CERTIFICATE

This is to certify that

Addis Ababa Chamber of

Commerce and Sectoral
Associations
Kirkos Sub City, Wereda 4, Chamber Building
P.O. Box 2458
Addis Ababa, Ethiopia

has implemented and maintains a Quality Management System.

Scope:
Provision of services and support on: policy analysis and advocacy, membership, business
development, communication and media (newspaper, radio programs, business forums and
delegations), trade and investment promotion, arbitration, training, and management systems

Through an audit, documented in a report, it was verified that the management system
fulfills the requirements of the following standard:

ISO 9001 : 2008

Certificate registration no. 497767 QM08

Valid from 2013-11-15
Valid until 2016-11-14
Date of certification 2013-11-15

DQS GmbH

Götz Blechschmidt
Managing Director

Accredited Body: DQS GmbH, August-Schanz-Straße 21, 60433 Frankfurt am Main

 Contents
Page

1. Export Business --------------------------------------------------------------------- 3

2. Export Licence------------------------------------------------------------------------- 3

3. Export Plan ---------------------------------------------------------------------- ----- 4

4. Products Identfication----------------------------------------------------------------- 5

5. Products Adaptation------------------------------------------------------------------- 6

6. Market Research--------------------------- ------------------------------------ ------- 6

7. Making Contacts---------------------------------------------------------------- ------ 7

8. Methods and Channels of Export ------------------------------------------------- 7

9. Price, Cost,Terms of Sales and Payment Methods --------------------------- 8

10. Quotation and Proforma Invoice------------------------------------------------ 12

11. Export Finance ---------------------------------------------------------------------- 13

12. Bank Permit -------------------------------------------------------------------------- 14

13. Shipping Products ---------------------------------------------------------------- 15

14. Documentations---------------------------------------------------------------------- 16

15. Clearing and Forwarding--------------------------------------------------------- 19

16. Export Incentives ------------------------------------------------------------ ------ 20

17. Free Trade Agreements ------------------------------------------------------- 21

1
Background
The Addis Ababa Chamber of Commerce & Sectoral Associations (AACCSA)
has been established, by the General Notice Number 90/ 1947, in April 1947 as an
autonomous, non-governmental, non-political and non-profit organization to act
on behalf of its members. The chamber re-establishment with the Proclamation
Number 341/2003, further provides the legal framework for the establishment of
Chambers of Commerce and Sectoral Associations.

AACCSA is a voluntary based member organization with more than 15,000

member business companies. The chamber promotes trade and industry,
disseminating business information, consulting government and members
on economic development and business issues, establishing friendly relationship
with similar chambers in other countries, and exchanging information as well as
engaging in arbitration in times of disputes among members.

AACCSA is the oldest, largest and strongest Chamber in Ethiopia, which

represents a wide spectrum of businesses constituting for more than 60%
of businesses operating in the country. Being a member of the World Chambers
Federation, AACCSA also has a prominent place in the international network of
chambers.

Vision

“To be a world class chamber enabling members to be internationally

competitive”

Mission

“To promote trade and investment by providing demand driven service to

its members and by advocating for favorable business environment based
on international best practices”.

Values
• Teamwork
• Fairness
• Credibility
• Business orientation
• Accountability
• Transparency

2
1. Export Business dures needed to start an Export Business
and guiding them through the steps that
An export business is a business that sells need to be taken.
products to a country other than the one
where the goods are produced or manufac- 2. Export License
tured.
Exporters must be registered with Ministry
of Trade and obtain export license. Agricul-
tural commodities, live animals and other
non-value added export products are
allowed only for domestic investors.

