AACCSA

The country has untapped resources along with favourable investment code. As a result, a foreign direct investment is on the increase in the areas such as cut flower, Garment, meat processing, etc,. from time to time. Foreign investors from different part of the world including Europe, the Middle East, North America, Asia and Africa are investing their capital in the country.

The 1995 Constitution of the Federal Democratic Republic of Ethiopia is the supreme law of the country. It recognizes the right of individuals to acquire and own property. The Investment Proclamation No 280/2002 (as amended by proclamation no.375/2003 ), the 2003 Regulations on Investment Incentives, and the Mining Proclamation no. 53/93 and the Mining Operations Regulations of 182/94 constitute the main legal framework for both foreign and domestic investments in Ethiopia. The Commercial Code of 1960 also provides the legal base for undertaking business activities in the country.

Proclamation 280/2002 with an amendment made by the proclamation no 375/2003 enacted with a view to:

Encouraging and promoting the role of the private sector in the economic development of the country;
Widening the scope of participation of foreign investors
Creating transparent and efficient system of investment administration.

The Investment Proclamation No.280/2002 (as amended) provides that a foreign investor can undertake investment either:

As a sole proprietor, with full equity ownership (100% equity ownership); or
Jointly or in partnership with domestic investor(s), or the Government.

The Law also stipulates the following capital requirements:

A minimum capital of $100,000 for a single investment project in cash and/ or in kind for wholly foreign owned investments;
A minimum capital of $50,000 in cash and/ or in kind per project in areas of engineering, architecture accounting and audit services project studies or business management consultancy services; or publishing.

A foreign investor intending to invest in partnership with domestic investors is required to invest a minimum capital of:

$60,000 in cash and/or in kind per project; or
$25,000 in cash and/ or in kind if the investment is made in the aforementioned areas.

Areas open for joint venture investment with the Government are manufacturing of weapons and ammunition, and telecommunication services.

Foreign investors must have their investment capital, external loans and suppliers' or foreign partners' credits registered with the National Bank of Ethiopia (NBE).

Investments in Ethiopia are protected and guaranteed against any non-commercial risks by domestic and international laws that the country has ratified.

The Constitution of 1995 and the Investment Proclamation No 280/2002 (as mended) provide for protection against the expropriation and nationalization of investments in the country. In case of expropriation or nationalization, dictated by public interest, the Constitution and the Investment Law guarantee that adequate compensation, corresponding to the prevailing market value be made in advance and promptly.

Labour disputes arising between employees and employers or trade union and employers are settled amicably through negotiations or conciliation between the two parties.

Ethiopia is a member and signatory of several international agreements for the protection of foreign investments and the settlement of investment disputes arising between the Government and investors including:

In addition to multilateral agreements or treaties, Ethiopia has signed bilateral treaties for Investment Protection and Promotion with Algeria, Austria, China, Denmark, Finland, France, Germany, Iran, Israel, Italy, Kuwait, Libya, Malaysia, the Netherlands, the Sudan, Sweden, Switzerland, Tunisia, Turkey and Yemen. Download full Document