Ethiopia Economy Profile - Doing Business 2019
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Doing Business 2019 Ethiopia
Economy Profile
Ethiopia
Page 1
Doing Business 2019 Ethiopia
Economy Profile of Ethiopia
Doing Business 2019 Indicators
(in order of appearance in the document)
Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company
Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality
control and safety mechanisms in the construction permitting system
Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the
electricity supply and the transparency of tariffs
Registering property Procedures, time and cost to transfer a property and the quality of the land administration
system
Getting credit Movable collateral laws and credit information systems
Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance
Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as
well as post-filing processes
Trading across borders Time and cost to export the product of comparative advantage and import auto parts
Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes
Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the
legal framework for insolvency
Labor market regulation Flexibility in employment regulation and aspects of job quality
Page 2Doing Business 2019 Ethiopia
About Doing Business
The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected
cities at the subnational and regional level.
The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying
to them through their life cycle.
Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative
indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit,
protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also
measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market
regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does
present the data for these indicators.
By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time,
Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves
as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy.
In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and
regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve
performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region
and with the 190 economies that Doing Business has ranked.
The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets
and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that
have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the
Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these
11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from
governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving
the regulatory environment for business around the world.
More about Doing Business (PDF, 5MB)
Page 3Doing Business 2019 Ethiopia
Ease of Doing Business in DB 2019 Rank
Region Sub-Saharan Africa
190 1
Ethiopia
Income Category Low income 159
DB 2019 Ease of doing business score
Population 104,957,438
0 100
City Covered Addis Ababa 49.06
DB 2019 Ease of Doing Business Score
0 100
77.88: Rwanda (Rank: 29)
70.31: Kenya (Rank: 61)
58.56: Egypt, Arab Rep. (Rank: 120)
51.61: Regional Average (Sub-Saharan Africa)
49.06: Ethiopia (Rank: 159)
23.07: Eritrea (Rank: 189)
Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies
in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100
represents the best performance. The ease of doing business ranking ranges from 1 to 190.
Rankings on Doing Business topics - Ethiopia
1
28
55 60
82
Rank
109
131 130
136 144 148
154
163 167 168
175 178
190
Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving
a with Electricity Property Credit Minority Taxes across Contracts Insolvency
Business Construction Investors Borders
Permits
Ease of Doing Business Score on Doing Business topics - Ethiopia
100
80
70.79
63.26 62.77
59.71
Score
60 56.00
52.84 51.33
40
28.33 30.53
20 15.00
0
Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving
a with Electricity Property Credit Minority Taxes across Contracts Insolvency
Business Construction Investors Borders
Permits
Page 4Doing Business 2019 Ethiopia
Starting a Business
This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited
liability company to start up and formally operate in each economy’s largest business city.
To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has
start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10
and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two
types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the
other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a
business. These scores are the simple average of the scores for each of the component indicators.
The most recent round of data collection for the project was completed in May 2018. See the methodology for more information.
What the indicators measure Case study assumptions
Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the
a company (number) business and the procedures are used. It is assumed that any required information is
readily available and that the entrepreneur will pay no bribes.
• Preregistration (for example, name verification or
reservation, notarization)
The business:
• Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type
city
of limited liability company in the economy, the most common among domestic firms
• Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation
registration, company seal) lawyers or the statistical office.
- Operates in the economy’s largest business city. For 11 economies the data are
• Obtaining approval from spouse to start a
business or to leave the home to register the also collected for the second largest business city.
company - The entire office space is approximately 929 square meters (10,000 square feet).
- Is 100% domestically owned and has five owners, none of whom is a legal entity;
• Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least
company registration and operation or national 100 times income per capita.
identification card
- Performs general industrial or commercial activities, such as the production or sale
of goods or services to the public. The business does not perform foreign trade
Time required to complete each procedure
activities and does not handle products subject to a special tax regime, for example,
(calendar days)
liquor or tobacco. It does not use heavily polluting production processes.
• Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the
information amount of the annual lease for the office space is equivalent to the income per
capita.
• Each procedure starts on a separate day (2
procedures cannot start on the same day) - Does not qualify for investment incentives or any special benefits.
- Has at least 10 and up to 50 employees one month after the commencement of
• Procedures fully completed online are recorded operations, all of whom are domestic nationals.
as ½ day - Has a company deed that is 10 pages long.
• Procedure is considered completed once final
document is received The owners:
• No prior contact with officials - Have reached the legal age of majority. If there is no legal age of majority, they are
assumed to be 30 years old.
Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record.
income per capita) - Are married and the marriage is monogamous and registered with the authorities.
