FMC 05
FMC 05
FMC 05
2
PARTNERSHIP READY ETHIOPIA: CONSTRUCTION
Large-scale, infrastructure and special projects are open to foreign Share Company: Requires a minimum of five shareholders
contractors due to know-how and technological requirements for and three directors who can either be individuals or corporate
machinery and equipment. In contrast, Ethiopian law investment bodies to be incorporated. The directors and shareholders
proclamation No. 849/2014 stipulates that foreign companies are can be of any nationality and must not be resident in Ethiopia.
not allowed to participate in investment areas exclusively reserved
for the government and domestic investors. Therefore, complex The Ethiopian commercial law allows foreign companies
construction projects, both public and private, are usually carried looking to establish business in Ethiopia to open branch
out by foreign construction companies or supported as local sub- offices in the country. The branch must seek approval from
contractors. the Ethiopian Investment Commission before commencing
operations in Ethiopia. At least one director of any nationality
All investment relevant specification regarding investment in all must be appointed to be the legal representative of the branch
sectors including the construction sector are outlined in Proclama- office in Ethiopia.
tion No. 270/2012 and No.849/2014. Investment in construction
contracting (including water well and mineral exploration drilling), The Ethiopia Ministry of Trade recently introduced mandatory
real estate development, architectural and engineering works, testing and verification according to 124 Compulsory Ethiopian
technical testing and analysis is not subject of any tax exemptions. Standards (CES). This list of 124 compulsory standards and regu-
Nevertheless, the import of construction materials is free of import lated products embrace measurement equipment and construction
tax in several investment areas if they are necessary for the estab- materials (such as steel, concrete, cement). Exporters who ship
lishment of a new enterprise or the expansion or upgrading of an to Ethiopia, require a certificate of conformity, which should be
existing enterprise. In addition, investments in the sectors (among acquired pre-shipment and importers will be required to present
others) cement, metals and engineering, renewable energy receive the original document to Ethiopian customs for clearance. An elec-
tax and duty incentives (as established in Investment Proclamation tronic copy will be held by the authority for authentication if and
769/2012). The proclamation No. 769/2012 on investment explains when needed. While in the past the role of the private sector was
all relevant processes and requirements for investments in Ethio- limited to contractor, the Ethiopian government is in the process of
pia. Additionally, all minimum capital to be allocated depending opening the economy. This now allows participation of the private
on the investment are outlined. Any foreign investor is required to sector in PPP-models for infrastructure projects. As of July 2017,
allocate a minimum capital of USD 200,000 for a single investment a PPP-law was enacted and last year a PPP-unit was established
project, for a foreign investor investing jointly with a domestic for approving and managing PPP-projects from government-side.
investor the minimum capital of USD 150,000 is needed. The mini- The energy sector will be the first sector where PPP-models will
mum capital required of a foreign investor investing in architectur- be considered.
al or engineering works or related technical consultancy services,
technical testing and analysis is USD 100,000 if the investment is
→→ REGULATORY AUTHORITIES
made wholly on its own and USD 50,000 if the investment is made
jointly with a domestic investor. A foreign investor re-investing his
PPP-unit (Ministry of Finance and Economic Cooperation): The
profits or dividends generated from his existing enterprise is not
Private Partnership proclamation No. 1076/2018 sets out the new
required to allocate a minimum capital.
PPP legislative framework with a view to promoting and imple-
menting privately financed infrastructure projects by enhancing
Some of the common business operations for foreigners to
transparency, fairness, value for money and efficiency through
establish are:
the establishment of specific procedures. PPP-projects may be
for either new or existing facilities and include design, financing,
Private Limited Liability Company: Is the preferred legal construction, rehabilitation, expansion, modernization, operation,
entity used by entrepreneurs up setting a business in Ethiopia.
maintenance, administration and/or management. The PPP-unit
Requires at least one director and two shareholders who can
and the Board of the PPP-unit are responsible for approving the
either be individuals or legal entities. The director and share-
PPP-projects.
holder can be of any nationality and must not be resident of
Ethiopia.
3
PARTNERSHIP READY ETHIOPIA: CONSTRUCTION
Ethiopian Investment Commission (EIC) is the primary govern- The Ministry of Works and Urban Development (MoWUD) is the
ment organ that serves as a nucleus for investment matters and lead agency entrusted with the responsibility of providing housing.