The documents required for the issuance

of an export license are:

•• An application,
•• The principal registration certifi-
cate,
•• A passport size photographs,
There is profit to be made in export. The
•• An investment permit and resi-
international market is much larger than the
dence permit if there is foreign
local market. Growth rates in many over-
investment,
seas markets far outpace domestic market
•• A memorandum and articles of
growth. And meeting and beating innova-
tive competitors abroad can help companies association or contract of partner-
keep the edge they need at home. ship,
•• A certificate of professional
There are many opportunities for export competence in testimony of the
businesses and it is possible for anyone to fulfillment of the requirements
start up an export business, however, there provided by the relevant govern-
are some procedures that those setting up ment office,
a business have to follow in order to com- •• A document evidencing the cap-
ply with both Ethiopian and international ital allocated for the commercial
regulations. activity,
•• A taxpayer registration certificate,
This guide is written with the intention of •• A recommendation given by con-
helping businesses understand the proce-
cerned government office, which

3
 testifies that the business premises The purpose of the Export Business Plan
in which the business is to be con- is to prepare the company’s business to
ducted is suitable for the intended enter the international marketplace.
business and
•• Where the application is submitted The plan uses:
by an attorney, an authenticated
power of attorney and photocopies •• to assemble facts, constraints,
of the attorney’s identification card and goals and
or passport •• to create an action statement that
takes all of these into account.
The export license covers a duration of not
less than twelve months, and should be re- The statement includes specific objectives,
newed not later than two months before the it sets forth time schedules for implemen-
end of the duration. tation, and it marks milestones so that the
degree of success can be measured and
Export of some agricultural commodities is help motivate personnel.
banned and controlled by means of licens-
es, however, many items are permitted to be The following lists should ultimately be
exported freely. Lists of banned items can addressed to at the plan development
be obtained from the Ministry of Trade.
•• Which products are selected for
3. Export Plan export development? What modi-
fications, if any, must be made to
adapt them for overseas markets?
•• Which countries are targeted for
sales development?
•• In each country, what is the basic
customer profile? What marketing
and distribution channels should
be used to reach customers?
•• What special challenges pertain to
each market (competition, cultural
differences, import controls, gov-
ernment regulations etc.), and what
strategy will be used to address
them?

4
 •• How will the product’s export sale 4. Products Identification
price be determined?
•• What specific operational steps The main exportable items in Ethiopia are
must be taken and when? agricultural commodities and some man-
•• What will be the time frame for ufactured products such as leather, textile
implementing each element of the & garments and some food staffs.
plan? The most common approaches to identify
•• What personnel and company products for export are:
resources will be dedicated to
•• Identify and analyze the items
exporting?
that are currently exportable and
•• What will be the cost in time and
money for each element? any other items that may have
•• What will be the ways to increase export potential,
visibility •• List the strengths and weakness-
•• How will results be evaluated and es of products that may have
used to modify the plan? export potential,
•• Collect export statistics related to
The first time an export plan is developed,
the identified products and mar-
it should be kept simple. It need be only
a few pages long, since important market ket and
data and planning elements may not yet be •• Identify the source of supply of
available. the product and get familiar with
commodity marketing (ECX)
The plan should also include company’s procedures.
visibility strategy such as;
Identifying product for export requires
•• developing web site and not only product knowledge but also
•• full contact details including com- knowledge of the unique characteristics
pany e-mail address of each market being targeted.

The more online visibility the company has,

If the company manufactures more than
the more likely people within the business
one product or offers many models of a
will look to it for necessary products or
single product, it should start with the
services.
one best suited to the targeted market.
Ideally, the firm chooses one or two

5
products that fit the market without major straints abroad, as well as to identify
design modifications. prospective buyers and customers for the
identified products.
5. Products Adaptation
To enter a foreign market successfully, a
company may have to adapt or modify its
product to conform to government regula-
tions, geographic and climatic conditions,
buyer preferences or standards of living.

Foreign government product regulations

are common in international trade A Step-by-Step Approach to Market
and are expected to expand in the future. Research
These regulations catagorize into tariff
The exporting company may
and non-tariff. The purposes are to:
find the following market reaserch
approach useful.
•• Protect domestic industries from
foreign competition, Step 1.
•• Protect the health of their citi-
Obtain export statistics that indicate
zens,
product exports to various countries.
•• Force importers to comply with
environmental controls, Step 2.
•• Ensure that importers meet local
Identify 5 to 10 large and fast-grow-
requirements,
ing markets for the firm’s product. Look
•• Restrict the flow of goods origi-
at them over the past three to five years.
nating in or having components
Has market growth been consistent year
from certain countries and
to year? Did import growth occur even
•• Protect their citizens from cultur-
during periods of economic recession?
al influences deemed inappropri-
If not, did growth resume with econom-
ate.
ic recovery?
6. Market Research
Step 3.
The purposes of market research are to
Identify some smaller but fast-emerging
identify marketing opportunities and con-
markets that may provide ground-floor op-

