Cross Border Trade - Ethiopia
Quick info guide
Requirements for petty cross-border trade
Licensing and renewal of license
✓ Entry into petty cross-border trade is not hampered by cumbersome regulatory procedures. The traders are required only to fill in a very simplified form with two photographs and to pay 25 Ethiopian Birr to get the license.
✓ It is clearly indicated in all petty cross-border trade directives that, in matters not specifically covered by the directives, the Commercial Registration and Business Licensing Proclamation (Proc. No. 686/2010) and its amendment (Proc. No. 731/2012 and Proc. No. 980/2016) will be applicable.
✓ The license should be renewed every year upon payment of 25 Ethiopian Birr. Using the license as a cover for illegal trading activities and failure to adhere to the obligations stipulated under the directives amounts to the revocation of license and new license may not be given for a trader involved in such activity. A trader will be totally banned from conducting a petty cross-border trade if he commits such crime again.
✓ The petty cross-border traders securing a license to import or export should undergo all the procedures of Customs except the regulatory requirements related to a letter of credit and hard currency and duty-free exportation of permitted items.
For further information please visit: https://www.ecc.gov.et
Trading across Ethiopia's borders
Cross-border trade plays a vital role in improving the livelihoods of Ethiopian women living around border areas. As a country, Ethiopia has an age-long cross border trade agreement with neighboring countries. These trade agreements play a vital role in maintaining healthy and strong bilateral relations which foster the realization of legal trade flow among nations in accordance with international trade law. In this regard, Ethiopia has taken significant steps in enhancing bilateral relations in the fields of cross-border trade.
Types of formal cross border trade in Ethiopia
The formal cross-border trade in Ethiopia involves both:
- large-scale cross-border trade: carried out by enterprises with large financial capacity and which consists of trade in goods or services carried out by legally registered traders who fulfill all requirements of the trading countries involved, and;
- petty cross-border trade: this involves low-income individuals who live close to the country’s border engaged in trading activities such as the export and import of a limited number of basic commodities.
Reasons for allowing petty cross-border trade
- The basic goods frequently used by local populations living near the border do not reach the area in adequate quantity. Even if goods reached these locations, their prices would be so high due to transportation costs becoming unaffordable for the poor, and;
- To curb illegal/informal trade across the border by allowing the people to freely import basic commodities
Ethiopia trades with neighboring countries like Kenya, Djibouti, Sudan, Somaliland, Sudan, and Somalia. Furthermore, in Ethiopia, women are active participants in such cross-border trade. The participation of women in this trade enhances food security and reduces poverty among the vulnerable population.
Major products traded at the borders
The following are the major products traded at the borders: agricultural products, livestock, sanitary and beauty products, medicines, footwear and textiles, cereals, processed and semi-processed foodstuffs (such as pasta, sugar, wheat flour, and tea), kerosene, charcoal and chat/khat.
Benefits of small-scale cross border trade for Ethiopian women
- Serves as a means of livelihood for their families
- It enhances food security and reduces poverty
Challenges Ethiopian cross border traders face
- the high cost of transportation
- lack of marketing information
- lack of access to credit
- lack of marketing infrastructure
- inefficient marketing system, and
- high business risk
Taxes imposed in the formal large-scale cross border traders are;
- Customs Duty
- Excise Tax
- Value Added Tax (VAT)
- Surtax and
- Withholding tax