"Russia and Ethiopia Have Much in Common"
Russia and Ethiopia have much in common. Our countries have gone through periods of empire formation, struggles against interventionists, building socialism, and transitioning to market economies. Moreover, Russia and Ethiopia are multinational federations connected by Orthodox Christianity. Diplomatic relations between our countries were established more than 125 years ago. In 2024, Ethiopia became a member of BRICS.
We discussed the history of relations between our countries and cooperation in industry, agriculture, energy, ICT, transport, education, culture, and tourism with Yaroslav Tarasyuk, Russia's Trade Representative in Ethiopia.
— The Russian Trade Mission in Ethiopia opened only in 2023. What is the history of relations between our countries?
— The Trade Mission in Ethiopia was established in 1977 and resumed its work in 2023. The history of fruitful cooperation between our countries began even earlier. In the late 19th century, Russia provided Abyssinia with military and technical support; Russian military personnel, for example, participated in the famous Battle of Adwa in March 1896, and Russian doctors treated wounded Ethiopian heroes who defeated the Italian invaders. Later, a permanent hospital of the Russian Red Cross was established in Addis Ababa, named after Balcha Safo, a hero of the Battle of Adwa. It is one of the oldest and most respected hospitals in Addis Ababa, still operating today.
Last year, we celebrated the 120th anniversary of the First Russian Geological Expedition led by mining engineer Nikolai Nikolaevich Kurmakov. The expedition arrived in Abyssinia in 1904 at the invitation of Emperor Menelik II. Gold-bearing areas at the sources of the White Nile were studied then. In modern times, our company "Zarubezhgeologiya" discovered and explored gold deposits at Lega Dembi and rare metal deposits at Kenticha in Ethiopia (1970-1980s), and conducted exploration and calculation of reserves of the Kalub gas condensate field (1984-1992).
In 1954, with our country's assistance, the Polytechnic Institute was founded in Bahir Dar. The institute, now a university, has become a leading center for training qualified specialists for various sectors of Ethiopia's economy.
In 1967, an oil refinery (17,500 bbl/d) was opened in Assab (then Ethiopia, now Eritrea) on the Red Sea coast, designed and built by Soviet specialists. Emperor of Ethiopia Haile Selassie and a delegation from the USSR Council of Ministers attended the grand opening ceremony.
In the 1970s-90s, after the opening of the Trade Mission and the establishment of the economic advisor's office, 43 major projects were implemented with our technical and financial assistance, including a tractor assembly plant in Adama (Nazret), a cement plant with a capacity of 600,000 tons in Dire Dawa, a tantalum processing plant and quarry at the Kenticha deposit, a hydroelectric power station with a dam on the Wabi Shebelle River near Melka Wakana, a 230 kV power transmission line from Melka Wakana to Kaliti with a length of 225 km, agricultural development of the Baro-Akobo valley (Gambela), construction of numerous vocational training centers, equipment repair workshops, refrigerated warehouses, fuel bases, grain storage facilities, and other facilities. There are still many Lada taxis in Addis Ababa that continue to operate, demonstrating their reliability. But they now need to be replaced with new environmentally friendly vehicles.
Finally, last year Ethiopia became a full member of BRICS. It should be noted that our partners have actively engaged in work within BRICS. It so happened that Russia, thanks to its chairmanship in BRICS in 2024, introduced Ethiopian colleagues to the work of this influential global association, and events held in Russia allowed them to see our country's achievements in various fields, including industry, agriculture, energy, mining, ICT, and other areas.
— What are the most important facts about Ethiopia and its history that one should know to understand its cultural and business traditions?
— Ethiopia is the second most populous country in Africa (after Nigeria) with a population of 127 million people. More than 80 nations and nationalities live here, among which the most numerous are Oromo, Amhara, Tigray, Somalis, and Afar. The languages of these peoples are official, but English is also used for administrative purposes and business communication. 47% of Ethiopia's population is under 15 years of age.
63% of the country's population are Christians, and 34% are Muslims. Urban population accounts for 21%. Literacy rate is 49%. Ethiopia has 25 million social media users, and their number is constantly growing.
