Unraveling the legal and regulatory framework for investment in Ethiopia : an in-depth gap exploration and analysis

Abstract

Investment is perceived as an important source for enhanced economic growth, despite contrasting views, in many countries, especially developing countries. It can pave the way for knowledge transfer, provide employment opportunities, and stimulate capital with appropriate regulations and effective implementation. To harness the benefits of investment, putting in place a good legal and regulatory framework for investment is essential. Ethiopia is one of the countries in the world that aspires to increase both foreign and domestic investment. This research assesses the legal and regulatory framework for investment in Ethiopia. It commences with an overview of the private sector liberalisation reforms and policies that took place in Ethiopia. Subsequently, it provides an overview of the relevant legislation governing investment and the regulatory framework. An analysis of the existing gaps and challenges in the legal and regulatory framework for investment is provided in the research, and finally, it evaluates whether the African Continental Free Trade Area (AfCFTA) Protocol on Investment addresses some of these challenges and gaps. Even though the investment legal framework was recently revised, challenges and gaps are still apparent in the legal and regulatory framework. With the current willingness and attempt to liberalise most closed sectors in the country for investors, it is relevant to analyse the gaps and challenges. The gaps are a roadblock to the effective realisation of creating an enabling investment environment. Lack of commitment to address such challenges undermines efforts to attain a good investment climate. Finally, this research concludes by providing recommendations on the apparent challenges and gaps.