Ethiopia Expands Duty Free Incentives to Cover Generators and Transformers

Ethiopia’s government has expanded investment incentives by granting duty and tax free import status to generators and transformers, a move formalized by the Ministry of Finance under Directive No. 1064/2017. The January 30, 2026 decision reflects the government’s effort to address infrastructure bottlenecks, as unreliable power supply continues to limit industrial output and slow foreign direct investment in manufacturing, agro processing, and large scale service sectors.

The update comes after investors highlighted that the original list of capital goods excluded essential equipment needed for approved projects. By adding generators and transformers, the ministry aims to lower initial project costs, speed up project implementation, and reduce dependence on expensive temporary power solutions, which have previously increased capital expenditures and delayed returns for businesses operating outside stable grid zones.

Authorities, including Finance Minister Ahmed Shide, have instructed customs and tax offices to process applications under the new provisions. The expanded incentive is expected to attract more private investment, support Ethiopia’s industrial development objectives, and reduce energy related risks that have historically hindered project execution and growth.