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IMPORT AND EXPORT BUSINESS IN ETHIOPIA Import and Export Business in Ethiopia: Methods of Payment

An Ethiopian importer or exporter who is engaged in import or export business in Ethiopia should know what type of import export payments in Ethiopia are possible while doing import or export trade in Ethiopia or with Ethiopian businesses. Moreover, it should be known that which type of payment is preferable and under what conditions. This article contains the methods of payment practised in international import export business and especially what is practised or allowed in Ethiopia and deals specifically with Letter of Credit (LC), Cash against Document (CAD), Telegraphic Transfer (TT) and Advance Payment. It also contains documents to be included in a letter of credit and specifically in an LC opened through Ethiopian banks.

Methods of Payment Letter of credit Cash Against Document Telegraphic Transfer Advance Payment Types of L/C Irrevocable Vs Revocable Confirmed Vs Unconfirmed Straight Vs Negotiable Sight Vs Usance Documents to be included in L/C Transaction Steps of L/C

Letter of credit (L/C)

It is a written commitment to pay, by a buyer's or importer's bank to the seller's or exporter's bank. LC guarantees payment. A supplier or exporter that has sold to an Ethiopian Importer on LC basis should present to the bank these four sets of documents: Original sets of CLEAN Bill of lading, Shipping Document (Airway Bill, Truck way bill or Railway Manifest), Commercial Invoice thats verified by the chamber of commerce of the suppliers country, Packing List and Certificate of Origin thats verified by the chamber of commerce of the suppliers country. If the goods are imported from China, a CIQ certificate (pre shipment inspection certificate carried out by China AQSIQ) should be presented along with the other four documents.

The two most basic types of L/C are Revocable-credit L/C and Irrevocable-credit L/C, which comes in two versions: Confirmed irrevocable letter of credit and Non-confirmed irrevocable L/C.

Cash Against Documents (CAD)

A transaction in which the buyer assumes the title for the goods being purchased upon paying the sale price in cash. Its quicker than LC, but not as safe; Ethiopian exporters are advised to use CAD if they have a very good relationship with the buyer and know that the credentials of the buyer make it trustworthy.

A supplier or exporter that has sold to an Ethiopian Importer on CAD basis should present to the bank these four sets of documents: Original sets of CLEAN Bill of lading, Shipping Document (Airway Bill, Truck way bill or Railway Manifest), Commercial Invoice thats verified by the chamber of commerce of the suppliers country, Packing List and Certificate of Origin thats verified by the chamber of commerce of the suppliers country. If the goods are imported from China, a CIQ

certificate (pre shipment inspection certificate carried out by China AQSIQ) should be presented along with the other four documents.

Telegraphic Transfer (TT)

Its a method of payment in which funds are transferred via telegraph or cable. Its most common in business conducted in developing countries, where other types of infrastructure, such as computerized payments, may not be available; however, in Ethiopia all imports, of which value is more than USD 2000, are required to be done via LC or CAD. But in there are instances where banks allow up to USD 5000 for TT transfer

Advance Payment

An advance payment, or simply an advance, is the part of a contractually due sum that is paid in advance for goods or services, while the balance included in the invoice will only follow the delivery. It is called a prepaid expense in accrual accounting. In Ethiopia an advance payment of up to USD 5000 may be allowable and can be done through Telegraphic Transfer. However, the receiver's bank should provide guarantee for it.

Top Types of L/C

1. Revocable L/C Vs Irrevocable L/C


Irrevocable L/C If this type of L/C is once opened, it can not be changed or cancelled or amended without the consent of all parties (including the beneficiary or the seller). Revocable L/C A revocable L/C may be amended or cancelled by the Issuing Bank at any moment and without prior notice to the Beneficiary. The cancellation is usually made at the request and on the instructions of the applicant. Top

2. Confirmed L/C Vs Advised (Unconfirmed L/C)


Confirmed L/C It is a type of L/C in which the Confirming Bank promises to pay.When an exporter exports to a country with economical or political instability or if the exporter is unfamiliar with the Issuing Bank, the exporter should require that the L/C be confirmed by a firstclass bank. If L/C is confirmed, the confirming bank is liable for the payment. The payment is assured even if the importer or the issuing bank defaults. However, under normal circumstances, an unconfirmed LC may be preferred to avoid the charges that would be paid by both the buyer and seller for confirmation. Advised L/C (Unconfirmed L/C) Is opened by an issuing bank in which the advising bank does not add its confirmation to the credit. The promise to pay comes from the issuing bank only. Top

3. Straight L/C Vs Negotiation L/C


Straight L/C It can only be paid in the country of the Paying Bank.

