Ethiopia is one of the fastest growing economies in the world, but buying a car, even for individuals who have money at hand is a dream that is almost unthinkable . A frustrated citizen, Daniel Desalegn explains to me “I’ve been saving money for up to five years but still cannot afford the cheapest vehicle sold in Addis Abeba .”

He went to so many car shops in Addis Ababa the capital, to search for a used car but has not found a less expensive or affordable car as he puts it. He plans to settle for second-hand imported cars brought into the country from Europe or the Gulf States – but even such cars are very expensive. The government classifies them as luxury goods.

Even second-hand vehicle will be taxes up to about 200% which is just too outrageous, almost double the initial price.

“I have saved up to $15,000 with the mind of getting at least a nice family car.” says Daniel.

“I am not interested in the Toyota Vitz,” he says while pointing directly at the small hatchbacks which have become a popular figure on the roads. This cost of these cars in Ethiopia is $17,000 but in other neighboring countries like Kenya, the car is not above $8,000.

Report of 2016 point out that there are just two cars per 1500 individuals is valid. No wonder Ethiopia has the lowest rate of car ownership in the globe.

Teferi Demessew who own a business on car import and sales in the capital blamed the high price on taxation.

“It is because of the taxation that we do not import better cars from America or Europe. And even when we import, we have to sell at higher prices to make some profit.

“In addition to the shipping cost say the cars are being imported from Dubai through Djibouti, we still need to deal with a lot of taxes when the car finally arrives. And even though many consider the business to be lucrative, the multiple taxations made it one of the most difficult businesses to enter into in the country.

Tax breaks for the local plants

The government, in its quest to get people to patronize locally made and cheaper cars, it offered incentives – a tax break for foreign car makers to setup as well as assemble new vehicles in Ethiopia.

The country currently produces just 8000 private and commercial vehicles for the local market on a daily basis. The government has admitted the numbers of cars are not enough considering its potential and wants it to increase.

Here are some tax examples

Diesel vehicles with cylinder capacity not exceeding 1300cc
Duty Rate: 35%
Excise Tax: 30%
VAT: 15%
Sur Tax: 10%
Withholding tax: 3%

Vehicles with spark–ignition engine of cylinder capacity greater than 3000cc
Duty Rate: 35%
Excise Tax: 100%
VAT: 15%
Sur Tax: 10%
Withholding tax: 3%

The importing procedure can be very difficult, it might take easily 6 months or more to clear your car from customs. You might have to hire an agent which will it also make again more expensive.

Spare parts: is your car a toyota or a Lada, then you can consider importing, if it is another brand, sell  it before you leave. Because of the three  points I mentioned before it is hard to find good quality spare parts.

Driving and road conditions in Ethiopia: Ethiopian traffic is challenging, there is not much discipline on the road, head lights must be very expensive to import because they barely use them. The roads are not good in comparison with other more developed African countries. So your car’s lifetime will shorten a lot.

Getting all the permits –> good luck, and make sure you are zen

If you want to export the car again, the whole show starts again….

My advice: sell your car, and rent a Toyota Vitz or Yaris here for ETB 300 a day, it will be much better for your blood pressure, and cheaper.

Source: Danie Tamiru, VOA news (Youtube)


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