The Law and Policy of Foreign Investment Promotion and Protection in Ethiopia: An Appraisal of Theories, Practices and Challenges

Abstract

This article explores selected and topical features of Ethiopian foreign direct investment (FDI) law and practice in light of the laissez-faire (or liberal) and statist approaches to promoting and governing inward foreign investment. It particularly focuses on entry and operational requirements, including the extent to which some economic sectors are restricted to foreign investors, the rules of local content with emphasis on local employment, protection offered to investors and their investment, the aggressive state intervention in facilitating and attracting FDI and some of the challenges affecting FDI such as the controversial large-scale land deals between the government and foreign investors. By applying general doctrines and approaches of FDI law, it argues that the Ethiopian FDI legal framework is consistent with the trends and foundational standards of international investment law (IIL); it further finds that Ethiopian FDI law and practice are predominantly statist. While this approach to FDI can be acclaimed for attracting foreign investment and helping economic growth in developing countries like Ethiopia, lack of transparency, accountability and lack of strict adherence to local content rules and policies raise concerns. Addressing the various governance and other interpretive and technical challenges would be vital to building a healthy, sustainable and fair (foreign) investment regime to those who invest, to communities and to the country at large.