- Where the answer differs according to the legal system applicable to the woman or
• Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the
• No professional fees unless services required by answer used will be the one that applies to the majority of the population.
law or commonly used in practice
Paid-in minimum capital (% of income per
capita)
• Funds deposited in a bank or with third party
before registration or up to 3 months after
incorporation
Page 5Doing Business 2019 Ethiopia
Starting a Business - Ethiopia
Standardized Company
Legal form Private Limited Company (PLC)
Paid-in minimum capital requirement ETB 0
City Covered Addis Ababa
Indicator Ethiopia Sub-Saharan OECD high Best Regulatory
Africa income Performance
Procedure – Men (number) 11 7.4 4.9 1 (New Zealand)
Time – Men (days) 32 23.3 9.3 0.5 (New Zealand)
Cost – Men (% of income per capita) 52.7 44.4 3.1 0.0 (Slovenia)
Procedure – Women (number) 11 7.6 4.9 1 (New Zealand)
Time – Women (days) 32 23.4 9.3 0.5 (New Zealand)
Cost – Women (% of income per capita) 52.7 44.4 3.1 0.0 (Slovenia)
Paid-in min. capital (% of income per capita) 0.0 10.0 8.6 0.0 (117 Economies)
Figure – Starting a Business in Ethiopia and comparator economies – Ranking and Score
DB 2019 Starting a Business Score
0 100
91.39: Rwanda (Rank: 51)
84.11: Egypt, Arab Rep. (Rank: 109)
82.41: Kenya (Rank: 126)
78.52: Regional Average (Sub-Saharan Africa)
70.79: Ethiopia (Rank: 167)
51.91: Eritrea (Rank: 187)
Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores
are the simple average of the scores for each of the component indicators.
Page 6Doing Business 2019 Ethiopia
Figure – Starting a Business in Ethiopia – Procedure, Time and Cost
Time (days) Cost (% of income per capita)
50
30
Cost (% of income per capita)
25 40
Time (days)
20
30
15
20
10
10
5
0 0
1 2 3 4 5 *6 7 8 9 10 11
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and
women, the graph shows the time for women. For more information on methodology, see the Doing Business website
(http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below.
Page 7Doing Business 2019 Ethiopia
Details – Starting a Business in Ethiopia – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Reserve a unique company name 1 day ETB 27
Agency : Ministry of Trade or Trade Bureau at sub-city level
The entrepreneur can reserve the unique company name. According to the Commercial
Code, the company name shall be as agreed but shall not. offend public policy nor the
rights of third parties
The entrepreneur completes a simple form and submits it to the agent at window No. 1.
The service is partially computerized and the search is quick. A Letter of
Recommendation (LR) will be given by the agent and must be attached to the
Memorandum and Articles of Association for authentication.
Once a name is reserved, a confirmation letter is issued by the Ministry/Bureau addressed
to the Ethiopian Revenues and Customs Authority. This letter will enable the company to
sign the bylaws at the notary and obtain a tax registration certificate.
2 Authentication of the company documents and the lease agreement at the 2 days ETB 451
Documents Authentication and Registration Office (DARO)
Agency : Documents Authentication and Registration Office (DARO)
Article 11 (1) (e) of Commercial Registration and Business Licensing Proclamation No.
686/2010, the Memorandum and Articles of Associations must be authenticated. The
entrepreneur deposits the documents at DARO and will be given an appointment for the
next day. The Documents Authentication and Registration Office verifies the in-kind
contribution stated in the Memorandum. The partners appear in person at the appointed
date, with an original copy of their letter of appointment (power of attorney) and a valid
identity card. The officer checks the validity of the documents, the authenticity of the
signatures, and the genuineness of the identity cards. All partners sign the documents
before the notary public and pay a stamp duty flat fee of ETB 350, as well as100 ETB /4
copy and Birr 1 per additional person Payment is done in the same office where the
documents are being registered in the books.
3 Obtain a tax identification number (TIN) 1 day no charge
Agency : Ethiopian Revenue and Customs Authority
Before incorporation, the company must obtain a tax identification number by completing
and submitting an application form together with its memorandum and articles of
association. A taxpayer registration certificate will then be issued to the company for
submission at the sub-city along with its application for incorporation.
4 Register the company and obtain the Commercial registration certificate 1 day ETB 102
Agency : Commercial Register
The applicant registers the Memorandum and Articles of Association. After reviewing the
documents, including the lease agreement, the Commercial register delivers a registration
certificate. Payment is done at the same time.
5 Make a company seal 1-3 days ETB 550
Agency : Seal maker
While the law does not specifically require a company to have a seal, it is required and
commonly used in practice. The seal maker is a private service provider thus, the pace of
its service delivery depends on its cost, reputation and quality. The seal maker will
require the business license and TIN of the company.
6 Register the company and employees with the Private Organization 1 day, simultaneous no charge
Employees' Pension Fund
Agency : Private Organizations Employees Social Security Agency (POESSA)
According to Article 4 of the Private Organization Employees Pension Proclamation No.
715/2011 enacted June 2011, any private organization shall, for the purpose of
registration, submit to the agency copies of its establishment law, personal data of its
employees taken at the time of first employment, letter of employment issued to the
employee and other particulars determined by the Agency within 60 days from the date of
establishment of the company or employment.