6
portunities. If the market is just beginning tion may result. In many cases, however,
to open up, there may be fewer competi- exporters need an in-country presence
tors than in established markets. Growth through a representative or distributor to
rates should be substantially higher in reach the eventual buyer. Alternatively,
these countries to qualify as up-and-com- the firm may identify customers through
ing markets, given the lower starting point. attendance at trade shows, trade mis-
sions, direct mail campaigns, and adver-
Step 4.
tising.
Target three to five of the most statistically
Regardless of how the exporter makes
promising markets for further assessment.
Consult with Chamber of Commerce, contacts and develops sales leads, the
business associates, freight forwarders, exporter faces many questions:
and others to help refine targeted mar- •• Specifically who are potential buy-
kets. ers?
•• What trade shows are the most
effective?
7. Making Contacts
•• Which marketing techniques are
After a company has identified its most most successful?
promising markets and developed export
plan and strategies to enter those markets, 8. Methods and Channels of
the next step is to actually locate a buyer. Export

The most common channels of exporting

are indirect selling and direct selling.

If that buyer is the end user of a compa-

ny’s product, a relatively simple transac-

7
Direct Selling uct overseas. Of the four, pricing can be the
Selling to a direct buyer means conducting most problematic, even for an experienced
an export business directly with a customer exporter.
interested in buying the product.

The advantages of direct exporting for a Price

company are:
The price considerations listed below will
•• more control over the export process, help an exporter determine the best price for
its export product.
•• potentially higher profits, and
•• a closer relationship to the buyer
•• At what price should the firm sell
and the marketplace.
its product in the foreign mar-
Indirect Selling ket?
•• What type of market positioning
In indirect selling, an export intermediary
(customer perception) does the
such as an export management compa-
company want to convey from its
ny or an export trading company assumes
pricing structure?
responsibility for finding overseas buyers.
Thus, the exporter deals with an intermedi-
ary than direct buyer.

The advantages of indirect exporting for a

company are:

•• it provides a way to penetrate for-

eign markets and
•• minimize the complexities and •• Does the export price reflect the
risks of direct exporting. product’s quality?
•• Is the price competitive?
9. Price, Quotation, Terms •• Should the firm pursue market
and Payment Methods penetration or market-skimming
pricing objectives abroad?
Proper export pricing, complete and
•• What type of discount (trade, cash,
accurate quotations, choosing the terms of
quantity) and allowances (advertis-
the sale, and selecting the payment method
ing, trade-off) should the firm offer
are four critical elements in selling a prod-
its foreign customers?

8
 •• Should prices differ by market many new terms and abbreviations) and
segment? their definitions is provided in Incoterms.
•• What should the firm do about The following are a few of the more
product line pricing? frequently used terms in international
•• What pricing options are avail- trade:
able if the firm’s costs increase
or decrease? Is the demand in the •• CIF (cost, insurance, freight)
foreign market elastic or inelastic? to a named overseas port where
•• Are the prices going to be viewed the seller quotes a price for the
by the foreign government as rea- goods (including insurance), all
sonable or exploitative? transportation, and miscellaneous
charges to the point of debarka-
Costs tion from the vessel. (Used only for
ocean shipments.)
The computation of the actual cost of pro-
ducing a product and bringing it to market is
the core element in determining if exporting
is financially viable.

Due consideration should be given to cal-

culate cost. Marginal cost pricing is a more
competitive method of pricing a product for
market entry.

This method considers the direct, out-of-

pocket expenses of producing and selling
products for export as a floor beneath which
prices cannot be set without incurring a loss.
•• CFR (cost and freight)
Terms of Sale
to a named overseas port where
In any international ales agreement, it the seller quotes a price for the
is important that there is a common under- goods that includes the cost of
standing of the delivery terms since confu-
transportation to the named point
sion over their meaning can result in a loss
of debarkation. The buyer covers
on a sale.
the cost of insurance. (Used only
A complete list of important terms (including for ocean shipments.)