is given the power and duty to promote, coordinate and enhance The ministry is responsible for preparing the country’s building
investment activities. It is one of the first stops for an investor code, issuing standards for design and construction works. It also
wishing to apply for an Ethiopian business and investment license. ensures that buildings comply with the minimum requirements
As a national requirement, all business entities operating in Ethio- for design, safety, construction and quality of materials set down
pia must first be registered with the Ministry of Trade and obtain by the 14 Ethiopian Building Code Standards which detail the
a tax identification number (TIN) from the Ethiopian Revenue minimum requirements for design, constructions and quality of
and Customs Authority (ERCA). The institution also issues Custom materials. In addition, the Ministry is responsible for the classifi-
Duty-Free permission letter. www.investethiopia.gov.et cation (grades 1 to 10, depending on size, expertise and financial
means) for contractors. www.mudc.gov.et/web/guest
Addis Ababa Construction Bureau has taken over the responsibility
of managing all construction projects in the capital at the begin-
ning of 2019. It is responsible for preparing bidding documents, →→ P
ARTICIPATION IN GOVERNMENT TENDERS
announcing tenders, selecting contractors and consultants, clear- OR BIDS
ing land and fulfilling infrastructure for any project that takes place
within the city. Previously, the projects used to be managed by dif- There are two types of government tenders, national and inter-
ferent offices under the City Administration using the supervision, national. National tenders are restricted to local companies’ while
consultancy and regulatory manpower of the Bureau. Currently, international tenders are open to all including foreign companies.
200 projects are delayed for which 2 Billion Birr are allocated in Foreign companies that do not have a local office in the country
this fiscal year under the responsibility of the Construction Bureau. should have a local agent to successfully bid on international ten-
In general, the construction sector consumes 75 %−80 % of the ders. It is advisable for foreign companies to carefully select their
city’s aggregate budget. The new procedure compels all the local partners based on a thorough due diligence investigation.
contractors and consultants in the city to register at the Bureau
to participate in any kind of projects in the city. Due to lack of capacity within Ethiopia, State Owned Enterprises
(SOE’s) may seek bids from foreign companies to accomplish their
Ethiopian Standards Agency has three core business areas which procurement requirements subject to these thresholds; for works
mainly focus on standard formulation, training and technical above 50 million Birr, for goods above 10 million Birr, for consul-
support and organizing and disseminating standards, conformity tancy services above 2.5 million Birr and for other services above
assessment procedures and technical regulation. 7 million Birr.
www.ethiostandards.org
4
PARTNERSHIP READY ETHIOPIA: CONSTRUCTION
International companies should be prepared to submit the follow- The booming construction activities in Ethiopia have also led to the
ing evidence to be considered eligible in a tender invitation bid: growth of the cement industry in the country. The Derba Midroc
Cement project, a USD 350 million project, consists of a cement
Business organization registration certificate or trade plant to develop the Derba-Muger limestone deposit. The plant
license issued by the country of establishment was built by MIDROC Construction Ethiopia PLC, co-financing
Professional and technical qualifications and competence was provided by the European Investment Bank, the International
to undertake the work/supply/service for which they are Finance Corporation and the African Development Bank.
bidding
Registration in the Public Procurement and Property The European Investment Bank has also financed projects in cru-
Administration Agency supplier list cial sectors such as water and sanitation, supported by the Water
Satisfactory financial capability and resources. Resources Development Fund as well as three European partners
Plus all other relevant documents as per the specific that agreed to provide more than EUR 81 million for the project.
requirement on the bid documents. This includes EUR 40 million from the European Investment Bank,
EUR 20 million from the African Development Bank Group and
Tenders are published in newspapers with a wide circulation EUR 15 million from Italian development cooperation. A further
(e.g. Ethiopian Herald, Capital Ethiopia, The Reporter) and are also EUR 6.4 million in grant funding from the three partners comple-
published on the PPA’s website (www.ppa.gov.et). mented the loans.
5
PARTNERSHIP READY ETHIOPIA: CONSTRUCTION
2 Structural Use of
Concrete
• T
his Code applies to the design of buildings and civil engineering works in plain, reinforced and pre-stressed
concrete made with normal weight aggregates.
• It is only concerned with requirements for resistance, serviceability and durability (not covered: thermal or
sound insulation).
• Construction is covered to the extent that is necessary to indicate the quality of construction materials and
products as well as the standard of workmanship.
3 Design of Steel
Structures
• This Code applies to the design of buildings and civil engineering works in steel.
• It is only concerned with requirements for resistance, serviceability and durability (not covered: thermal
or sound insulation).
• Construction is covered to the extent that is necessary to indicate the quality of construction materials
and products as well as the standard of workmanship.
4 Design of Composite
Steel and Concrete
Structures
• This Code applies to the design of composite structures and members, made from structural steel and rein-
forced or pre-stressed concrete connected together to resist loads, for buildings and civil engineering works.
• It is only concerned with requirements for resistance, serviceability and durability (not covered: thermal or
sound insulation).
• Execution is covered (reference to EBCS 2 – Structural Use of Concrete and EBCS 3 – Design of Steel
Structures) indicating quality of construction materials and products and standard of workmanship.
