GENERAL INVESTMENT POLICY DESCRIPTIONS AND ADMINISTRATION

A. FOREIGN INVESTMENT

Ethiopia has untapped resources along with a favorable investment code. As a result, Foreign Direct Investment (FDI) is on the increase in areas such as cut flower, garment, meat processing, etc. Foreign investors from different parts 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 (FDRE) 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 frameworks for both foreign and domestic investments in Ethiopia. The Commercial Code of 1960 also provides the legal basis for undertaking business activities in the country.

Proclamation 280/2002 amended by Proclamation no 375/2003, was 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 a 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.