Negotiation L/C
It can be presented and paid to any bank. Top

4. Sight L/C Vs Usance L/C


Sight L/C The Beneficiary is paid as soon as the Paying Bank has determined that all necessary documents are in order. Usance L/C Usance time can be between 30 and 180 days after the bill of lading date. This is a form of delayed payment, and should be avoided. Top

Documents to be included in L/C


Documents that are to be included in the L/C are always based on negotiation of the parties. It is preferable not to include documents that must be signed or authorized by the buyer's representative or a document that may never be produced (say, a certificate, which should be issued by a foreign agency) and to keep the list of the documents as short as possible. It is not necessary to mention all documents required by the contract in the L/C. Most likely, it is required to present a commercial invoice, a transport document (Original sets of Bill of lading, Airway Bill, Truck way bill or Railway Manifest), Country of origin invoice and others. What is required in Ethiopia is mentioned above. The list of additional documents depends up on the agreement made between the seller and the buyer. The list may include:

Certificate of origin Certificate of quality Weight certificate Pre-shipment inspection certificate Packing declaration Packing list Fumigation certificate, and so on.

It is also necessary to specify how many original documents and how many copies are to be presented. The description of goods stipulated in the L/C must correspond with the description given in the invoice. Top

Transaction Steps of L/C


The following are a Typical Letter of Credit Transaction steps of a confirmed irrevocable letter of credit.

After the exporter and buyer agree on the terms of a sale, the buyer arranges for its bank to open a letter of credit that specifies the documents needed for payment. The buyer determines which documents will be required. The Buyer's Bank issues, or opens, its irrevocable letter of credit includes all instructions to the seller relating to the shipment.

The Buyer's Bank sends its irrevocable letter of credit to a Exporters Bank and requests confirmation. The Exporter may request that a particular local bank be the Confirming Bank, or the Foreign Bank may select a correspondent bank in the Exporters country.

The Confirming Bank prepares a letter of confirmation to forward to the Exporter along with the irrevocable letter of credit. The Exporter reviews carefully all conditions in the letter of credit. The Exporter's freight forwarder is contacted to make sure that the shipping date can be met. If the exporter cannot comply with one or more of the conditions, the customer is alerted at once.

The Exporter arranges with the Freight Forwarder to deliver the goods to the appropriate port or airport. When the goods are loaded, the Freight Forwarder completes the necessary documentation. The Exporter (or the Freight Forwarder) presents the documents, evidencing full compliance with the letter of credit terms, to the Confirming Bank. The Confirming Bank reviews the documents. If they are in order, the documents are sent to the Buyer's Bank for review and then transmitted to the Buyer. The Buyer (or the Buyer's Agent) uses the documents to claim the goods. A draft, which accompanies the letter of credit, is paid by the Buyer's Bank at the time specified or, if a time draft, may be discounted to the Confirming Bank at an earlier date.

Import Trade In Ethiopia: Procedures


Wednesday, 30 April 2008 09:26 Import - Import procedures Share|

Anybody who wants to import to Ethiopia should know the import procedures in relation to the pre-shipment inspection on goods imported from China and applications submitted to commercial banks in Ethiopia to obtain Import Permit; in addition, an importer in the country should know the modes of payment allowed for import, documentation requirements to effect payment and document checking and verification. An importer who wishes to import goods to Ethiopia should pay through the commercial banks. All payments above USD2000 should be done through Letter of Credit or Cash Against Document. Preshipment inspections apply for all imports from China. The procedures needed to start an Import Trade and the frequently asked questions to start business in Ethiopia are found in the Business Startup page; procedures and requirements regarding payment through banks and preshipment inspection on goods imported to Ethiopia are found below.

Pre-shipment Inspection:
Goods imported are not required to be inspected prior to shipment except when they are imported from China or if the importer and the supplier have agreed to do that.

Pre-shipment Inspection on goods imported from China:


The Ministry of Trade and Industry has made arrangements with China Inspection and Quarantine Bureau (CIQ) so that the latter would carry out the inspections prior to shipment and issue the quality certificates.

Terms and Conditions


1. Pre-shipment Inspection requirement on all goods purchased from China implemented with effect from January 1, 2007

2. 3. 4. 5.

Pre-shipment inspection certificate is one of the documents required to effect import payment from China. Pre-shipment Inspection certificate requirement is mandatory for all import purchases made from China in excess of USD 2,000 Banks are required to insert requirement in the LC and also to insure that purchase order transmitted clearly depict to have CIQ inspection requirement. Banks can not accept documents without CIQ certificate if goods are imported from China.

Waivers issued
1. 2. 3. 4. In the event of any discrepancy on the CIQ certificate issued or if goods are imported without being inspected the case shall be referred to Quality and standard Authority of Ethiopia. Any waiver or explanation given in favor of an importer shall be issued to the bank holding the document pending receipt of clarifications. The Ministry of Trade & Industry has issued its mandate to Quality and Standards Authority of Ethiopia to examine the nature of discrepancies and to issue its decisions by looking into the cases as may be appropriate. Banks have accordingly been advised that discrepancies can be cleared or waivers can be made provided a letter of authority is received from the Quality and standardization Authority.