9
 named shipping point. It may also
•• CPT (carriage paid to) and CIP be used for multimodal transport,
(carriage and insurance paid container stations, or any mode of
to) a named place of destination. transport, including air.
These terms are used in place of
CFR and CIF, respectively, for all •• FOB (free on board) at a named
modes of transportation, including port of export where the sell-
intermodal. er quotes the buyer a price that
covers all costs up to and includ-
•• EXW (ex works) at a named ing the loading of goods aboard a
point of origin (e.g., ex factory, vessel.
ex warehouse) where the price
quoted applies only at the point of It is important to understand and use sales
origin. The seller agrees to place terms correctly. A simple misunderstanding
the goods at the buyer’s disposal at may prevent exporters from meeting con-
the specified place within the fixed tractual obligations or make them responsi-
time period. All other charges are ble for shipping costs they sought to avoid.
put on the buyer’s account.
Methods of Payment
•• FAS (free alongside ship) at a
named port of export where the The four methods of payment allowed
seller quotes a price for the goods by the National Bank of Ethiopia for ex-
that includes the charge for deliv- port business are listed here below based
ery of the goods alongside a vessel on risk level (starting from the less risky).
at the port. The seller handles the
cost of wharf age, while the buy- Advance Payment
er is accountable for the costs of
loading, ocean transportation, and Receiving payment by cash in advance of
insurance. the shipment might seem ideal. In this sit-
uation, the exporter is relieved of collec-
•• FCA (free carrier) This term tion problems and has immediate use of the
replaces the former “FOB named money. A wire transfer is commonly used
inland port” to designate the sell- and has the advantage of being almost im-
er’s responsibility for handing over mediate.
the goods to a named carrier at the

10
Letter of Credit (L/C) Confirmed Letter of Credit

Letters of Credit (L/C) - are a written A letter of credit issued by a foreign bank
commitment to pay, by a buyer’s or import- is sometimes confirmed by one of the 1st
er’s bank (called the issuing bank) to the class international banks. This is called
seller’s or exporter’s bank. (called the confirmed letter of credit; it adds its prom-
accepting bank, negotiating bank or paying ise to pay to that of the foreign bank (the
bank). issuing bank).

•• L/Cs are much safer if confirmed Cash Against Documents (CAD)

and should be irrevocable to carry
real safety. Payment under document collection terms
•• To ensure payment the export- requires a greater level of trust between the
er must comply strictly with the buyer and seller. The exporter is basically
documentary requirements of the trusting that the buyer will have the money
credit. and integrity to pay when the documents
evidencing shipment have been received.
Types of Letter of Credit
If the order is transported by sea or air, the
Irrevocable:- An irrevocable letter of credit bill of loading or airway bill serves as a
can neither be amended nor cancelled with- title document, which will not be released
out the agreement of two parties (exporters/ to the importer until the importer has paid
importer) to the credit. (cash against documents) or agrees to pay
(documents against acceptance).
Revocable:- A revocable letter of credit can
be changed at any time by either the buyer Consignment Payment
or the issuing bank with no notification to
the exporter (beneficiary). The goods are shipped to a foreign dis-
tributor who sells them on behalf of the
exporter. The exporter retains title to the
goods until they are sold, at which point
payment is sent to the exporter. The ex-
porter has the greatest risk and least con-
trol over the goods with this method. Ad-
ditionally, receiving payment may take
quite a while.

11
 10. Quotation and Proforma
The consignment sales are only applicable invoice
to perishable items such as:
Many export transactions, particularly
•• fruits, cut flowers, fresh (not fro- initial export transactions, begin with the
zen) meat, live animals, molasses receipt of an inquiry from abroad that is
and others as may be approved by followed by a request for a quotation.
National Bank of Ethiopia.
Proforma Invoice
In regards to payment, the exporters
should: A quotation prepared in invoice format is
called pro forma invoice.
•• Know thoroughly the foreign buy-
er’s financial soundness, reliability, Since the foreign buyer may not be famil-
integrity, full address, etc. iar with the product, the description of it
in an overseas quotation usually must be
•• Sales/Purchase contract should ex- more detailed than in a domestic quota-
ist between the two parties (import- tion. The description should include the
er and exporter). following point:
•• (LC Mode of Payment) go through •• Seller’s and buyer’s names and
text of L/C opened in their favor addresses,
and make sure that compliance can
•• Buyer’s reference number and
be met without doubt. Otherwise,
date of inquiry,
amendments need to be requested
from opener as soon as L/C has
been received or at the earliest -
long before shipment of consign-
ments.