7 Register with Ethiopian Revenue and Customs Authority for VAT 1 day no charge
Agency : Ethiopian Revenue and Customs Authority
A newly established firm must register for VAT if its turnover is at least ETB 500,000 on
the basis of VAT Proclamation No. 285/2002, Article 16. Article 16 (1) (b) of the VAT
Proclamation and Article 4 (3) of Directive No. 25/2009, A Directive for VAT registration
states that persons engaged in the following business activities have the obligation to
register; importers, manufacturers of plastics and plastic products, shoe factories,
contractors above Grade 10, computers and accessories shops, manufacturers and sellers
of leather and leather products, electronic shops and jewelry shops. Once registered, the
VAT certificate is obtained.
Page 8Doing Business 2019 Ethiopia
8 Publish name in nationwide newspaper 15 days ETB 300
Agency : Ethiopian Press Agency
As a prerequisite to registering the name, companies are required to publish the name for
15 days in a national newspaper. If after 15 days no objection is lodged, the company
may apply for the name registration certificate.
9 Reserve a unique trade name 1 day ETB 27
Agency : Ministry of Trade or Trade Bureau at sub-city level
After publication in the newspaper, the company can continue to register for the trade
name and pay all relevant fees. Article 24 (1) of the 2010 Commercial Registration and
Business Licensing Proclamation states that any person desiring to engage in a
commercial activity shall register his trade name at the place where he is registering in
the commercial register.
Before the registration of a trade name in the commercial register and in the trade name
register, it shall be verified that another business person has not got the trade name
registered in the trade name register or in the commercial register.
10 Obtain a business license 1 day ETB 102
Agency : Ministry of Trade or Trade Bureau at the sub-city level
A business license must be obtained. The applicant must present the Principal
Registration, a proof of the new Tax Identification Number and pay the relevant fees. For
certain categories of businesses, a certificate of competence in the field of commercial
activity in which the applicant is seeking a business license may also be required. The
Business License is usually issued on the same day these documents are submitted.
11 Install a cash registration machine 7 days on average ETB 5,000-10,000
Agency : Ethiopian Revenue and Customs Authority, Point of sales software
providers, and Cash register machine hardware providers
Pursuant to the Council of Ministers Regulations No. 139/2007 ‘To Provide for the
Obligatory Use of Sales Register Machines’, all businesses must purchase and install a
sales register machine in order to comply with VAT tax obligations. The machines are
available at certified supplier locations around Addis Ababa. Once the machine is
brought to the company offices, it must be properly installed and set up so that it is linked
to the Tax Administration system.
Takes place simultaneously with previous procedure.
Page 9Doing Business 2019 Ethiopia
Dealing with Construction Permits
This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all
required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with
Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of
quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of
data collection was completed in May 2018. See the methodology for more information
What the indicators measure Case study assumptions
Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the
(number) construction company, the warehouse project and the utility connections are used.
• Submitting all relevant documents and obtaining The construction company (BuildCo):
all necessary clearances, licenses, permits and
certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s
largest business city. For 11 economies the data are also collected for the second
• Submitting all required notifications and receiving largest business city.
all necessary inspections
- Is 100% domestically and privately owned; has five owners, none of whom is a
• Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with
sewerage the local association of architects or engineers. BuildCo is not assumed to have any
other employees who are technical or licensed experts, such as geological or
• Registering and selling the warehouse after its
completion topographical experts.
- Owns the land on which the warehouse will be built and will sell the warehouse
Time required to complete each procedure upon its completion.
(calendar days)
The warehouse:
• Does not include time spent gathering
information - Will be used for general storage activities, such as storage of books or stationery.
- Will have two stories, both above ground, with a total constructed area of
• Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3
though procedures that can be fully completed
meters (9 feet, 10 inches) high and will be located on a land plot of approximately
online are an exception to this rule
929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the
• Procedure is considered completed once final warehouse is valued at 50 times income per capita.
document is received - Will have complete architectural and technical plans prepared by a licensed
architect. If preparation of the plans requires such steps as obtaining further
• No prior contact with officials
documentation or getting prior approvals from external agencies, these are counted
Cost required to complete each procedure (% of as procedures.
income per capita) - Will take 30 weeks to construct (excluding all delays due to administrative and
regulatory requirements).
• Official costs only, no bribes
The water and sewerage connections:
Building quality control index (0-15)
- Will be 150 meters (492 feet) from the existing water source and sewer tap. If there
• Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is
• Quality control before construction (0-1) no sewerage infrastructure, a septic tank in the smallest size available will be
installed or built.
• Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average
• Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of
1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300
• Liability and insurance regimes (0-2) gallons) a day.
• Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the
year; will be 1 inch in diameter for the water connection and 4 inches in diameter for
the sewerage connection.
Page 10Doing Business 2019 Ethiopia
Dealing with Construction Permits - Ethiopia
Standardized Warehouse
Estimated value of warehouse ETB 858,959.90
City Covered Addis Ababa
Indicator Ethiopia Sub-Saharan OECD high Best Regulatory
Africa income Performance
Procedures (number) 13 14.7 12.7 None in 2017/18
Time (days) 134 145.7 153.1 None in 2017/18
Cost (% of warehouse value) 14.4 8.8 1.5 None in 2017/18
Building quality control index (0-15) 7.0 8.5 11.5 15.0 (3 Economies)
Figure – Dealing with Construction Permits in Ethiopia and comparator economies – Ranking and Score
DB 2019 Dealing with Construction Permits Score
0 100
71.77: Egypt, Arab Rep. (Rank: 68)
67.01: Rwanda (Rank: 106)
63.49: Kenya (Rank: 128)
58.59: Regional Average (Sub-Saharan Africa)
52.84: Ethiopia (Rank: 168)
0.00: Eritrea (Rank: 186)
Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with
construction permits. These scores are the simple average of the scores for each of the component indicators.
