Investment Opportunities in Mekelle, Tigray State, Ethiopia
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MCI AND VCC WORKING PAPER SERIES ON INVESTMENT IN THE MILLENNIUM CITIES No 10/2009 INVESTMENT OPPORTUNITIES IN MEKELLE, TIGRAY STATE, ETHIOPIA Bryant Cannon December 2009 432 South Park Avenue, 13th Floor, New York, NY10016, United States Phone: +1-646-884-7422; Fax: +1-212-548-5720 Websites: www.earth.columbia.edu/mci; www.vcc.columbia.edu MCI and VCC Working Paper Series o N 10/2009 Editor-in-Chief: Dr. Karl P. Sauvant, Co-Director, Millennium Cities Initiative, and Executive Director, Vale Columbia Center on Sustainable International Investment: [email protected] Editor: Joerg Simon, Senior Investment Advisor, Millennium Cities Initiative: [email protected] Managing Editor: Paulo Cunha, Coordinator, Millennium Cities Initiative: [email protected] The Millennium Cities Initiative (MCI) is a project of The Earth Institute at Columbia University, directed by Professor Jeffrey D. Sachs. It was established in early 2006 to help sub-Saharan African cities achieve the Millennium Development Goals (MDGs). As part of this effort, MCI helps the Cities to create employment, stimulate enterprise development and foster economic growth, especially by stimulating domestic and foreign investment, to eradicate extreme poverty – the first and most fundamental MDG. This effort rests on three pillars: (i) the preparation of various materials to inform foreign investors about the regulatory framework for investment and commercially viable investment opportunities; (ii) the dissemination of the various materials to potential investors, such as through investors’ missions and roundtables, and Millennium Cities Investors’ Guides; and (iii) capacity building in the Cities to attract and work with investors. The Vale Columbia Center on Sustainable International Investment promotes learning, teaching, policy-oriented research, and practical work within the area of foreign direct investment, paying special attention to the sustainable development dimension of this investment. It is a joint center of Columbia Law School and The Earth Institute at Columbia University. Correspondence should be directed at any of the editors. A separate MCI working papers series on the social sector is also available. For more information, please refer to the MCI website at: http://www.earth.columbia.edu/mci/ and the Vale Columbia Center website at: http://www.vcc.columbia.edu/. Copyright © 2009 by the Millennium Cities Initiative and Vale Columbia Center on Sustainable International Investment. All rights reserved. Unless otherwise indicated, this working paper may be reproduced, quoted or cited without permission of the author(s) provided there is proper acknowledgement. The responsibility for the contents of this Working Paper remains with the author(s). Accordingly, this publication is for informational purposes only and is meant to be purely educational. While our objective is to provide useful, general information, the Millennium Cities Initiative and the Vale Columbia Center make no representations or assurances as to the accuracy, completeness, or timeliness of the information. The information is provided without warranty of any kind, express or implied. This publication does not constitute an offer, solicitation, or recommendation for the sale or purchase of any security, product, or service. Information, opinions and views contained in this publication should not be treated as investment, tax or legal advice. Before making any decision or taking any action, you should consult a professional advisor who has been informed of all facts relevant to your particular circumstances. 2 Table of Contents Acknowledgments ......................................................................................................................... 6 List of abbreviations ..................................................................................................................... 7 Executive summary ....................................................................................................................... 9 Chapter 1. The broader context ................................................................................................ 13 A. Country background.......................................................................................................... 13 B. The region ......................................................................................................................... 14 C. The economy ..................................................................................................................... 15 D. Markets ............................................................................................................................. 15 E. Trade facilitation ............................................................................................................... 16 F. Exports .............................................................................................................................. 16 G. Imports .............................................................................................................................. 17 H. Foreign direct investment ................................................................................................. 18 Chapter 2. Investing in Mekelle ................................................................................................. 20 A. Introduction ....................................................................................................................... 20 B. Mekelle economy .............................................................................................................. 21 C. Reserved areas of investment............................................................................................ 21 1. Reserved for the Government ....................................................................................... 21 2. Reserved for joint investment ....................................................................................... 21 3. Reserved for domestic investors ................................................................................... 21 D. Investment permit ............................................................................................................. 22 1. Required minimum capital ............................................................................................ 22 2. Required minimum capital (approved sectors) ............................................................. 22 E. Federal level investment incentives .................................................................................. 23 1. Exemption from customs duty ...................................................................................... 23 2. Duties ............................................................................................................................ 23 3. Exemption from income and profit tax ......................................................................... 23 4. Tax holiday ................................................................................................................... 23 F. Regional investment incentives ........................................................................................ 23 1. Industrial zones ............................................................................................................. 23 2. Approved investments for free land lease ..................................................................... 24 3. Agricultural investments ............................................................................................... 24 4. Land as collateral .......................................................................................................... 24 5. Grace period for lease ................................................................................................... 24 6. Reduced lease price....................................................................................................... 25 G. Guarantees to investors ..................................................................................................... 25 1. Guarantee against expropriation ................................................................................... 25 2. Loss carried forward ..................................................................................................... 25 Chapter 3. Opportunities for investors ..................................................................................... 26 A. Sectoral selection criteria and analysis ............................................................................. 26 B. Livestock ........................................................................................................................... 26 1. Milk products ................................................................................................................ 27 2. Meat products................................................................................................................ 29 3 3. Leather goods ................................................................................................................ 30 4. Animal feeds ................................................................................................................. 34 C. Poultry ............................................................................................................................... 35 D. Fishery..............................................................................................................................