•• (CAD Mode of Payment) Follow

up the payment, as nonpayment
•• Listing of requested products and
or even delay of remittance above
90 days will put name of exporter in brief description,
delinquent list freezing further ex- •• Price of each item,
ports until proceeds are received. •• Appropriate gross and net ship-
ping weight (in metric units where
appropriate),

12
 •• Appropriate total cubic volume and 11. Export Finance
dimensions packed for export(in
metric units where appropriate), Export finance is often a key factor
•• Trade discount (if applicable), in a successful sale. Exporters should be
•• Delivery point, aware of the many financing options open
•• Terms of sale, to them so that they may choose the one
•• Terms of payment, that is most favorable for both the buyer
•• Insurance and shipping costs, and the seller.
•• Validity period for quotation,
•• Origin of goods,
•• Total charges to be paid by custom-
er,
•• Estimated shipping date from Djibouti
port or airport,
•• Currency of sale.

Proforma invoices are models that the buyer

uses when applying for an opening a letter
of credit or arranging funds for import.
The two most common types of export
Sales Contract financing provided by banks are:

When the negotiation completed and •• Pre-shipment Export Financing

the proforma, the terms and conditions of and
payment are acceptable to the buyer and •• Revolving Export Credit Facility
seller, the seller/exporter may place an or-
der with the buyer/importer in the form of a Pre-shipment Export Finance
sales contract.
•• It is a short term loan extended to
exporter engaged in export busi-
The formulation of a sales contract rep-
ness for purchase of raw mate-
resents the conclusion of the negotiations
rial, processing, warehousing,
between the exporter and importer. packing, transporting the finished
goods to shipment.

13
 •• The facility is availed to the max-
•• The facility can be granted to cus- imum of one year and the lending
tomers engaged in export sector and interest rate is 7.5%.
able to present receipts of export
proceeds at least USD 300,000 or The following factors are important to
equivalent currencies, or engaged consider in making decisions about financ-
in viable business at least for two ing:
years or offer collateral. •• The need for financing to make the sale,
•• The length of time the product is
•• The advance rate ranges from 70% being financed,
to 90% depending on type of goods •• The cost of different methods of
to be exported. financing and
•• The facility is availed to the max- •• The risks associated with financ-
imum of one year and the lending ing the transaction.
interest rate is 7.5%. 12. Bank Permit
Revolving Export Credit Finance The Foreign Exchange Regulation of
Ethiopia requires all exports to be pro-
•• It is an advance extended to export- cessed against approval of foreign ex-
ers upon presentation of acceptable change permits. Approval process re-
export documents except bill of quires presentation of different sets of
loading. It is to solve working documents for each transaction. Permits
capital problems of exporters with will be approved when documents in a
continuous export transaction ema- set show consistency of data between
nating from money tied up in goods each other.
in transit of shipment.

•• Exporter should submit export doc- Documents required for export

permit approval
uments indicating the goods are in
transit of shipment to port. Like •• Duly signed contract by seller &
irrevocable L/C way bill, insur- buyer,
•• Undertaking letter of customer
ance contract, and other documents
that consignment will be settled
specified in L/C.
within a maximum of 90 days
•• The maximum advance rate is up to
from date of the Foreign Ex-
80% of the value of the document.
change Permit for Cash Against

14
 Document (CAD) mode of payment arrive on time at the right place;
and Authenticated message of L/C •• Documented correctly to meet the
opened for Letter Credit mode of buyer and foreign government
Payment, requirements, as well as proper
•• Seller’s invoice,
collection standards; and contact
•• Export license valid for the year,
•• Tax registration certificate (TIN customs clearing and forwarding
certificate), agent.
•• Export permit application form
duly filled, signed & stamped (as
appropriate) by the customer.

