Ethiopia has removed import bans on more than 35 items but maintained its ban on imported fuel-powered cars, its Ministry of Finance said on Tuesday.
- In a letter signed by the Finance Minister, Ahmed Shide, the Ethiopian government has determined that 37 items that were on the list of banned imports would be traded freely, but imports of fuel-powered cars remained banned.
- Although no explicit reason was given, the decision is probably in line with the country’s determination to transition to electric or hybrid vehicles – a goal that the government thinks it can achieve by cutting off the supply of fuel-powered cars.
- Ethiopia became the first country in the world to ban fuel-powered cars, as one of its strategies to reduce reliance on fuel imports by 50%.
In October 2022, the Ethiopian government had listed several items whose importation was banned including: furniture, perfumes, make‑up, artificial flowers, headgear, artificial jewellery, carpets, umbrellas, watches and clocks, soaps, fireworks, artificial hair, bags and wallets.
Other products included canned fruit, sweet biscuits, waffles, seafood, chocolate, alcoholic drinks, water, and fruit juices. The decision to ban some imports was intended to uplift local production and reduce forex demand amidst biting shortage.
Why Fuel-Powered Cars are Still Banned
To ease the uptake of EVs, the country subsidized their imports. The country’s Minister for Transport and Logistics, Bareo Hassen, said in April that EV parts imported in Ethiopia were exempted from paying customs duty. EVs that were partially assembled were charged 5% import tax, while fully assembled EVs were charged only 15%.
Ethiopia’s ambitious EV adoption plan sets a target of 439,000 vehicles by 2030, the government claiming that so far, 100,000 EVs have been imported into the country.
The country’s soft spot for EVs seeks to bring in private sector investors to help fulfil demand through rapid production and development of charging infrastructure – a prevailing challenge to the government’s plan.
Temporary subsidization of imports key to the government’s agenda was part of the transitional strategies laid out on the National Bank of Ethiopia’s economic liberalization agenda. Other sectors meant to benefit from this scheme include Agriculture and Health.
“Through the use of temporary subsidies and a gradual pass-through of prices, the Government has decided to minimize the full price impacts on essential import items such as fuel, fertilizers, medicine, and edible oil. This measure will help millions of urban residents, millions of farmers, and large population segments reliant on these critical imported commodities,” the NBE stated.
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