Import Payment Foreign exchange can be availed by banks to any importer provided they can present one of these
1. 2. 3. Import License issued by Ministry of Trade and Industry (MOTI) Industry License issue by MOTI (If applicable) Investment License issued by Investment Agency

Applications submitted for import should be accompanied by the Proforma Invoice / contracts from suppliers stating
1. 2. 3. 4. 5. 6. 7. The type of commodity Quantity of the commodity Price per unit FOB amount Freight if any Other charges No insurance payment is allowed for payment in Foreign Exchange, so the importer should make insurance arrangement locally.

Mode of payment allowed for import


1. 2. 3. Letter of Credit Cash against document Advance payment up to USD5000

Documentation requirements to effect payment:


It is important that the required sets of documents that should be presented by the supplier to demand payment should be mentioned in the LC or Purchase order. The following are mandatory for payment and always mentioned in the LC or Purchase order: 1. 2. 3. 4. 5. A final invoice (commercial invoice) attested by the chamber of commerce of the country of the supplier Original sets of Bill of lading, Airway Bill, Truck way bill, Railway Manifest (depending on the mode of transportation) Country of origin invoice attested by the chamber of commerce of the country of the supplier Packing list Certificate of quality where appropriate

Importers who wish it import using CAD


1. 2. 3. 4. Should first get approvals of the their Bank on the purchase order they wish to pass to the supplier The purchase order should clearly sate document requirements and certificate to be attached. Shipping documents normally required for import payments Payment can only be released on CAD provided the importers get the prior approval from its bank.

On Document checking and verification


1. 2. Banks shall have the responsibility to check documents and insure that goods shipped are in accordance with the L/C term or the purchase order issued (in case of CAD) which should clearly sate the list of documents that should presented . If the documents presented are in compliance with the letter of credit terms pr the purchase order approved (in case of CAD) then the documents shall be accepted and the payment will be released. If not, it will be kept in suspense pending receipt of clarification and amendments.

Important offices to acquire information on procedures on foreign currency payment and preshipment inspection:
The National Bank of Ethiopia: Location: At 'Biherawi' near the National Theatre on the way from Biherawi to "Goma Quteba' Phone: +251 11 5517430, Website:http://www.nbe.gov.et/ P.O Box:5550, Addis Ababa, Ethiopia Quality and Standards Authority of Ethiopia: Location: On the way from Imperial Hotel To Megenagna, adjacent to AMCE Phone: +251 11 6460525, Fax: +251 11 6460880, E-mail: qsae@ethionet.et , http://www.qsae.org/ P.O Box: 2310, Addis Ababa, Ethiopia.

Export Procedures and regulations in Ethiopia


Wednesday, 30 April 2008 09:29 Export - Export regulations, procedures Share|

According to Regulations No. 84/2003 or 84/1995 EC and its amendment 146/2008 or 146/2000 EC,(Download) export trade of raw coffee, chat, oil seeds, pulses, hides and skins bought from the market and live sheep, goats and cattle not raised or fattened by the investor is exclusively reserved for domestic investors. Foreign investors cannot be involved in export trade of these items from Ethiopia. Businesses that wish to export from Ethiopia should know the export procedures needed to obtain export permit by commercial banks; should prepare Application for Quality Testing and Certification to obtain Export Authorization Certificate from the Quality and Standards Authority of Ethiopia; should fill the Customs declaration. We have included all these export procedures in Ethiopia and also the VAT registration for exporters from Ethiopia and VAT rate applied on goods exported from Ethiopia.

Export permit by commercial banks


Documents required for Export Permit Approval: (taken From Dahsen Bank )

Duly signed contract by seller & buyer

Undertaking letter of our customer that consignment will be settled within a maximum of 90 days from date of the Foreign Exchange Permit for Cash Against Document (CAD) mode of payment and Authenticated message of L/C opened for Letter Credit mode of Payment.

Seller's invoice Export License Valid for the year Tax registration certificate (TIN certificate) Export permit application form duly filled, signed & stamped (as appropriate) by the customer. NBE (National Bank of Ethiopia) issues delinquent list of exporters periodically. Customers name should not appear in the delinquent exporters list of NBE for the period. If the name appears, there should be subsequent list indicating the given customer has cleared all outstanding items at NBE.

In regards to payment, the exporters should:

Know thoroughly the foreign counterparts (buyers) financial soundness, reliability, integrity, full address, etc. Sales/Purchase contract should exist between the two parties (importer and exporter). (LC Mode of Payment) Go through text of L/C opened in their favor and make sure that compliance can be met without doubt. Otherwise, amendments need to be requested from opener as soon as L/C has been received or at the earliest - long before shipment of consignments.

(CAD Mode of Payment) Follow up the payment, as nonpayment or even delay of remittance above 90 days will put name of exporter in delinquent list freezing further exports until proceeds are received.

Application for Quality Testing and Certification:


When export products are ready, make arrangements for suitable packaging and apply to the Quality and Standards Authority of Ethiopia for quality testing, and acquire the Export Authorization Certificate.