Remittance delay notification

(Delinquent)

NBE (National Bank of Ethiopia) issues de-

linquent list of exporters periodically. Ex-
porters name should not appear in the delin-
quent list of NBE for the period. If the name
appears, it should be cleared all outstanding Packing
items at NBE. Exporters should be aware of the demands
the international shipping puts on
13. Shipping Products packaged goods.
Exporter should reserve space on the car-
rier well before actual shipment date. This Buyers are often familiar with the port
reservation is called the booking contract. systems overseas, so they will often spec-
ify packaging requirements. If the buyer
When shipping a product overseas, the ex-
porter must be aware of packing, label-
does not specify this, be sure the goods are
ing, documentation, and insurance require-
ments. It is important that exporters ensure prepared using these guidelines:
that the merchandise is:
•• Goods should be palletized and
•• Packed correctly so that it arrives when possible containerized,
in good condition; •• Packages and packing filler should
•• Labeled correctly to ensure that be made of moisture-resistant ma-
the goods are handled properly and terial.

15
 •• Observe any product-specific mate- The overseas buyer usually specifies which
export marks should appear on the cargo for
easy identification by receivers. Products
can require many markings for shipment.
For example, exporters need to put the fol-
lowing markings on cartons to be shipped:

•• Good description,
•• Shipper’s mark,
•• Country of origin,
•• Weight marking ( in kilograms),
•• Number of packages and size of cases,
rials packing requirements, •• Handling marks,
•• Cautionary markings, such as “This
•• Pack in strong containers, ade-
Side Up” or “Use No Hooks” (in
quately sealed and filled when
English and in the language of the
possible and
country of destination),
•• To provide proper bracing in the •• Port of entry,
container, regardless of size, make •• Labels for hazardous materials (uni-
sure the weight is evenly distribut- versal symbols adapted by the Inter-
ed. national Air Transport Association
and the International Maritime Orga-
Marking and Labeling
nization)
Specific marking and labeling is used on
export shipping cartons and containers to:
14. Documentations
•• Meet shipping regulations, Export documentation is required in importing
•• Ensure proper handling, countries to clear goods from customs and
•• Conceal the identity of the con-
effect bank payment. It can also be used to
tents,
as proof of origin in order to claim preferen-
•• Help receivers identify shipments
tial duty rates.
and
•• Insure compliance with environ- The documents often become more import-
ant than the goods, as without the correct
mental and safety standards.
paperwork, the products can’t clear customs.

16
Goods stuck in customs are not stored free- •• A Bill of Lading: is a con-
of-charge and it is the exporter or seller that tract between the owner of the
pays these charges. Most of all, export goods and the carrier. There are
documentation must be accurate and contain two types: a straight bill of lad-
the correct information.
ing which is non-negotiable and a
negotiable or shipper’s order bill
of lading. The latter can be bought,
sold, or traded while the goods are
in transit. The buyer always needs
an original bill of loading as proof
of ownership to take possession of
the goods.

•• A Commercial Invoice: is a bill

for the goods from the seller to
the buyer. These invoices are often
Exporters should seriously consider pre- used by governments to determine
paring documents or having the customs the true value of goods when assess-
clearing agent or freight forwarder handle
ing customs duties.
the formidable amount of documentation
that exporting requires.
•• A Certificate of Origin: is a doc-
The following documents are commonly
ument that is required in certain
used in exporting; but which of them are
nations. It is a signed statement to
necessary in a particular transaction depends confirm the origin of the export
on the requirements of the importing item. Certificate of origin are usual-
country. ly signed by chamber of commerce
and custom authorities. A certifi-
•• Airway Bill: This document is cate may still be required even if
issued by air carrier. A confirma- the commercial invoice contains
tion receipt for cargo accepted for the information.
transportation must be presented
for taking delivery at the destina- •• A Preferential Certificate of
tion. Origin: is a document that is nec-
Airway bill can never be made in non essary when an importing country
negotiable form. offers a preferential tariff to Ethio-
pia. This type of certificate enables

