Ethiopia: Operating a Business

Setting Up a Company

Share companies: Number of partners: at least 5
Capital (max/min): ETB 50,000
Full subscription of capital, in addition to at least 25% of the capital paid up capital, is required
For wholly foreign-owned companies, the minimum capital is USD 200,000
Shareholders and liability: limited to the assets of the company
Limited liability company: Number of partners: at least 1 director and 2 shareholders
Capital (max/min): ETB 15,000
Shareholders and liability: limited to the assets of the company
Joint venture: Number of partners: at least 1 local and 1 foreigner
Capital (max/min): USD 150,000
Shareholders and liability: limited to the company’s assets
Sole Proprietorship: Number of partners: 1
Capital (max/min): For wholly foreign-owned companies, the minimum capital is USD 200,000
Shareholders and liability: the sole proprietor is liable personally for all debts of the business operation
Partnership: Number of partners: minimum 2
Capital (max/min): contributions shall be equal and of the nature and extent required for carrying out the purposes of the partnership
Shareholders and liability: the liability of members of partnership is unlimited (in the case of limited partnership, limited partners who do not participate in management have limited liability). However, the liability of the general partners or managing partners remains unlimited)

Setting Up a Company	Ethiopia	Sub-Saharan Africa
Procedures (number)	11.0	7.5
Time (days)	32.0	21.3

Source: Doing Business.

Business Setup Procedures: Consult Doing Business Website, to know about procedures to start a Business in Ethiopia.

Legal Weekly Duration: A regular working day counts 8 hours and a regular working week counts 48 hours. Where the circumstances in which the work has to be carried on are such that normal hours of work cannot be distributed evently over the individual week, normal working hours may be calculated as an average over a period longer than one week, provided, however, that the average number of hours over a period shall not exceed eight hours per day or 48 hours per week.
Retirement Age: 60 years old.
Working Contracts: A contract of employment shall be stipulated clearly and in such manner so that the parties are left with no uncertainity as to their respective rights and obligations under the terms thereof, it shall specify the type of employment and place of work, the rate of wages, method of calculation thereof, manner and interval of payment and duration of the contract.
Unless otherwise provided by law, a contract of employment shall not be subject to any special form.
Contracts of employment must be translated in Amharic.
Labour Laws: Consult Doing Business Website, to obtain a summary of the labor regulations that apply to local entreprises.

Minimum Wage: There is no national minimum wage for the private sector, but the public sector minimum is ETB 420 per month (approx. USD 3.30), as managed by the Ministry of Labor and Skills; this rate is significantly outdated and under review.
Average Wage: The average monthly salary in Ethiopia is 3,500 Ethiopian Birr (ETB), which translates to about USD 60.
Social Contributions: Social Security Contributions Paid By Employers: 11% (civilian) or 25% (military). The employer's contributions also finance work injury benefits. (7% contribution paid by the employee.)
Social Security Contributions Paid By Employees: 7%
Self-employed person: Up to 18% of declared income.

Social Dialogue and Involvement of Social Partners: According to art. 42 of the Constitution, factory and service sector employees, peasants, agricultural workers, other rural workers, government employees below a certain level of responsibility and the nature of whose employment so requires, shall have the right to form associations for the purpose of improving their economic and employment conditions. This right shall include the right to form trade union and other associations, and to negotiate with their employers and other organizations affecting their interests. The same article also mentions explicitly the right of strike.
Labour Unions: Confederation of Ethiopian Trade Unions (CETU)
Unionisation Rate: The trade unions of Ethiopia have a total membership of approximately 300,000. Over 203,000 are members of the Confederation of Ethiopian Trade Unions (CETU).
Labour Regulation Bodies: www.molsa.gov.et/

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