Figure – Dealing with Construction Permits in Ethiopia – Procedure, Time and Cost
Time (days) Cost (% of warehouse value)
14
120
12
Cost (% of warehouse value)
100
10
Time (days)
80
8
60 6
40 4
20 2
0 0
1 *2 3 4 *5 6 7 8 9 10 11 12 13
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and
women, the graph shows the time for women. For more information on methodology, see the Doing Business website
(http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below.
Page 11Doing Business 2019 Ethiopia
Figure – Dealing with Construction Permits in Ethiopia and comparator economies – Measure of Quality
15 14.0 14.0
Index score
10 9.0 8.5
7.0
5
0
No Practice
Ethiopia Egypt, Arab Rep. Eritrea Kenya Rwanda Sub-Saharan Africa
Details – Dealing with Construction Permits in Ethiopia – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Obtain a geotechnical study / soil test 15 days ETB 8,590
Agency : Private laboratory
A soil test is required prior to starting construction, and is obtained by BuildCo from a
private laboratory.
2 Obtain planning consent 3 days ETB 729
Agency : Municipality (Subcity Building Design Department)
According to Part 2, Section 5, Articles 1 and 2 of Building Proclamation No. 624 of
2009, the applicant must secure a planning consent prior to submitting the application for
a construction permit. After having received an application for a planning consent a
building officer shall grant a written declaration for compliance or noncompliance with
the urban planning of the urban center.
In order to apply for a planning consent, according to Part 2, Section 4 of Regulation No.
243 of 2011, the owner of a building shall fill the form prepared by the urban
administration by showing the height and the type of service of the building to be
constructed and submit his application attached with the original and a copy of the title
deed in order to obtain a planning consent.
The urban administration shall, in case of a request for planning consent to build a new
building, grant:
• title deed and
• plan information describing the height and the permitted type of service.
The building officer will also determine the category of buildings submitted for his
approval in accordance with the criteria set within the regulations. For the Doing
Business case study, the warehouse would fall under Category B.
The building officer shall decide the compliance or non- compliance of the application
with the urban center and notify the applicant his decision and the reasons thereto, in
writing, within three working days.
With respect to the fees, according to Part 4, Section 24, Articles 2 and 4 of Regulation
No. 243 of 2011, there is a service fee of ETB 300 for the planning consent. And the plan
review fee is 1/2000 of the project estimate if the project estimate is less than ETB
2,500,000.
3 Obtain consent from neighbors and submit it to the Municipality 3 days no charge
Agency : Municipality (Subcity)
Once the consent has been obtained, BuildCo must obtain a written statement from the
neighbors, stating that there are no land disputes on the plot where the warehouse will be
built. This is set in the law - Part 2, Section 3, Articles 2 and 3 of Regulation No. 243 of
2011,
Page 12Doing Business 2019 Ethiopia
4 Obtain approval of plans and construction permit 30 days ETB 73
Agency : Municipality
The following documents must be submitted in order to obtain the construction approval:
• application with full name and address of the applicant,
• permitted service for the building,
• location of construction,
• table showing the total area of the floors,
• planning consent,
• architectural, structural, sanitary, electrical designs and soil test and structural analysis
report for buildings of Category “B”,
• in addition to the plans required for buildings of Category “B”, fire safety plans and
descriptions thereof shall be submitted for buildings of Category “C”,
• electro-mechanical designs and analysis for buildings using lifts and artificial
ventilation (not applicable to the Doing Business case study)
• number of floors of neighboring buildings below and above ground level and their
distance from the boundary lines, and
• full name, address, signature and a copy of registration certificate of professionals who
prepared plan of the building
• Consent from neighbors
According to Part 2, Section 6, Article 1 of Regulation No. 243 of 2011, the time limit to
review and approve the plans is 7 working days if the building is Category B or 21
working days if Category C.
With respect to the fees, according to Part 4, Section 25 of Regulation No. 243 of 2011,
the plan approval fee is 10% of the plan review fee.
5 Hire an external firm to conduct technical inspections and supervision 1 day ETB 105,000
during construction
Agency : Private Firm
According to Council of Ministers Building Regulation, Regulation No 243./2011, a
private and independent civil engineer must be hired to conduct the technical inspection
and supervision of construction. The rate of civil engineer depends on the type of
engineer and they receive a monthly pay.
For the Doing Business case study, the construction is expected to last 7 months.
