Are you interested in getting into the import and export trade in Ethiopia? Well, there are some things that you need to know about Ethiopia import and export procedures. Check them out below!
- Ethiopia Import Procedures
- It is important to know that all importers should pay their fees through commercial banks. In addition, payments for amounts above USD 2000 should be made through Letter of Credit (L/C) or Cash Against Document (CAD). Lastly, pre-shipment inspection is mandatory for imports from China.
- i) Pre-shipment Inspection
- Goods that are imported from China are subject to mandatory pre-shipment inspection. This requirement applies to all goods purchased from China since January 1, 2007
- The Ethiopia Ministry of Trade has made arrangements with the China Inspection and Quarantine Bureau (CIQ) to carry out inspections before shipment to Ethiopia and issue the quality certificates.
- The pre-shipment inspection certificate is one of the key documents required to effect import payments from China. It is mandatory to have this document if you plan to import goods that are worth over USD 2000.
- Commercial banks are required to ensure that the CIQ inspection certificate accompanies the Letter of Credit and the Purchase Order. If the inspection certificate is not attached to the other documents, the bank will not accept them.
- Pre-shipment inspection is also done in instances where an importer and a supplier have a prior agreement, regardless of the country of origin.
- ii) Import Payment
Foreign exchange is availed by banks to importers if they produce either of the following documents:
- Import License from the Ministry of Trade
- Industry License from the Ministry of Industry
- Investment License from the Investment Agency
Applications submitted for imports should be accompanied by a Proforma Invoice or contracts from suppliers containing the following information:
- Type of commodity
- Quantity of the commodity
- Price per unit of the commodity
- FOB amount
- Freight costs (if applicable)
- Other charges
- Insurance payment/requirement (You cannot pay for insurance using foreign currency. You will thus need to make arrangements to purchase your insurance locally)
The allowed Modes of Payment for imports include:
- Letter of Credit (L/C)
- Cash Against Document (CAD)
- Advance payments up to USD 5000
Documentation requirements to effect payments
- The following sets of documents are presented by the supplier to demand payment. Ethiopia import procedures require that these documents be specified in the L/C or Purchase Order for payment to be effected.
- A final invoice – must be a commercial invoice that is verified by the chamber of commerce in the country of origin (of the supplier)
- Depending on the mode of transportation used, the Bill of Lading, Airway Bill, Truckway Bill, or Railway Manifest (original sets only)
- Country of origin – the invoice must be certified by the chamber of commerce of the supplier’s country
- Packing list
- A certificate of quality (where appropriate)
Importers who prefer to import using CAD must note the following:
- They should first get approval from their bank on the purchase order they intend to give the supplier
- The purchase order should state the document requirements clearly, and the pre-shipment inspection certificate attached.
- Shipping documents should also be attached, as the import payment will not be released without them.
- Payment on CAD will only be released after the importer gets prior approval from the bank.
- Banks have the responsibility of checking that all the documents are genuine and in order, and ensuring that the goods shipped are as per the L/C or Purchase Order (in the case of Cash Against Document) issued. The list of documents to be attached and presented should be listed clearly on the L/C and Purchase Order.
- If the documents presented are deemed to be compliant with the L/C and Purchase Order, they will be accepted, and the payment released. If the documents are not accepted, they will be held back until amendments and further clarifications are done.
iii) Required documents for imports (Summary)
- Agency agreement
- Bank permit
- Bill of Lading/ Airway bill
- Certificate of origin
- Commercial invoices
- Foreign exchange authorization
- Import license
- Insurance certificate
- Packing list
- Tax identification number (TIN) certificate
- Pre-shipment inspection clean report of findings
- Transit document
- VAT certificate
- Ethiopia Export Procedures
- Any business owner who wants to export goods from Ethiopia should familiarize themselves with Ethiopia export procedures, which include:
- Obtaining export permits from commercial banks
- Preparation of Application for Quality Testing and Certification, to obtain the Export Authorization Certificate from the Quality and Standards Authority of Ethiopia
- Filling out the Customs declaration
- i) Export permit from commercial banks
The Documents required for Export Permit approval are:
- Seller’s invoice
- Tax registration certificate (TIN certificate)
- Export license valid for the year
- A duly signed contract between the seller and the buyer
- Export permit application form duly filled, signed and stamped (as required) by the customer
- Letter of undertaking from the customer indicating that the consignment will be settled in full within 90 days from the date of the Foreign Exchange Permit for the CAD, or the Authenticated message of opened Letter of Credit.
Note that the National Bank of Ethiopia (NBE) issues a delinquent list of exporters periodically. The customer’s name should not appear on this list within the period of transaction. If the client’s name is on the delinquent list, he must clear with the NBE and his name placed on a list of cleared exporters before he can transact any business.
Regarding payment, exporters should:
- Investigate the foreign buyer’s financial soundness, reliability, transaction history, integrity, reputation, address, etc
- Always have a Sales or purchase contract duly signed by the importer and exporter
- For the L/C mode of payment: Check the text of the L/C opened in their favor and make sure that the buyer will comply. If there are any doubts, amendments must be made by the opener before consignment is shipped.
- For the CAD mode of payment: Follow up the payment immediately, as a delay in remittance above 90 days will have the exporter put on the delinquent list.
- ii) Application for Quality Testing & Certification
- Once the products for export are ready, arrangements for suitable packaging should be made. After packaging is done, the exporter can apply to the Quality and Standards Authority of Ethiopia for quality testing, after which the Export Authorization Certificate is issued.
iii) Customs Declaration
- An exporter can avoid costly delays by making sure he declares all facts about the export consignment, and sends all supporting documents (originals) to the Customs Clearing Agents. The agents will then take care of the customs formalities and authorize the dispatch of the export goods.
- The documents that the exporter must hand over to the Customs Clearing Agents are:
- Ethiopian Customs Declaration Form
- A copy of the Customs Declaration Annex Form
- Export Permit
- Certificate of Origin
- Special Movement Forms and Certificates (the GSP Form A and the EURI Movement Certificate)
VAT and VAT Registration for Exporters
- All exports of goods and services are charged VAT of 0%. An exporter is therefore allowed to reclaim VAT on all goods and services used to produce the exports.
- Because exporters are still making taxable supplies at zero rates, they are required by law to register if the turnover surpasses the registration limits.
Now that you know all about Ethiopia import and export procedures, there is no reason why you cannot start an import/export business. Good luck in your new venture!