Customs Declaration:
To avoid costly delays, the exporter declares all facts about the export consignment, and all supporting original documents should be forwarded to the Customs Clearing Agents to enable customs formalities and authorization of the dispatch of the export goods. Accordingly, the exporter must hand over the Export Permit, the copy of the Customs Declaration Annex form, the Ethiopian Customs Declaration form, the Certificate of Origin, and the special movement forms/certificates (the EURI Movement Certificate and the GSP form A) to the clearing agents.

Exporters, VAT and VAT Registartion


According to the Value Added Tax Proclamation (285/2002) and the Regulation by the Council of Ministers on VAT (Regulation 79/2002), all exports of goods and services are liable to VAT at the zero rate. This means that VAT is charged at 0% (or no VAT has to be charged). However, more importantly an exporter is entitled to reclaim the VAT on all the goods and services purchased to produce the exports. But since this still means an exporter is still making taxable supplies even at a zero rate, the law requires the exporter to register if the turnover exceeds the registration limits

Import and Export Business in Ethiopia: Methods of Payment


Tuesday, 24 March 2009 07:58 Import - Import Payment Share|

An Ethiopian importer or exporter who is engaged in import or export business in Ethiopia should know what type of import export payments in Ethiopia are possible while doing import or export trade in Ethiopia or with Ethiopian businesses. Moreover, it should

be known that which type of payment is preferable and under what conditions. This article contains the methods of payment practised in international import export business and especially what is practised or allowed in Ethiopia and deals specifically with Letter of Credit (LC), Cash against Document (CAD), Telegraphic Transfer (TT) and Advance Payment. It also contains documents to be included in a letter of credit and specifically in an LC opened through Ethiopian banks.

Methods of Payment Letter of credit Cash Against Document Telegraphic Transfer Advance Payment Types of L/C Irrevocable Vs Revocable Confirmed Vs Unconfirmed Straight Vs Negotiable Sight Vs Usance Documents to be included in L/C Transaction Steps of L/C

Letter of credit (L/C)

It is a written commitment to pay, by a buyer's or importer's bank to the seller's or exporter's bank. LC guarantees payment. A supplier or exporter that has sold to an Ethiopian Importer on LC basis should present to the bank these four sets of documents: Original sets of CLEAN Bill of lading, Shipping Document (Airway Bill, Truck way bill or Railway Manifest), Commercial Invoice thats verified by the chamber of commerce of the suppliers country, Packing List and Certificate of Origin thats verified by the chamber of commerce of the suppliers country. If the goods are imported from China, a CIQ certificate (pre shipment inspection certificate carried out by China AQSIQ) should be presented along with the other four documents.

The two most basic types of L/C are Revocable-credit L/C and Irrevocable-credit L/C, which comes in two versions: Confirmed irrevocable letter of credit and Non-confirmed irrevocable L/C.

Cash Against Documents (CAD)

A transaction in which the buyer assumes the title for the goods being purchased upon paying the sale price in cash. Its quicker than LC, but not as safe; Ethiopian exporters are advised to use CAD if they have a very good relationship with the buyer and know that the credentials of the buyer make it trustworthy.

A supplier or exporter that has sold to an Ethiopian Importer on CAD basis should present to the bank these four sets of documents: Original sets of CLEAN Bill of lading, Shipping Document (Airway Bill, Truck way bill or Railway Manifest), Commercial Invoice thats verified by the chamber of commerce of the suppliers country, Packing List and Certificate of Origin thats verified by the chamber of commerce of the suppliers country. If the goods are imported from China, a CIQ certificate (pre shipment inspection certificate carried out by China AQSIQ) should be presented along with the other four documents.

Telegraphic Transfer (TT)

Its a method of payment in which funds are transferred via telegraph or cable. Its most common in business conducted in developing countries, where other types of infrastructure, such as computerized payments, may not be available; however, in Ethiopia all imports, of which value is more than USD 2000, are required to be done via LC or CAD. But in there are instances where banks allow up to USD 5000 for TT transfer

Advance Payment

An advance payment, or simply an advance, is the part of a contractually due sum that is paid in advance for goods or services, while the balance included in the invoice will only follow the delivery. It is called a prepaid expense in accrual accounting. In Ethiopia an advance payment of up to USD 5000 may be allowable and can be done through Telegraphic Transfer. However, the receiver's bank should provide guarantee for it.