6 Notify the Municipality of the commencement of works 1 day no charge
Agency : Municipality
According to Article 13 of Building Regulations 243 of 2011, Any person who has an
approved plan for category B and C buildings shall notify to the building officer , in
writing , the starting date of each stage of work before five working days of such starting
date. The warehouse in the Doing Business case study is considered a category B.
7 Request and receive inspection upon completion of foundation 2 days ETB 400
Agency : Municipality
According to Part 2, Section 13 of Regulation No. 243 of 2011, any person who has an
approved plan for category “B” and “C” buildings shall notify to the building officer, in
writing, the starting date of each stage of work before five working days of such starting
date.
The stages of work for which an advance notice is required in case of new construction
shall be in the following order:
a) on completion of surveying work for the foundation;
b) before starting concrete cast for grade beam;
c) before starting floor concrete works at all levels;
d) before starting final concrete works;
e) during testing of completed sanitary, electrical and electro mechanical installations;
f) other stages of work required by the building officer based on the type and method of
construction.
Normally the Municipality will come to inspect during the first 4 phases noted above.
The inspectors are usually very prompt, and if the builder times it well, there is no delay
caused by inspections. The construction manager keeps a site book, and the inspector
signs in the site book at every inspection.
With respect to the fees, according to Part 4, Section 26, Article 2 of Regulation No. 243
of 2011, the inspection fees per inspection is ETB 400
8 Request and receive inspection before starting concrete cast for grade 2 days ETB 400
beam
Agency : Municipality
9 Request and receive inspection before starting floor concrete works 2 days ETB 400
Agency : Municipality
10 Request and receive inspection before starting final concrete works 2 days ETB 400
Agency : Municipality
Page 13Doing Business 2019 Ethiopia
11 Request water and sewage connection from WSSA 1 day no charge
Agency : Addis Ababa Water Supply and Sewage Authority (WSSA)
The request for a water and sewerage connection from Addis Ababa Water Supply and
Sewerage Authority must be done in person. A copy of title deed of property must be
attached to the application form. Usually, Addis Ababa WASA conducts a site visit to
inspect the location of the property and to decide on the specifics of the connection.
12 Receive inspection for water and sewage 1 day no charge
Agency : Addis Ababa Water Supply and Sewage Authority
13 Obtain water and sewage connection from WSSA 75 days ETB 8,000
Agency : Addis Ababa Water Supply and Sewage Authority (WSSA)
Takes place simultaneously with previous procedure.
Page 14Doing Business 2019 Ethiopia
Details – Dealing with Construction Permits in Ethiopia – Measure of Quality
Answer Score
Building quality control index (0-15) 7.0
Quality of building regulations index (0-2) 2.0
How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0
Free of charge.
Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0
regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees
to be paid;
Required
preapprovals.
Quality control before construction index (0-1) 1.0
Which third-party entities are required by law to verify that the building plans are in Licensed 1.0
compliance with existing building regulations? (0-1) architect;
Licensed
engineer.
Quality control during construction index (0-3) 2.0
What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 1.0
(0-2) house engineer;
Inspections by
external engineer
or firm;
Inspections at
various phases.
Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0
inspections are
always done in
practice.
Quality control after construction index (0-3) 0.0
Is there a final inspection required by law to verify that the building was built in accordance Final inspection 0.0
with the approved plans and regulations? (0-2) is not required by
law.
Do legally mandated final inspections occur in practice? (0-1) Final inspection 0.0
does not always
occur in practice.
Liability and insurance regimes index (0-2) 0.0
Which parties (if any) are held liable by law for structural flaws or problems in the building No party is held 0.0
once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) liable under the
law.
Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0
structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law
or Decennial Insurance)? (0-1) to obtain
insurance .
Professional certifications index (0-4) 2.0
What are the qualification requirements for the professional responsible for verifying that the Minimum number 1.0
architectural plans or drawings are in compliance with existing building regulations? (0-2) of years of
experience;
University degree
in architecture or
engineering.
What are the qualification requirements for the professional who supervises the construction Minimum number 1.0
on the ground? (0-2) of years of
experience;
University degree
in engineering,
construction or
construction
management.
Page 15Doing Business 2019 Ethiopia
Getting Electricity
This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly
constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of
tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology
for more information.
What the indicators measure Case study assumptions
Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the
(number) warehouse, the electricity connection and the monthly consumption are used.
• Submitting all relevant documents and obtaining The warehouse:
all necessary clearances and permits
- Is owned by a local entrepreneur and is used for storage of goods.
• Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are
receiving all necessary inspections
also collected for the second largest business city.
• Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an
purchasing material for these works area with no physical constraints. For example, the property is not near a railway.
- Is a new construction and is being connected to electricity for the first time.
• Concluding any necessary supply contract and
- Has two stories with a total surface area of approximately 1,300.6 square meters
obtaining final supply
(14,000 square feet). The plot of land on which it is built is 929 square meters
Time required to complete each procedure (10,000 square feet).
