Ethiopia ratifies new investment law to attract FDI

The House of Peoples’ Representative of Ethiopia on Thursday ratified investment law that envisages to further opening up economy and attracting more foreign direct investment (FDI) to Country.

A Joint report by The House’s Trade and Industry Affairs Standing Committee, and Revenue, Budget, and Finance Standing Committee indicated that the law will also promote the transfer of technology and skills and creation more jobs while contributing to the coming of transparent and effective investors to the landscape.



The proclamation with 57 article in the ten parts will, among others, create enabling investment landscape to private participation and accelerate the country’s all- round development.

Any foreign investor, to be allowed to invest under this Proclamation, shall be required to allocate a minimum capital of $200,000 for a single investment project.

But the minimum capital required of a foreign investor jointly investing with a domestic investor shall be $150,000.

It is also stated that the minimum capital required of a foreign investor investing in architectural or engineering works or related technical consultancy services, technical testing and analysis or in publishing works shall be:
a) $100,000 if the investment is made on his own;
b) $50,000 if the investment is made jointly with a
domestic investor.

It is stated that the objectives of the new investment law of Ethiopia include the following:

– to enhance the competitiveness of the national economy by promoting investments in productive and enabling sectors;

– to create more and better employment opportunity for Ethiopians and advance the transfer of knowledge, skills and technology required for the development of the country;

– to increase foreign exchange earnings by encouraging the expansion in volume, variety and quality of the country’s export products and services;

– to save foreign exchange through local production of import substitutes;

– to augment the role of the private sector in the country’s economic development;

– to exploit and develop natural, cultural, and other resources of the country;

– to create an integrated economy by strengthening inter-sectoral and foreign-domestic investment linkages and;

– to encourage socially and environmentally responsible investments.

The law also stated that investment permit of an investor shall be suspended if the investor:

– fails to submit accurate and timely information or project implementation report requested by the appropriate investment organ pursuant to this Proclamation, or intentionally or negligently presents incorrect report;

– obtains the investment permit or secures its renewal fraudulently or by submitting a false information or statement;

– uses the investment permit incompatibly with the objective for which it was issued;

– fails, without good cause, to renew the permit in accordance with the requirements specified in this Proclamation and regulations issued hereunder;

– violates the provisions of this Proclamation, or regulations and directives
issued to implement this Proclamation, or other pertinent laws.