Manufacturing - The Incentives

The Incentives

Current incentives by the government for local production of pharmaceutical products include tax free loans of up to 70% for new investments and up to 60% for upgrading projects for the first five years from the dedicated government bank- the Development Bank of Ethiopia.

There is also a 100% custom duty exemption on import of all granted capital goods, such as plants, machinery equipment, and construction materials. Spare parts at up to 15% of the total value of imported investment capital goods are exempted from customs duty.

Those exporting 50% their products or services, or supplying 75% of their products or services as production or services input to an exporter are exempted from income tax for five years. While those exporting less than 50% of their products or services of their products or those supplying only to the domestic market are exempted from income tax for two years. Investors who invest in priority areas to produce mainly export products will be provided with land necessary for their investment at reduced lease rates.

The tender authority grants local manufacturers a 25% price preference, and also prepays 30% of the tender value upon contract award. The balance of the 70% of the award value can be accessed through the Development Bank of Ethiopia if the local company requires additional capital and is willing to cede the tender to the bank. To encourage products, registration for local manufacturers is also reduced to an average of one month time.