(calendar days)
The electricity connection:
• Is at least 1 calendar day
- Is a permanent one with a three-phase, four-wire Y connection with a subscribed
• Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1
• Does not include time spent gathering kilowatt (kW).
information - Has a length of 150 meters. The connection is to either the low- or medium-voltage
distribution network and is either overhead or underground, whichever is more
• Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve
follow-up and no prior contact with officials
the crossing of a 10-meter road (such as by excavation or overhead lines) but are all
Cost required to complete each procedure (% of carried out on public land. There is no crossing of other owners’ private property
income per capita) because the warehouse has access to a road.
- Does not require work to install the internal wiring of the warehouse. This has
• Official costs only, no bribes already been completed up to and including the customer’s service panel or
• Value added tax excluded switchboard and the meter base.
The reliability of supply and transparency of The monthly consumption:
tariffs index (0-8)
- It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00
• Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that
• Tools to monitor power outages (0–1) there are no electricity cuts (assumed for simplicity reasons) and the monthly energy
consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh.
• Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest
• Regulatory monitoring of utilities’ performance supplier.
(0–1) - Tariffs effective in January of the current year are used for calculation of the price of
electricity for the warehouse. Although January has 31 days, for calculation
• Financial deterrents limiting outages (0–1) purposes only 30 days are used.
• Transparency and accessibility of tariffs (0–1)
Price of electricity (cents per kilowatt-hour)*
• Price based on monthly bill for commercial
warehouse in case study
*Note: Doing Business measures the price of
electricity, but it is not included in the ease of doing
business score nor the ranking on the ease of
getting electricity.
Page 16Doing Business 2019 Ethiopia
Getting Electricity - Ethiopia
Standardized Connection
Price of electricity (US cents per kWh) 3.9
Name of utility Ethiopian Electric Utility
City Covered Addis Ababa
Indicator Ethiopia Sub-Saharan OECD high Best Regulatory
Africa income Performance
Procedures (number) 4 5.2 4.5 3 (25 Economies)
Time (days) 95 112.0 77.2 18 (3 Economies)
Cost (% of income per capita) 891.8 3456.5 64.2 0.0 (3 Economies)
Reliability of supply and transparency of tariff 0 1.6 7.5 8.0 (27 Economies)
index (0-8)
Figure – Getting Electricity in Ethiopia and comparator economies – Ranking and Score
DB 2019 Getting Electricity Score
0 100
78.72: Rwanda (Rank: 68)
76.80: Kenya (Rank: 75)
71.41: Egypt, Arab Rep. (Rank: 96)
59.71: Ethiopia (Rank: 131)
49.00: Regional Average (Sub-Saharan Africa)
0.00: Eritrea (Rank: 187)
Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are
the simple average of the scores for all the component indicators except the price of electricity.
Page 17Doing Business 2019 Ethiopia
Figure – Getting Electricity in Ethiopia – Procedure, Time and Cost
Time (days) Cost (% of income per capita)
1000
90
Cost (% of income per capita)
80
800
70
60
Time (days)
600
50
40
400
30
20 200
10
0 0
1 2 3 4
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and
women, the graph shows the time for women. For more information on methodology, see the Doing Business website
(http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below.
Figure – Getting Electricity in Ethiopia and comparator economies – Measure of Quality
8
7
6
Index score
5
5
4
4
3
3
2 1.6
1
0
0
No Practice
Ethiopia Egypt, Arab Rep. Eritrea Kenya Rwanda Sub-Saharan Africa
Page 18Doing Business 2019 Ethiopia
Details – Getting Electricity in Ethiopia – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Submit application to utility and await site visit 14 calendar days ETB 225
Agency : Ethiopian Electric Utility
The customer should bring the application paper by specifying the required power in kilo
watt to the nearby EEPCO district office. If the customer requirement is greater than 15
KW power, the electrical drawing diagram, done by the professional who has electrical
design license should be attached. The customer should pay for labour and transport cost
of the estimator.
The application must be accompanied by: the location map of the warehouse; the
electrical plans, copy of business license, lease document (if applicable), certificate of
conformity (obtained after the final inspection) and site plan. The professional electrician
has to be licensed with EEPCO and Ministry of Urban Development (for electrical
design)
2 Receive site visit from utility engineer and await estimate 7 calendar days ETB 0
Agency : Ethiopian Electric Utility
The technician from EEPCO will visit the site plan to check for the required materials
and check the electricity plan with the layout of the building and notes the nearest
connection point.
3 Receive and pay estimate and receive internal wiring inspection 14 calendar days ETB 152,976.4
Agency : Ethiopian Electric Utility
The connection cost is estimated on the power required. EEPCO provides all material and
is responsible for the labor from the electrical grid to the meter. It is most likely that a
distribution transformer would be required.
The deposit for the meter is: 10% of the cost of power. This deposit is reimbursed when
the connection is terminated. The technician will visit the site plan to check for the
required materials and at the same time, will do the internal inspection.
4 Receive external connection, meter installation and electricity flow 60 calendar days ETB 0
Agency : Ethiopian Electric Utility
The connection cost requested by EEPCO will include all costs including meter
installation.
Takes place simultaneously with previous procedure.