Top Types of L/C

1. Revocable L/C Vs Irrevocable L/C


Irrevocable L/C If this type of L/C is once opened, it can not be changed or cancelled or amended without the consent of all parties (including the beneficiary or the seller). Revocable L/C A revocable L/C may be amended or cancelled by the Issuing Bank at any moment and without prior notice to the Beneficiary. The cancellation is usually made at the request and on the instructions of the applicant. Top

2. Confirmed L/C Vs Advised (Unconfirmed L/C)


Confirmed L/C It is a type of L/C in which the Confirming Bank promises to pay.When an exporter exports to a country with economical or political instability or if the exporter is unfamiliar with the Issuing Bank, the exporter should require that the L/C be confirmed by a firstclass bank. If L/C is confirmed, the confirming bank is liable for the payment. The payment is assured even if the importer or the issuing bank defaults. However, under normal circumstances, an unconfirmed LC may be preferred to avoid the charges that would be paid by both the buyer and seller for confirmation. Advised L/C (Unconfirmed L/C) Is opened by an issuing bank in which the advising bank does not add its confirmation to the credit. The promise to pay comes from the issuing bank only. Top

3. Straight L/C Vs Negotiation L/C


Straight L/C It can only be paid in the country of the Paying Bank.

Negotiation L/C
It can be presented and paid to any bank. Top

4. Sight L/C Vs Usance L/C


Sight L/C

The Beneficiary is paid as soon as the Paying Bank has determined that all necessary documents are in order. Usance L/C Usance time can be between 30 and 180 days after the bill of lading date. This is a form of delayed payment, and should be avoided. Top

Documents to be included in L/C


Documents that are to be included in the L/C are always based on negotiation of the parties. It is preferable not to include documents that must be signed or authorized by the buyer's representative or a document that may never be produced (say, a certificate, which should be issued by a foreign agency) and to keep the list of the documents as short as possible. It is not necessary to mention all documents required by the contract in the L/C. Most likely, it is required to present a commercial invoice, a transport document (Original sets of Bill of lading, Airway Bill, Truck way bill or Railway Manifest), Country of origin invoice and others. What is required in Ethiopia is mentioned above. The list of additional documents depends up on the agreement made between the seller and the buyer. The list may include:

Certificate of origin Certificate of quality Weight certificate Pre-shipment inspection certificate Packing declaration Packing list Fumigation certificate, and so on.

It is also necessary to specify how many original documents and how many copies are to be presented. The description of goods stipulated in the L/C must correspond with the description given in the invoice. Top

Transaction Steps of L/C


The following are a Typical Letter of Credit Transaction steps of a confirmed irrevocable letter of credit.

After the exporter and buyer agree on the terms of a sale, the buyer arranges for its bank to open a letter of credit that specifies the documents needed for payment. The buyer determines which documents will be required. The Buyer's Bank issues, or opens, its irrevocable letter of credit includes all instructions to the seller relating to the shipment. The Buyer's Bank sends its irrevocable letter of credit to a Exporters Bank and requests confirmation. The Exporter may request that a particular local bank be the Confirming Bank, or the Foreign Bank may select a correspondent bank in the Exporters country.

The Confirming Bank prepares a letter of confirmation to forward to the Exporter along with the irrevocable letter of credit. The Exporter reviews carefully all conditions in the letter of credit. The Exporter's freight forwarder is contacted to make sure that the shipping date can be met. If the exporter cannot comply with one or more of the conditions, the customer is alerted at once.

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The Exporter arranges with the Freight Forwarder to deliver the goods to the appropriate port or airport. When the goods are loaded, the Freight Forwarder completes the necessary documentation. The Exporter (or the Freight Forwarder) presents the documents, evidencing full compliance with the letter of credit terms, to the Confirming Bank. The Confirming Bank reviews the documents. If they are in order, the documents are sent to the Buyer's Bank for review and then transmitted to the Buyer. The Buyer (or the Buyer's Agent) uses the documents to claim the goods. A draft, which accompanies the letter of credit, is paid by the Buyer's Bank at the time specified or, if a time draft, may be discounted to the Confirming Bank at an earlier date.

Bond Insurance
Introduction Bond insurances are mainly given to cover failure of contractual agreement made between two or more parties. The legal contract dealt with different parties can fail due to various reasons. Therefore, inorder to compensate the loser there must be a surety to cover the loss. Worldwide there are more than 15 types of bond insurances. Ethiopian Insurance Corporation currently provides seven types of bond insurances. Namely Performance, supply, bid, advance payment, customs, maintenance & retention bonds. Hence, this brochure elaborates all these bond insurances that the Corporation provides to its customers.

I. PERFORMANCE BOND AND SUPPLY BOND


(The policy wordings for Performance & supply bond are the same.) General Under these bonds the Ethiopian Insurance Corporation (the surety) and the contractor are held firmly bound to the employer up to the amount stated in the Policy document. Both the Surety and the contractor bind themselves, their successors and assign jointly and severally firmly by these presents. Whereas the contractor has entered into a certain contract in writing with the Employer which contract with all its covenants and conditions is hereby made a part of this Bond to all intents and purposes as though the contract had been incorporated herein, including any duly authorized modifications of the said contract that may be made hereafter. Conditions 1. If the contractor shall well and truly and faithfully comply with all terms, covenants and conditions of the said contract, on its part to be kept and performed according to the tenor of the said contract; or if on default by the contractor the Surety shall satisfy and discharge the damage sustained by the Employer thereby up to the sum agreed then this obligation shall be null and void otherwise it shall remain in force and virtue; 2. This bond is executed by the Surety upon the following express conditions which shall be conditions precedent to the right of the Employer to recover hereunder. Provided always that:

2.1 upon the discovery by the employer or by the employer's agent or representative of any act or omission that shall or might

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involve a loss hereunder, the employer shall give immediate written notice thereof with the fullest information obtainable at the time of the Surety at its Head Office or Branch Office concerned; 2.2 if the contractor shall fail to comply with the provisions of the contract to such an extent that the contract shall be forfeited, the Surety shall have the right and opportunity to assume the remainder of the contract and at its option to perform or sublet the same; 2.3 in the event of any breach of the provisions of the contract, the Surety shall be subrogated to all the rights and properties of the contractor arising out of the contract. All deferred payments and all moneys and properties, that are then, or that may thereafter, become due to the contractor under or by virtue of the contract shall be credited upon any claim that the Employer may make upon the Surety.

II. BID BOND


Under this bond the Ethiopian Insurance Corporation /the Surety/ and the principal are held firmly bound to the obligee up to the amount stated in the policy document. Both the surety and the principal bind themselves, their successors and assign firmly by these presents. The principal should submit the accompanying bid which indicates date, detail information with which the principal intered the contract and the purpose or for what the contract is entered. Conditions:If the bid be accepted as to any or all of the items or materials and workmanship proposed to be furnished thereby or as to any position of the same, and if the principal will within the period specified thereof or, if no period be specified, within ten (10) days after notice of the award of the contract, enter into contract with the obligee, to furnish all work and materials at the prices offered by said bid, and will furnish bond with good and sufficient surety, for the faithful and proper fulfilment of such contract, then this obligation shall be void. And the Surety hereby binds itself and its successors to pay to the obligee, in case the principal fails to enter such contract and give such bond within the period specified thereof or if no period be specified, within ten (10) days after such notice of award of contract the difference in money between the amount of the bid of the principal on the work and material so accepted, and the amount for which the obligee may contract with others for such work and material, if the latter amount be in excess of the former, but in no event shall the surety's liability exceed the sum hereof.

III. ADVANCE PAYMENT BOND


Under this bond the Ethiopian Insurance Corporation /the Surety/ and the contractor are held firmly bound to the employer up to the amount stated in the policy document. Both the surety and the contrtactor bind themselves, their successors and assign jointly and severally firmly by these presents. Whereas the Contractor has entered in to a contract (a certain Contract) in writing with the employer related to for which and only purpose the Employer has agreed to pay to the CONTRATOR a sum of agreed amount upon presentation of an ADVANCE PAYMENT BOND for the same amount. Which agreement with all its covenants and conditions its hereby made a part of this BOND to all intents and purposes as though the ADVANCE PAYMENT AGREEMENT had been incorporated herein, including any duly authorized modifications that may be made hereafter. Conditions:1. if the Contractor shall well and truly and faithfully comply with all terms, covenants and conditions of the said Advance Payment, on its part to be kept and performed according to the Advance Payment Agreement; 2. or if in default by the contractor the surety shall satisfy and discharge the demand by the Employer thereby up to the sum of agreed amount; then this obligation shall be null and void otherwise it shall remain in force and virtue. 3. This bond is executed by the surety upon the following express conditions which shall be conditions precedent; to the right of the Employer to recover hereunder. Provided always that: 3.1 This original bond shall be returned to the Surety after the expiry date. Where no claim hereunder is received by the Surety from the Employer on or before the expiry date, this bond will automatically become null and void irrespective of its being returned

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to the Surety or not. 3.2 Upon the discovery by the Employer or by the Employer's agent or representative, of any act or omission that shall or might involve a loss hereunder, the Employer shall give immediate written notice hereof with the fullest information obtainable at the time to the Surety at its Head Office. 3.3 In the event of any breach of the provisions of the contract, the Surety shall be subrogated to all the rights and properties of the Contractor arising out of the Contract. All deferred payments and all money and properties, that are then, or that may thereafter; become due to the contractor under or by virtue of the contract shall be credited upon any claim that the Employer may make upon the surety. Exclusions: The Surety shall not be liable under this bond for any occurrence whether directly or indirectly caused by or arising out of: War, invasion, act of foreign enemy, hostilities or war like operations (whether war be declared or not) Civil war. Mutiny, civil commotion, popular rising, military rising, insurrection, rebellion, revolution, or usurped power, martial law or state of siege or any of the events or causes which determine the proclamation or maintenance of martial law or state of siege or any acts of terrorism. Earthquake, flood or other acts of God. Arbitration All differences arising out of this bond guarantee shall be referred to the decision of an Arbitrator to be appointed in writing by the parties in difference or if they cannot agree upon a single Arbitrator to the decision of two Arbitrators, one to be appointed in writing by each of the parties within one calendar month after having been requested in writing so to do by either of the parties or in case the Arbitrators do not agree of an Umpire appointed in writing by the Arbitrators before entering upon the reference. The umpire shall sit with the Arbitrators and preside at their meeting and the making of any award shall be a condition precedent to any right or action.