5 Utilization of Timber • T
his Code includes specifications concerning the utilization of timber about the following aspects: Milled
Products and Sawn Boards; Wood Testing Methods; Stress-, Visual- and Mechanical Grading of Hard- and
Softwoods; Wood Frames; Timber Floor Framing and Flooring; Timber Wall Framing; Timber Roof Framing;
Timber Doors and Windows including Frames and Linings; Plywood Construction and Structural Timbers
and Glue-laminated Members; Wood Flooring Blocks; Scaffold Planks; Timber Fastener and Connectors.
6 Masonry • T
his Code includes specifications concerning masonry about the following aspects: Materials for Masonry
Construction; Masonry Construction; General Design Principles of Masonry Wall; General Requirements
for Structural Design; Design of Unreinforced Masonry; Design of Reinforced Masonry; Design for Fire
Resistance; Workmanship and Site Control.
7 Foundations • This Code applies to geotechnical aspects of the design of buildings and civil engineering works.
• It covers requirements for strength, stability, serviceability and durability of structures.
• It gives rules to calculate actions originating from the ground, such as earth pressures.
• Rules related to execution are covered, indicating the quality of construction materials and standard
of workmanship
• This Code shall be used in conjunction with EBCS 1 – Basis of Designs and Actions on Structures
8 Design of Structures
for Earthquake
Resistance
• T
his Code provides rules for seismic design, completing or adapting the rules of the previous Code
(EBCS 7 - Foundations).
9 Plumbing Services
of Buildings
• T
his Standard lays down requirements for and gives recommendations on the design, installation, testing,
and maintenance of plumbing fixtures, water supply for domestic and fire-fighting systems, drainage and
venting of disposal systems for water born domestic waste, and storm-water drainage on the premises.
10 Electrical
Installation of
Buildings
• T
his Code applies to the design, selection, erection, inspection and testing of electrical installations for
residential, commercial, public and industrial premises, including prefabricated buildings, construction sites,
exhibitions, fairs and other temporary installations up to and including 1000.0V a.c. or 1500.0V d.c.
• T
his Code does not apply to: electric traction equipment; electrical equipment of automobiles, -on board
ships, -in aircrafts; public street-lighting installations; installations in mines, radio interference suppression
equipment (except s it affects safety of the installation); fixed wiring for telecommunication and signaling
and control and the like; internal wiring of apparatus; systems for distribution of energy to the public or
power generation and transmission for such systems.
6
PARTNERSHIP READY ETHIOPIA: CONSTRUCTION
11 Ventilation and
Air Conditioning of
Buildings
• T
his Code specifies requirements for and gives recommendations on the design, installation, testing and
maintenance of ventilation and air conditioning systems.
12 Fire Precautions
during Building
Construction Design,
• T
his Code covers Fire precautions bases during building design services, works and uses; Fire safety and
means of escape; Fire safety and construction details; Fire related ancillary engineering services; Fire, smoke
and heat transmission, detection and control system; Firefighting system and Fire safety and firefighting
Works and Use management.
• E
thiopian Building Proclamation 624/2009
The Federal Ministry of Economy Cooperation and Develop- www.fsc.gov.et/Negarits/GetPdf/123
ment (BMZ) has commissioned Deutsche Gesellschaft für
Internationale Zusammenarbeit (GIZ) GmbH to implement • R
egistration and Control of Construction Machinery
the Sustainable Training and Education Programme (STEP) www.fsc.gov.et
which focuses on providing special training in the construc- • B
uilding Regulation no. 243/2011
tion sector: www.ethioconstruction.net
• Vocational: A cooperative training model is in develop-
• I nvestment proclamation no. 849/2014
ment, focusing on hotel maintenance, i.e. electrical,
www.addischamber.com/
plumbing and furniture installations, with the main coop-
investment-proclamation-and-regulation
eration partner being Bahir Dar Polytechnic College.
• I nvestment Proclamation 769/2012
• Short-term: The Graduates Anchoring Program (GAP)
www.mot.gov.et
aims at bridging the skills gap of TVET and higher-
education graduates in the field of electrical installations, • T
he Ministry of Works and Urban Development
plumbing, finishing and soft skills. The program will train (MoWUD)
380 trainees in four 3-month cohorts and consists of www.mudc.gov.et/web/guest
on-the-job training in host companies and theory inputs
• I nvest Ethiopia
to improve their employability on construction sites. GAP
www.investethiopia.gov.et
is implemented in cooperation with the Construction
Contractors Association of Ethiopia (CCAE) and the Addis • E
thiopian Standards Agency
Ababa Construction Bureau. Another short-term training www.ethiostandards.org
focuses on increasing institutional capacity to support
micro, small and medium enterprises by providing know-
how in financial, organizational and project management
as well as in sector-specific areas.
• Industry-wide: In order to complement the existing
cooperative training and to enhance workers’ qualifica-
tions in the construction sector, tailored and job-specific
courses are offered in cooperation with CCAE.
7
PARTNERSHIP READY ETHIOPIA: CONSTRUCTION
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