Page 19Doing Business 2019 Ethiopia
Details – Getting Electricity in Ethiopia – Measure of Quality
Answer
Reliability of supply and transparency of tariff index (0-8) 0
Total duration and frequency of outages per customer a year (0-3) 0
System average interruption duration index (SAIDI) ..
System average interruption frequency index (SAIFI) ..
What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A
Mechanisms for monitoring outages (0-1) 0
Does the distribution utility use automated tools to monitor outages? No
Mechanisms for restoring service (0-1) 0
Does the distribution utility use automated tools to restore service? No
Regulatory monitoring (0-1) 0
Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of No
supply?
Financial deterrents aimed at limiting outages (0-1) 0
Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages No
exceed a certain cap?
Communication of tariffs and tariff changes (0-1) 0
Are effective tariffs available online? No
Link to the website, if available online n.a
Are customers notified of a change in tariff ahead of the billing cycle? Yes
Note:
If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff
index.
If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.
If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.
Page 20Doing Business 2019 Ethiopia
Registering Property
This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to
purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land
administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency
of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for
the project was completed in May 2018. See the methodology for more information.
What the indicators measure Case study assumptions
Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the
immovable property (number) parties to the transaction, the property and the procedures are used.
• Preregistration procedures (for example, The parties (buyer and seller):
checking for liens, notarizing sales agreement,
paying property transfer taxes) - Are limited liability companies (or the legal equivalent).
- Are located in the periurban area of the economy’s largest business city. For 11
• Registration procedures in the economy's largest economies the data are also collected for the second largest business city.
business city.
- Are 100% domestically and privately owned.
• Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals.
title with municipality) - Perform general commercial activities.
Time required to complete each procedure The property (fully owned by the seller):
(calendar days)
- Has a value of 50 times income per capita, which equals the sale price.
• Does not include time spent gathering - Is fully owned by the seller.
information - Has no mortgages attached and has been under the same ownership for the past
• Each procedure starts on a separate day - 10 years.
though procedures that can be fully completed - Is registered in the land registry or cadastre, or both, and is free of title disputes.
online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required.
- Consists of land and a building. The land area is 557.4 square meters (6,000
• Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is
document is received
located on the land. The warehouse is 10 years old, is in good condition, has no
• No prior contact with officials heating system and complies with all safety standards, building codes and legal
requirements. The property, consisting of land and building, will be transferred in its
Cost required to complete each procedure (% of entirety.
property value) - Will not be subject to renovations or additional construction following the purchase.
• Official costs only (such as administrative fees, - Has no trees, natural water sources, natural reserves or historical monuments of
duties and taxes). any kind.
- Will not be used for special purposes, and no special permits, such as for
• Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural
payments are excluded activities, are required.
- Has no occupants, and no other party holds a legal interest in it.
Quality of land administration index (0-30)
• Reliability of infrastructure index (0-8)
• Transparency of information index (0–6)
• Geographic coverage index (0–8)
• Land dispute resolution index (0–8)
• Equal access to property rights index (-2–0)
Page 21Doing Business 2019 Ethiopia
Registering Property - Ethiopia
Indicator Ethiopia Sub-Saharan OECD high Best Regulatory
Africa income Performance
Procedures (number) 7 6.2 4.7 1 (4 Economies)
Time (days) 52 53.9 20.1 1 (New Zealand)
Cost (% of property value) 6.0 7.6 4.2 0.0 (Saudi Arabia)
Quality of the land administration index (0-30) 6.0 8.8 23.0 None in 2017/18
Figure – Registering Property in Ethiopia and comparator economies – Ranking and Score
DB 2019 Registering Property Score
0 100
93.70: Rwanda (Rank: 2)
55.97: Kenya (Rank: 122)
55.00: Egypt, Arab Rep. (Rank: 125)
52.62: Regional Average (Sub-Saharan Africa)
51.33: Ethiopia (Rank: 144)
35.30: Eritrea (Rank: 180)
Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These
scores are the simple average of the scores for each of the component indicators.
Figure – Registering Property in Ethiopia – Procedure, Time and Cost
Time (days) Cost (% of property value)
7
50
6
Cost (% of property value)
40
5
Time (days)
30 4
3
20
2
10
1
0 0
1 2 3 4 5 6 7
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and
women, the graph shows the time for women. For more information on methodology, see the Doing Business website
(http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below.
Page 22Doing Business 2019 Ethiopia
Figure – Registering Property in Ethiopia and comparator economies – Measure of Quality
30 28.5
25
Index score
20
16.0
15
10 9.0 8.8
6.0 6.5
5
0
Ethiopia Egypt, Arab Rep. Eritrea Kenya Rwanda Sub-Saharan Africa
Details – Registering Property in Ethiopia – Procedure, Time and Cost
No. Procedures Time to Complete Associated Costs
1 Verify the owner of the property and obtain the Carta and plan at the sub- 4 days ETB 200
city office
Agency : Sub-City Office
Since 2005 the Land Registry has been decentralized into 10 sub-cities. Due diligence is
conducted at the sub-city where the warehouse is located. This search will provide
information on the owner of the building, construction date of the building, the basic area
of the property, and whether the property is affected by encumbrances. At the same time,
the carta and plan of the warehouse will be provided; the buyer needs to submit the sale
agreement to obtain them. At the time of due diligence, the lawyer of the buying
company will also check that the other company is properly registered.