The Federal Democratic Republic of Ethiopia includes 12 regions and 2 cities of federal significance (Addis Ababa and Dire Dawa). Each region has its own constitution, laws, president, armed formations, courts, taxes, subsidies, licenses, and banks.
Ethiopia has significant unrealized economic potential, which is confirmed by the high growth rates of the country's gross domestic product and the interest of foreign investors. Today, Ethiopia is the fifth largest economy in Africa with GDP growth of 7-8% per year.
Ethiopia is rich in minerals (gold, platinum, potash, iron ore, rare earth metals). It is a hydropower and air transport hub of Africa.
Ethiopian Airlines is one of the world's leading and fastest-growing airlines. The capital's airport in Addis Ababa operates an international pharmaceutical logistics hub and has opened an e-commerce center. Incidentally, Ethiopian Airlines operates four flights to Moscow, and there will be five from summer. There are agreements to launch regular cargo transportation.
Ethiopia has built the largest cross-border electrified railway from Djibouti to Addis Ababa and is implementing plans to build a network of railways and highways.
Despite having no access to the sea, the state-owned Ethiopian Shipping & Logistics company, whose vessels are registered in the port of Djibouti, remains the largest in sub-Saharan Africa. Most of Ethiopia's trade cargo goes by sea, and until recently, ESL was a monopolist in multimodal cargo transportation. More than 80% of foreign trade cargo passes through the port of Djibouti, but the port of Berbera in Somaliland is also used.
Finally, Addis Ababa is not only the capital of Ethiopia but also the diplomatic capital of Africa, as it is home to the African Union headquarters.
— What are the characteristics of Ethiopia's legal and judicial system?
— Ethiopia's legal system combines civil law with common law institutions, while customary and Muslim law operate as autonomous systems.
This is because foreign specialists were involved in the preparation of various legal acts; for example, the Criminal Code of 1957 was drafted by a Swiss specialist, the Civil Code of 1960 by the famous French legal scholar René David, and the Criminal Procedure Code of 1961 by a British lawyer.
The current Constitution was adopted in 1994. It established a parliamentary form of republican government and the independence of the judiciary. The Ethiopian Constitution guarantees democratic rights and freedoms, including the rights of women, children, nations, and nationalities.
The main source of law in Ethiopia is legal acts, including the federal Constitution, federal laws, constitutions and laws of regions, government regulations, and by-laws of other authorities. International agreements ratified by Ethiopia are also an integral part of national law.
Ethiopia borrowed from France a dualistic system of private law, in which civil and commercial law are regulated by separate codes.
The highest judicial power belongs to the Federal Supreme Court. Regions, in accordance with the Constitution, have supreme courts, high courts, and courts of first instance. The Constitution also recognizes the existence of special customary law courts. For the Muslim population, for example, Muslim legal doctrine applies and Muslim courts operate.
It should be noted that the Ministry of Justice is currently working on creating an international arbitration hub in Ethiopia. Negotiations are underway with the Permanent Court of Arbitration (PCA), the London Court of International Arbitration (LCIA), and the International Chamber of Commerce (ICC) to open their offices in Addis Ababa.
— Which countries invest the most in Ethiopia and in which industries?
— Ethiopia is the third country in Africa (after Egypt and South Africa) in terms of attracted foreign direct investment. Foreign direct investment in 2023/24 amounted to $3.9 billion. The main investors are China, India, Turkey, and the UAE.
Investors' interest in Ethiopia is due to its vast market with a population of over 125 million people, access to cheap energy resources, developing industrial parks, and special economic zones. The Dutch, for example, have invested about $1 billion in flower production, dairy and brewing industries, and fintech. Indian companies have invested in textile and pharmaceutical industries, paper production, sugar, flowers, rice, corn, and vegetables.
The Ethiopian Investment Commission, which serves as a "one-stop shop" for foreign investors, recently reported that it has selected 2,507 major international companies that will be invited to consider investing in Ethiopia in the development of industrial and agricultural production, energy, ICT, and tourism.