17
 products to enjoy tariff reductions •• A Packing List: It is an itemiz-
or exemptions when they are ex- es the material in each individual
ported to countries extending these package and indicates the type
privileges. The countries which of package, such as a box, crate,
extend duty free tariff treatment drum, or carton. The list is used
to Ethiopia’s export products are by the shipper or forwarding agent
USA, the EU, Japan, Canada, to determine the total shipment
Australia, New Zealand, Turkey, weight and volume and whether the
Russia, China, India and Korea. correct cargo is being shipped.
Each preferential trade programs
has a set of origin requirement. The •• A Phytosanitary Certificate: It
product expected to comply with is an international requirement
the rules of origin requirements to that any consignment of plants
access duty free at destination. or agricultural commodity being
imported into a country shall be
•• A COMESA Certificate of accompanied by a Phytosanitary
Origin: Ethiopia is member of Certificate issued by Ministry of
Common Market for Eastern Agriculture. The certificate stating
and Southern Africa agreement that the consignment is found to be
(COMESA) and goods originating substantially free from diseases and
from Ethiopia can enter to COME- pests and confirm with the current
SA member countries with 10 phytosanitary regulations of the im-
percent duty reduction. COMESA porting country.
certificate of origin uses to confirm
the originating status of the prod- •• Quality Testing and Certifica-
uct.
tion: When export products are
ready, arrangements should be
•• Ethio-Sudan PTA Certificate of
Origin: The preferential trade made for suitable packaging and an
agreement signed between Ethi- application should be made to the
opia and Sudan allows product to Standards Agency of Ethiopia for
enter to both country duty free if quality testing, and to acquire the
it is originated and comply origin
Export Authorization Certificate. (if
requirements.
necessary)

18
 •• Fumigation Certificate: A pest to handle ocean freight.
control certificate that is issued to
certify that the concerned products
have undergone the quarantine and
pre-shipment fumigation by the
approved fumigation service pro-
viders.
•• Inspection Certificate: A report
issued by an independent surveyor
(inspection company) or the ex-
porter on the specifications of the
When the order is ready for shipment and
shipment, including quality, quan-
tity, and/or price etc., required by documents prepared, clearing or forward-
certain buyer and countries. er agent should be review all documents
to ensure that everything is in order. They
•• Consular Invoice: A document also finalize the customs process and get the
required by some foreign countries, release from Customs.
showing shipment information
such as consignor, consignee and
The agent is familiar with the import rules
value description etc., certified by
a consular official of the importing and regulations of Ethiopian government
country. and foreign countries and the methods of
shipping and the documents related to for-
15. Clearing and Forwarding eign trade. The cost for their services is a le-
gitimate export cost that should be included
Goods cannot be cleared without passing in the price charged to the buyer.
the customs procedures. Customs clearing
and forwarding operation is usually perform The customs clearing and forwarding agent
by customs clearing and forwarder agent. is essentially taking care of:
The agent is accredited with the customs
authority, International Air Transport Asso- •• customs clearance aspect of the
ciation (IATA) to handle air freight and the business,
•• customs inspections,
shipping and transport logistics enterprise

19
 •• shipping and documentation and are liable to VAT at zero rates.
•• moving cargo to an overseas This means that VAT is charged at
destination, 0% (or no VAT has to be charged).

The following documents required to •• However, more importantly an

obtained customs clearance: exporter is entitled to reclaim the
•• Customs declaration, VAT on all goods and services pur-
•• Export permit chased to produce the exports.
•• Valid business registration and
•• Duty draw back schemes offers
export licence,
investors an exemption from the
•• VAT and Tin certificates,
payment of customs duties and
•• All relevant documents, Invoice
other taxes levied on imported and
packing list, and other regulatory locally purchased raw materials
bodies certificate. and used in the production and
To avoid costly delays, the exporter declares manufacturing of export goods.
all facts about the export consignment and Duties and other taxes paid are
all supporting original documents should drawn back 100 percent at the time
be forwarded to the Customs Clearing of the export of the finished goods.
Agents to enable customs formalities and •• A voucher is a printed document
authorization of the dispatch of the export having monetary value which is
goods. used in lieu of duties and taxes
payable on imported raw materi-
als. The beneficiaries of the voucher
16. Export Incentives scheme are exporters.