IV. PARTICULAR CUSTOMS BOND FOR THE RE-EXPORTATION OF TEMPORARLY IMPORTED GOODS DELIVERED WITHOUT PAYMENT OF DUTY AND TAXES
The insured hereinafter called the "Principal" (which expression shall include its successors/heirs, executors, administrators and legal representatives) and the insurers hereinafter called the "Surety" (which expression shall include its successors/heirs, executors, administrators and legal representatives) are firmly bound unto the Ethiopian Customs authority hereinafter called the "authority" (which expression shall include its successors and assigns) in the sum of agreed amount to be paid to the authority for which payment well and truly to be made bind every concerned body and whole heirs, executors, administrators and legal representative and every of them firmly by these presents. Scope of Cover Whereas the above bounden (principal) has temporarily imported into Ethiopia goods (hereinafter called the said goods) whose particulars stipulated in; clearly indicating invoice No. __ date __ under B/L, Airway, Bill, Truck way Bill, Cetme No. whereon:a. the import duties and taxes have not been paid, b. the above bounden is required to re-export the said goods within agreed date hereof or with in; such other time as the authority may allow and to produce export declaration as proof of accomplishing export formalities and freight declaration approved by customs exit office as proof of re-export of the said goods to the satisfaction of the authority, c. or otherwise to pay to the authority the full duties and taxes in respect of so much of the said goods as shall not have been reexported as per an appropriate permit from concerned body so proved as aforesaid. Conditions

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The above written particular customs bond has the following conditions: 1. if the above bounden (Principal) shall pay to the authority the full duties and taxes upon so much of the said goods as shall not have been re-exported and so proved as aforesaid and shall not sell or transfer or otherwise dispose of any or all of the said goods within Ethiopia with out the written permission of the authority; 2. upon re-export to produce export declaration as proof of accomplishing export formalities and freight declaration approved by customs exit office as proof of re-export of the said goods to the satisfaction of the authority; then this General customs bond shall be void, but otherwise shall be and remain in full force and virtue. And it is hereby agreed and declared by and between the parties as follows:I. This general customs bond is given under customs proclamation 60/1997 chapter seven. II. This general customs bond shall cover goods will be imported temporarily into Ethiopia under this guarantee, as aforesaid, from the date the customs bond officer signed on this general customs bond to a period specified herein before. III. The Surety has power and obligation to give this general customs bond without further deleyance in favor of the authority and the signatory of this bond on behalf of the Surety has full power to sign this bond.

V. PARTICULAR CUSTOMS BOND FOR TRANSITING GOODS IN ETHIOPIA


General: The insured hereinafter called the "principal" (which expression shall include its successors/heirs, executors, administrators and legal representatives) and the insurer hereinafter called the "Surety" (which expression shall include its successors/heirs, executors, administrators and legal representatives) are held and firmly bound unto the Ethiopian Customs Authority hereinafter called the "authority" (which expression shall include its successors and assigns) in the sum of agreed to be paid to the authority for which payment well and truly to be made bind both parties severally for and the whole heirs, executors, administrators and legal representative and every of them firmly by these presents. Cover Whereas the above bounden (principal) shall transit the uncustomed goods, by road from place of customs transit departure to place of customs transit destination. Conditions The above written particular customs bond has the following conditions. 1. if such goods and every part thereof shall be duly transited and produced to the proper customs officer at place of customs transit destination within the period specified by the customs for prescribed transit route, and 2. if no alteration or diminution in their quantity or quality (except such as may be accounted for to the satisfaction of the authority) shall take place in the said good, which are described in the Transit Permit Application and Freight declaration formats; during customs transit operation; 3. if the above bounden shall thereupon within 90 days deliver or cause to be deliver to the proper officer as aforesaid customs entries of all such goods to the satisfaction of the authority and in the case of goods not entered to home use or warehoused in pursuance of any entry for warehousing shall forthwith pay to the authority all duties and taxes due to it on such goods or account to the said goods in such other manner as the authority may direct; then this particular customs bond shall be void, but otherwise shall be and remain in full force and virtue. And it is hereby agreed and declared by and between the parties as follows:1. This particular customs bond is given under customs proclamation 60/1997 chapter seven. 2. This particular customs bond valid only for one transaction. 3. The surety has power and obligation to give this particular customs bond without further deleyance in favor of the authority and

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the signatory of this bond on behalf of the surety has full power to sign this bond.

