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Habits Ethiopia: Entrepreneurs & specialists about the Ethiopian Business culture

3 Dutch entrepreneurs share their experiences in Ethiopia. One of the most important characteristics of an Ethiopian is his pride. Long and bureaucratic trails do exist in the country so you will need diplomacy, tact and patience to be able to work in Ethiopia. Relationships are really important, you are who you know!

Elmer Vlielander, Export area manager, Horticoop
Member of the board of directors of Horticoop Ethiopia.

‘Horticoop is a supplier of horticulture products and follows the inland, but also the foreign market. One of the new markets is Ethiopia where there are mainly rose cultivators. But we basically deliver to every cultivator, also the local ones. Horticoop exports worldwide, but has experienced that Ethiopia is more complex than other countries on some areas. It takes for example a lot of time and patience to get all the necessary permits. We have bought land in Debre Zeyt, 45 minutes from Addis Abeba, for office space, a laboratory for earth- and water samples and for depository. We execute this PSOM-project together with ALTIC in Dronten and build under Dutch Management. The communication is usually in English; a language that is spoken by a big part of the inhabitants. One of the most important characteristics of an Ethiopian is his pride. On the other hand, the people do no not have a lot of authority to make decisions. That is why long and bureaucratic trails exist. Diplomacy, tact and patience are therefore essential ingredients for streamlined contacts.’

Ton Haverkort, Consultant and owner of an Ethiopian glass factory

‘I have worked for years in Ethiopia and Kenya for development cooperation. Since 2004, I work as a consultant for Cordaid. Furthermore I own a company in souvenirs and promotion articles, mainly of glass, together with my Ethiopian wife. Entrepreneurs have to keep in mind that in Ethiopia it is all about relationships. You are, who you know. Dependent of your network, problems can be solved in a personal manner. Try to find a good local business partner to arrange the administrative matters with the authorities, who has a big network and can read and write Amhaars. As an entrepreneur you have to have patience, because agreements and contracts are more often not followed up then followed up. Do however take up clauses in your contracts to prevent that agreements are being changed or not followed up without a reason. Although corruption is not as obvious as in for example Kenya, also in Ethiopia people often pay to get things done. There are however big punishments for corruption. I would like to advice starting entrepreneurs in Ethiopia to read the book “Riding the waves of culture” of Trompenaars en Hampden Turner. Have yourself informed about the differences in culture, time management, relationships and hierarchy. Adolescents and women are for example not judged and respected for their qualities. Adapt to the culture, or you will for sure be frustrated.’

Tadesse Tessema, Director Holland Car, car assembly in Modjo

“As an asylum seeker from Ethiopia I graduated from the HTS (Technical Bachelor) in the Netherlands and after that returned to my native country. There I noticed a gap in the transport market because of the import of Ladas from Eastern Europe. There is an increasing need of/from the population for affordable cars, and there was also a demand for other brands. The import tax on western car brands is a significant 35% in Ethiopia. Together with a Dutch contact, Wim Guns, director of Trento Engineering in Sittart, we came up with the solution of assembling cars in Ethiopia. The import tax on car parts is namely only 5% import tax. In 2005 we started with the Holland Car factory in Modjo, 65 kilometers of Addis Abeba. Because our factory is unique in Ethiopia and there was no legislation in this area, the startup took more than a year. Luckily the Ethiopian government was very flexible. They gave their complete support, just like the Dutch Embassy did. For the project we also received PSOM-support. In 2006 the first cars, compiled of Fiat parts, were finished. Currently we assemble thousands of cars a year. We have grown from 50 to 150 competent employees, who are in abundance here by the way. Dutch entrepreneurs that want to start in Ethiopia should be able to react quickly ad hoc. Flexibility is required. Only be engaged with the company and don’t engage in all kinds of juridical and administrative tasks. There are sufficient educated employees that can do that for you for relatively low costs.”

Do’s and don’ts:

• Take the many fasting days of the orthodox Ethiopians into account. On these days they are not allowed to eat dairy products or meat. Fixed fasting days are on Wednesdays and Fridays and the 40 days before Ethiopian Easter;
• Know that Ethiopians use the Julian calendar. This calendar runs 7 or 8 years behind on our calendar. A year consists of twelve months of 30 days and 1 month of 5 or 6 days; 
• Don’t forget to carefully check the arranged time. The day starts at 6.00, so the official time runs 6 hours behind on ours. In business life they often use the Western time indication. If you have an appointment ‘tomorrow at three o’clock’, they might mean nine o’clock the next morning; 
• Be prepared, the Ethiopian are strong negotiators. They will try to haggle on everything.

Capital: Addis Abeba
Amount of inhabitants: 72,8 million  (estimated by the EIU in 2008)
Surface: 1.127127 km2 (27 x the Netherlands)
Language: Amhaars and English are the official business languages. There are approximately 80 languages and dialects in Ethiopia of which 64 are officially acknowledged by the government.
GDP: 27,2 billion US dollar (estimated by the EIU in  2008)
Sectors with opportunities: Horticulture, tourism, energy, construction and railway
Economic growth: 8,5 % (estimated by the EIU 2008)

More information:
EVD Netherlands, country employee Ethiopia, (0031(0)70) 778 8614, ethiopie@info.evd.nl, www.evd.nl/ethiopie 
 
Text: Ilse Kuiper
Source: BM may 2009
Publication date: 5th may 2009

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