Fiscal
•• A Customs bonded warehouse is
The export incentives given for all exporters building or other secured areas
are the followings: in which dutiable goods may be
•• With the exception of semi-pro-
cessed hides and skins (for which
the export tax rate is 150%), no
export tax is levied on export
products.

•• All exports of goods and services

20
 stored, manipulated, or undergo 17. Free Trade Agreements
manufacturing operations without
payment of duty.

•• The types of customs bonded factory

and manufacturing warehouses
producers and exporters benefits
are bonded manufacturing ware-
house, industry zone, input supply
warehouse and bonded factory
warehouse.

Non- fiscal
Ethiopia is signatory of two free trade
The non- fiscal incentives given to all ex- agreements. These are:
porters are:
•• To retain and deposit in a bank •• Common Market Eastern South-
account up to 20 percent of their ern African Countries (COME-
foreign exchange earnings for SA) and
further use in the operation of their •• Ethiopia and Sudan bilateral free
enterprises. trade agreement.
•• Franco valuta imports of raw ma-
terials are allowed for enterprises The country is not full participant of
engaged in export processing. COMESA FTA, but under Ethiopia and
Sudan bilateral FTA, tariff has fully re-
•• Export credit guarantee scheme in duced to zero for goods originated from
order to ensure an exporter receives both countries.
payment for goods shipped over-
seas in the event the customer de-
faults, reducing the risk of exporter
business competitiveness.

21
Unilateral Trade Agreement
Everything But Arms (EBA)
General Systems of Preferences
(GSP)
The most favorable treatment under the
various EU-GSP’s granted to Ethiopia
GSP is UNCTAD trade program. The
is the “Everything But Arms” (EBA)
countries which grant duty free market
initiatives. EBA is granting duty-free
access under GSP program to Ethiopian
access to all products originated from
export products are Australia, Belarus,
Ethiopia, except arms and ammunitions.
Bulgaria, Canada, Estonia, the European
Union, Japan, New Zealand, Norway, the African Growth Opportunity Act
Russian Federation, Switzerland, Turkey (AGOA)

and the United States of America.

AGOA is an extended duty free market
access given by USA for Sub Saharan
Each GSP scheme has its own set of Rules
African countries.
of Origin, there are slight differences but
Duty free access to the U.S. market un-
most of the contents are similar.
der the combined AGOA/GSP program
stands at 6400 products tariff lines, in-
cluding the apparel, footwear, wine, cer-
tain motor vehicle components, a vari-
ety of agricultural products, chemicals,
steel and others.

22
Most of Ethiopian Export products can enter
to US market under AGOA duty free market
access privilege.

Duty Free Tariff Preference

(DFTP)

India grants preferential duty free market

access for exports from all 50 LDCs includ-
ing Ethiopia, covering 94 per cent of the to-
tal tariff lines of India.

Special Preferential Tariff Treatment

(SPTT)

China under the Special Preferential Tariff

Treatment grants duty free quota free market
access privileges to 20 African countries in-
cluding Ethiopia since 1 January 2005.

South Korea Duty Free Treatment

Scheme

South Korea grants DFQF market access to

LDC’s after the 2005 Hong Kong ministeri-
al decision. All goods export to South Korea
enters without paying duty.

23
 Why Export?
Foreign Exchange Earning:

A country’s international financial strengthens determines on the basis of

favorable balance of trade. It happens when export is more than import.
Foreign exchange earnings will be more in a favorable balance of trade.
So the wealth of a nation increases while earning foreign exchange.

Government Supports:

While supporting to increase foreign exchange inflow to a country,

government supports in maximum ways to safeguard the exporters in
almost all their problems and threats in the form of funding as well as
services.

International Standard:

While meeting the quality requirements of foreign buyer, it will in-

crease business confidence in comply with international standards.

More Profit:

Compared to domestic market, quantity of exports will be more in turn

the profit.

Globalization:

Export gives liberalization in terms of procedures and formalities to

integrate in global trading system.