VI. RETENTION BOND


General Under these bonds the Ethiopian Insurance Corporation (the surety) and the contractor are held firmly bound to the employer up to the amount stated in the Policy document. Both the Surety and the contractor bind themselves, their successors and assign jointly and severally firmly by these presents. The contactor has entered into a certain contract in writing with the employer mentioning all the necessary information indicated in the policy. The employer after having given the provisional acceptance, has agreed to enter into a contract with the contractor, to release the retained amount of money to the contractor before the expiry date of the maintenance period which contract with all its covenants and conditions is hereby made part of this Bond to all intents and purposes as through it is incorporated herein, including any duly authorized modifications of the said contract that may be made hereafter. Condition:1. if the contractor shall well and truly and faithfully comply with all the terms, covenants and conditions of the latter contract or in default by the contractor the surety shall satisfy and discharge the demand by the employer up to the sum agreed, then this obligation shall be null and void otherwise it shall remain in force and virtue. 2. This Bond is executed by the surety upon the following express conditions which shall be conditions precedent to the right of the employer to recover hereunder. Provided always that: 2.1 Upon the discovery by the employer or by the employer's agent or representative of any act or omission that shall or might involve a loss hereunder, the employer shall give immediate written notice hereof with the fullest information obtainable at the time of the surety at its Head Office; 2.2 In the event of any breach of the provisions of the agreement, the surety shall be subrogated to all the rights and properties of the contractor arising out of the contract. All deferred payments and any and all monies and properties, that are then, or that may thereafter, become due to the contractor under or by virtue of the contract shall be credited upon any claim that the employer may make upon the surety. Exclusions The Surety shall not be liable for any damage resulting from strikes, or labour difficulties, or from mobs, riots, fire , the elements, or Acts of God or for the repair or reconstruction of any work or material damaged or destroyed by any such causes, nor for damages for injury to persons, nor for the non-performance of any guarantees of the efficiency or wearing qualities of any work done or materials furnished or the maintenance thereof or repairs thereto, not for the furnishing of any bond or obligation other than this instrument.

VII. MAINTENANCE BOND


General Under these bonds the Ethiopian Insurance Corporation (the surety) and the contractor are held firmly bound to the employer up to the amount stated in the Policy document. Both the Surety and the contractor bind themselves, their successors and assign jointly and severally firmly by these presents. Maintenance bond is given when the contractor has entered into maintenance contract in writing with the employer for specified period and duty. The contract with all its covenants and conditions is hereby made a part of this bond to all intents and purposes as though the maintenance contract had been incorporated herein, including any duly authorised modifications of the said maintenance contract

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that may be made hereafter. Conditions 1. if the contractor shall well and truly and faithfully comply with all terms, covenants and conditions of the said maintenance contract, on its part to be kept and performed according to the tenor of the said maintenance contract; 2. or if on default by the contractor the surety shall satisfy and discharge the damage sustained by the employer thereby up to the sum of agreed amount. Then this obligation shall be null and void otherwise it shall remain in force and virtue. 3. This bond is executed by the surety upon the following express conditions which shall be conditions precedent to the right of the employer to recover hereunder. Provided always that: 3.1 upon the discovery by the employer or by the employer's agent or representative of any act or omission that shall or might involve a loss hereunder, the employer shall give immediate written notice thereof with the fullest information obtainable at the time to the surety at its head office or branch office concerned; 3.2 If the contractor shall fail to comply with the provisions of the contract to such an extent that the contract shall be forfeited, the surety shall have the right and opportunity to assume the remainder of the contract and at its option to perform or sublet the same. 3.3 in the event of any breach of the provisions of the contract, the surety shall be subrogated to all the rights and properties of the contractor arising out of the contract. 3.4 All deferred payments and all money and properties that are then, or that may thereafter, become due to the contractor under or by virtue of the contract shall be credited upon any claim that the employer may make upon the Surety. 4. No change shall be made in the plans and specifications forming part of the contract that shall increase the amount to be paid to the contractor by more than 5% unless the surety's consent thereto shall be secured in writing. 5. The guarantee given by this particular Maintenance Bond shall be governed by the suretyship provision of the civil code. Exclusion The Surety shall not be liable for any damage resulting from strikes or labour difficulties or from mobs, riots, fire, the elements, or acts of God or for the repair or reconstruction of any work or material any such cause; nor for damages for injury to persons, nor for the non-performance of any guarantees of the efficiency or wearing qualities of any work done or materials furnished or the maintenance thereof or repairs thereto, nor for the furnishing of any bond or obligation other than this instrument. Arbitration With the exception of the instances where differences may not be submitted to arbitration according to article 315 (2) of the code of civil procedure, all differences arising out of this bond guarantee shall be referred to the decision of an Arbitrator to be appointed in writing by the parties in difference or if they cannot agree upon a single Arbitrator to the decision of two Arbitrators, one to be appointed in writing by each of the parties within one calendar month after having been requested in writing so to do by either of the parties or in case the Arbitrators do not agree of an Umpire appointed in writing by the Arbitrators before entering upon the reference. The umpire shall sit with the Arbitrators and preside at their meeting and the making of any award shall be a condition precedent to any right or action. Note This brochure is prepared to elaborate about "Bond Insurances". Provided by the Corporation. Therefore, legally it shall not come to force.

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