by Start Ethiopia.
[Speaker 2] (8:20 - 8:24)
And as Start Ethiopia reminds us, it's not as daunting as it seems.
[Speaker 1] (8:24 - 8:25)
No.
[Speaker 2] (8:25 - 8:28)
Yeah. The World Bank might say one thing, but Start Ethiopia's got your back.
[Speaker 1] (8:28 - 8:30)
Yeah. They're there to help you navigate the system.
[Speaker 2] (8:31 - 8:31)
Exactly.
[Speaker 1] (8:31 - 8:36)
Okay. So, if you're ready to take the plunge or if you just want to learn more, you know where to go.
[Speaker 2] (8:37 - 8:38)
Ethiopian Investment Commission.
[Speaker 1] (8:38 - 8:38)
Yeah. I see.
[Speaker 2] (8:39 - 8:41)
And Start Ethiopia. They're your go-to resources.
[Speaker 1] (8:41 - 8:43)
Yeah. They'll give you the most up-to-date information.
[Speaker 2] (8:43 - 8:44)
Absolutely.
[Speaker 1] (8:44 - 8:49)
Okay. So, as you're going through all these steps, keep in mind, Ethiopia's got a lot to offer.
[Speaker 2] (8:49 - 8:50)
Oh, yeah.
[Speaker 1] (8:50 - 8:52)
Dynamic economy, tons of opportunities.
[Speaker 2] (8:53 - 8:58)
Huge potential. Agriculture, manufacturing, mining, tourism, you name it.
[Speaker 1] (8:58 - 9:10)
So, as you're doing all this paperwork, think about the bigger picture. Think about what you're going to contribute to this evolving landscape. Exactly.
All right. That's it for this deep dive into business registration in Ethiopia.
[Speaker 2] (9:10 - 9:11)
Thanks for tuning in.
[Speaker 1] (9:11 - 9:15)
We'll be back soon with more insights into the Ethiopian business landscape.
[Speaker 2] (9:15 - 9:16)
See you next time.