Legal requirements to invest in Ethiopia and rights of investors
Gebreala Gebri 3 Jan 2019

Legal requirements to invest in Ethiopia and rights of investors

Ethiopia highly encourages foreign direct investment. To get the best out of foreign investment in the country, Ethiopia has issued a number of regulations. One of the most vital rules is the Investment Proclamation. As a post-socialist country, Ethiopia has opened sectors for private investment in various fields. However, there are minimum capital requirements that an investor shall bring into the country for foreign investment.  A foreign investor that would like to invest in the country shall bring in USD 200,000 for a wholly foreign owned investment. This capital requirement is lowered to USD 150,000 when it is a joint investment between a foreign investor and a domestic investor. An investor that desires to invest in the consultancy field is required to bring in USD 100,000 which is USD 50,000 when it is a joint investment with a domestic investor.

Apart from minimum capital requirements, the law imposes that any investor before engaging in any investment activity shall be issued with an investment permit. The investor shall fulfill documents required by law to be issued with investment permit by the Ethiopian Investment Commission. If the investor fails to commence its operation within the time required, the investment permit will be revoked. Before engaging in selling products and services, any investor is required to be issued with business license. Most business licenses are obtained from Ministry of Trade and Industry. Both investment permit and business licenses shall be renewed each year at the authority where the documents are first issued.

Foreign investors have rights guaranteed under the law. Investors have the right to employ managerial level expatriates without any restriction. Investor also can employ foreign experts but shall replace them with domestic employees by providing training to domestic employees. In addition, guarantee to repatriate profits and dividend is provided under the investment proclamation with list of funds eligible for remittance. 

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