Executive Summary
Ethiopia has a population of more than 110 million, predominantly living in rural and subsistence agricultural areas with poor access to safe drinking water, housing, sanitation, food, and health services. Communicable and non-communicable diseases, nutritional diseases, and suboptimal quality of life are major health challenges in Ethiopia. While communicable diseases such as COVID, HIV/AIDS, TB, diarrhea, respiratory infection, malaria cover a big portion of the healthcare challenge, non-communicable diseases (NCD) such as cancer of different types, high blood pressure, diabetes, hepatitis, and cardiac problems are becoming a serious challenge in the country. Recent studies show that non-communicable diseases including cancer caused 52 % of the total deaths. Currently, the main priority for the Ethiopian government is to work on NCD related diseases.
The healthcare sector is not strong enough to accommodate a pandemic situation such as covid. Under normal cricumstances, two healthcare workers must provide service to 1000 people.
As per the Ministry of Health’s 2020 report, a total of 25,548 healthcare facilities are available to provide healthcare services in Ethiopia. Out of this number only 396 are hospitals that can provide tertiary services. Ethiopian hospitals do not have enough capacity for specialty services both in terms of facilities and healthcare professionals. More than 6,000 patients seek overseas treatment per year (for advanced cardiac surgery, organ transplant, cancer treatment, neurosurgery, fertility treatment, ophthalmologic issues, neurosurgery, etc.). As a result, these trips incur $100 million USD annually for overseas treatment and this practice has a large foreign exchange outflow impact.
Market Entry
The health sector is one of the few sectors which is open for foreign competition, unlike other services such as banking and telecommunication. The country’s trade and investment policies and strategies aim at creating a competitive economy driven by the private sector. The policy also enables the government to regulate the services provided by the private health providers. Health and health-related services are not subject to discriminatory taxes on trade. In addition, the country has put in place different laws to regulate the healthcare market. Suggested market entryways which are recognized by Ethiopian Commercial Code of 1960 are ordinary partnership, joint venture, general partnership, limited partnership, Share Company, and private limited company. The Government of Ethiopia requires all imports be done through Ethiopian Nationals registered as official import or distribution agents with the Ministry of Trade.
Current Market Trends
The Government of Ethiopia has taken a proactive role to address health-related challenges by increasing the health budget. The Government of Ethiopia is actively working on a Public-Private Partnership to tap into and make optimal use of available resources for healthcare and promote quality improvements on the part of the private sector. The major priority areas of the healthcare sector development program are maternal and newborn care, child health, and to halt and reverse the spread of major communicable disease such as HIV/AIDS, TB, and Malaria. However, there is increasing focus on other communicable and non-communicable diseases such as cancer, heart diseases, high-blood pressure, diabetes, and others.
Currently the below healthcare facilities are available in Ethiopia:
- Health Posts: 17,154 available and 438 under construction
- Health Centers: 4,063 available and 68 under construction
- Hospitals: 338 available and 218 under construction
Best Prospects
• Surgical unit equipment, supplies and items
• Early screening equipment and supplies
• Pharmaceuticals
• Radiotherapy equipment and solutions
• Capacity building especially in handling radiotherapy equipment
• Healthcare technologies
Public Private Partnership (PPP) areas that Ministry of Health is working on are:
- On diagnostic, pilot PPPs on laboratory and imaging are under approval process.
- For oncology services, feasibility assessment is under preparation.
Main Competitors
The majority of medical equipment and supplies is imported from India and China. However, there are some imports from European countries like Germany, the United Kingdom, and France.
Current Demand
Market prospects for the health sector are promising, as it is one of the major areas the government gives attention. The Ethiopian community is interested in new technology developments and products in relation to medical equipment and supplies. In the second Growth and Transformation Plan of Ethiopia (2015- 2020), it is envisaged that necessary incentive packages such as tax exemption for heavy machines and some medical equipment, as well as importing of vehicles for ambulance service, will be made available to the private sector working on health and healthcare-related services. In addition, the Government of Ethiopia is working on improving public-private partnership initiatives to improve the health service in the country.
Registration Process
A U.S. firm wishing to establish a branch office in Ethiopia must submit the following documents for registration:
- A notarized copy of the registration of a parent company in the U.S.
- A copy of a U.S. Memorandum and Articles of Association.
- An authenticated decision of the parent company’s board of directors or a similarly authorized body for the establishment of a branch in Ethiopia. The decision should indicate the types of activities of the branch, the individuals appointed by the parent company to act on its behalf, and the capital allocated for its operation.
- An authenticated power of attorney issued by an authorized organ of a company for the permanent representative in Ethiopia.
- A letter of financial reference from the company’s bank.
- A notice published in a local newspaper announcing the establishment of a branch company in Ethiopia.
Reimbursement
The government of Ethiopia is working to address the challenge of high out-of-pocket costs for the use of health services, which includes the introduction of community-based health insurance (CBHI) and social health insurance (SHI) for the informal and formal segments of society, respectively. The Ethiopian Health Insurance Agency (EHIA) has already been established and is undertaking the necessary preconditions to offer SHI. Currently, patients are using on-the-spot payment for medical services as Ethiopia does not yet have an insurance system in place.
Barriers
• Lack of available forex for the private and the public sectors to import the necessary equipment and supplies.
• Price sensitivity of the market and lack of expertise/awareness to differentiate between product qualities.
• Import of medical equipment and supplies is highly dominated by Chinese and Indian companies.
• Long bureaucratic chains in the registration and licensing agencies. Procurement processes are time taking and non-transparent.
• Lack of knowledge about new technologies amongst regulatory bodies and healthcare service providers.
• Delays in the bidding process.
• Poor data management and reporting for proper decision making.
Procurement & Tenders
Most of the tenders and procurements are posted on the local newspapers.
Frequently Asked Questions
1. What is the best way to enter to the Ethiopian market?
Building a partnership with a well-established local importer is the best way to enter to the Ethiopian market.
2. What is the biggest challenge U.S. firms face in the procurement process?
The biggest challenges faced by U.S. firms in the procurement process is the lack of transparency and unequal treatment amongst bidding firms.
U.S. Commercial Service Contact Information
Name: Yemesrach Kassu
Position: Commercial Specialist
Email: Yemesrach.Kassu@trade.gov
Phone: +251111306074