2 Evaluation of the sale price by the sub-city 1 day no charge
Agency : Sub-City Office
The parties will bring the sale and purchase agreement to the sub-city. The sub-city
official will check that the price included in the sale agreement corresponds to the Master
list price. If the price in the sale agreement is greater than the Master list price, the greater
price will be accepted. If not, then the Master price will be applicable.
Each sub-city has a fee schedule depending on the location of the building. In the event
that the price in the sale agreement is not the same as the one indicated by the sub-city,
the stamp duty will be paid based on the amount indicated by the sub-city and not on the
amount written in the sale agreement.
3 The seller must obtain tax clearance from Tax Authorities 14 days no charge
Agency : Tax Authority
The seller must obtain tax clearance on the property (from Tax Authorities for property
transfer tax. This institution has also been decentralized.
4 Payment of Stamp duty at the Land Administration Office 1 day ETB 51,537.59; (2%
Agency : Land Administration Office of the property value
Stamp duty is set by Proclamation 110/1998. Upon payment, the buyer will be given a for the Stamp duty
receipt that he must bring back to the office of Documents Authentication and and 4% of the
Registration.
property value for the
In the case where the property is not registered in the property master list of the
ownership title
municipal land administration, a land survey is required.
transfer tax)
5 Payment of capital gains tax at Inland Revenue Service 1 day no charge
Agency : Inland Revenue Service
The seller pays the capital gain tax at the Customs and Inland Revenue Authority. The tax
amount is calculated based on a set scale.
6 Execution of the sale contract at the office of Documents Authentication 1 day ETB 61; (10 ETB for
and Registration the service charge +
Agency : Office of Documents Authentication and Registration 51 ETB for the power
The parties go to the office of Documents Authentication and Registration where they of attorney)
sign the sale and purchase agreement in front of the officials.
They must provide the following documents
• The seller gives the Title deed of the building
• A copy of the ID of both managers
• The power of attorney of each manager to ensure that they do have the power to
sell/buy this warehouse at the specified amount.
• A copy of the Business License for each PLC.
Page 23Doing Business 2019 Ethiopia
7 Apply for registration of property and obtain title deed in the buyer’s name 30 days ETB 100
Agency : Land Administration Office
The buyer company brings the authenticated sale contract to the Land Administration
Office for the final transfer.
The buyer submits the authenticated agreement, the former title deed & ID card/Passport
copy with the application for the title deed registration to the office of documents
authentication and registration to avoid forgery.
The buyer also needs to place an ad in the newspaper declaring the purchase and asking
anyone who objects to come forward. The notice period for the ad is 15 days. After the
notice period, the buyer applies for the transfer of deed.
Takes place simultaneously with previous procedure.
Page 24Doing Business 2019 Ethiopia
Details – Registering Property in Ethiopia – Measure of Quality
Answer Score
Reliability of infrastructure index (0-8) 0.0
What is the institution in charge of immovable property registration? Addis Ababa City
Administration
In what format are the majority of title or deed records kept in the largest business city—in a Paper 0.0
paper format or in a computerized format (scanned or fully digital)?
Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions No 0.0
and the like)?
Institution in charge of the plans showing legal boundaries in the largest business city: Cadastre
department at the
Addis-Ababa Sub
city
Administration
In what format are the majority of maps of land plots kept in the largest business city—in a Paper 0.0
paper format or in a computerized format (scanned or fully digital)?
Is there an electronic database for recording boundaries, checking plans and providing No 0.0
cadastral information (geographic information system)?
Is the information recorded by the immovable property registration agency and the cadastral Separate 0.0
or mapping agency kept in a single database, in different but linked databases or in separate databases
databases?
Do the immovable property registration agency and cadastral or mapping agency use the No 0.0
same identification number for properties?
Transparency of information index (0–6) 0.0
Who is able to obtain information on land ownership at the agency in charge of immovable Only 0.0
property registration in the largest business city? intermediaries
and interested
parties
Is the list of documents that are required to complete any type of property transaction made Yes, in person 0.0
publicly available–and if so, how?
Link for online access:
Is the applicable fee schedule for any property transaction at the agency in charge of Yes, in person 0.0
immovable property registration in the largest business city made publicly available–and if
so, how?
Link for online access:
Does the agency in charge of immovable property registration commit to delivering a legally No 0.0
binding document that proves property ownership within a specific time frame–and if so, how
does it communicate the service standard?
Link for online access:
Is there a specific and separate mechanism for filing complaints about a problem that No 0.0
occurred at the agency in charge of immovable property registration?
Contact information:
Are there publicly available official statistics tracking the number of transactions at the No 0.0
immovable property registration agency?
Number of property transfers in the largest business city in 2017:
Who is able to consult maps of land plots in the largest business city? Only 0.0
intermediaries
and interested
parties
Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, in person 0.0
and if so, how?
Link for online access:
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