— You said that Ethiopia's economy is one of the fastest growing in the world, but its national currency is not convertible. Special permission is needed to repatriate dividends. How do investors solve this problem?
— On July 29, 2024, the National Bank of Ethiopia issued Directive No. FXD/01/2024, significantly changing the currency and foreign economic regulation in the country. This includes the introduction of a market mechanism for setting the exchange rate, the creation of non-banking currency bureaus that will handle currency operations on market terms, simplification of rules for using foreign currency accounts by foreign legal entities, removal of the interest rate ceiling for foreign borrowings, access of foreign investors to the Ethiopian securities market, and provision of special currency privileges to residents of special economic zones, including the possibility of using 100% of their foreign currency earnings.
The directive also defines the list of documents that must be submitted to the National Bank of Ethiopia along with an application for the repatriation of profits or dividends by foreign investors:
1. A certified protocol of the Board of Directors or similar body distributing profits or declaring dividends, duly signed by the Chairman or Secretary of the Board.
2. A copy of the financial reporting documents, duly audited by an independent audit firm operating in Ethiopia.
3. A capital registration letter issued by the National Bank of Ethiopia or the Ethiopian Investment Commission.
4. Tax receipts confirming payment of all taxes.
5. Memorandum and Articles of Association or any similar document.
6. A valid business license.
After obtaining permission from the National Bank of Ethiopia, the commercial bank where the investor company has an account will transfer the funds.
— How friendly is Ethiopia to Russian business? Does it support sanctions against Russia? What place does Russia occupy in Ethiopia's trade turnover?
— Ethiopia is a country friendly to Russia and consistently maintains a principled line of distancing itself from participation in anti-Russian formats.
Official and business circles in Ethiopia are interested in joint projects with Russia. A Russian-Ethiopian business forum is held annually in Addis Ababa (December 2023 and November 2024). This year, we expect two major Russian-Ethiopian events.
In general, Russian and Ethiopian companies are already actively working on projects in the fields of automotive, energy, chemical and food industries, transport, and digital technologies, and bilateral trade, both Russian exports and imports from Ethiopia, are growing at a good pace and have good prospects for further growth.
Special economic zones of Ethiopia (SEZs) may be of interest to Russian companies focused on business with Africa. For example, Bole Lemi and Kilinto SEZs (in the suburbs of Addis Ababa), as well as SEZs in the cities of Adama, Bahir Dar, Debre Birhan, Awassa, Jimma, Kombolcha, Mekele, and Semera. SEZs have created favorable conditions for doing business, including a "one-stop shop" mechanism, a number of tax, customs, currency, and other preferences, necessary infrastructure, and services. Residents of SEZs can be industrial, agro-industrial, logistics, and scientific-production companies.
Let me give one example of the Ethiopian Government's comprehensive approach to production development. Ethiopia is implementing an ambitious plan to create production of medicines and medical equipment in the country not only for domestic consumption but also for other African countries. In 2017, a pharmaceutical logistics center was opened at Addis Ababa airport, with facilities that have different temperature regimes. It came in handy during the COVID-19 pandemic when Ethiopian Airlines actively engaged in transporting vaccines to African countries. In 2019, a Pharmaceutical Park was built in Kilinto, a suburb of Addis Ababa. Currently, the Ethiopian Food and Drug Authority (EFDA) has begun construction of a modern center for testing vaccines, medicines, and medical equipment in the Pharmaceutical Park. Given the interest of Ethiopian companies in implementing joint projects with Russia in the field of pharmaceuticals and medical equipment, Russian companies have good prospects to establish themselves in Ethiopia for further expansion into other countries of the continent.
— How does the trade mission help or can help Russian companies that want to do business with Ethiopia?
— The Trade Mission informs Russian companies about the demand for their products and services, about the conditions for doing business in Ethiopia, the need for product certification and current customs duties, advises on payments and logistics, informs about upcoming exhibition and business events, organizes meetings in ministries and departments of Ethiopia, business associations, as well as with potential partners.