Why Ethiopia

Since 2007, Ethiopia has emerged as one of the world’s fastest growing economies, achieving growth rates of over 10% per year. Increasing FDI flow has been one of the key determinants of our growth. To accelerate this, we have been implementing a homegrown economic reform agenda since 2019, which included several reforms to improve the investment climate.

One of the key investment climate reforms we introduced was in the form of the 2020 new investment proclamation. Through the new proclamation, we have removed the former restrictive investment entry legislation and opened all economic sectors except for a few that are fully/partially reserved for domestic investors for FDIs. Newly opened sectors include telecom, logistics, diagnostics, cold chains and management consultancy are more. This has made the FDI entry process transparent and straightforward, opening the broader economy for FDI participation and making the investment legislation future-proof.

We have also introduced several reforms that allow investors to have 5-years multiple entry visa, enabling cohabitating spouse the right to work in Ethiopia, abolishing minimum capital requirement for reinvestment in any business, broadening definition of and protection for investment (including recognition of intellectual property rights as investments), expanding one-stop-shop services, creating a defined process for investor grievance handling, establishing a federal-subnational governments coordination platform, introducing private sector representation in the Ethiopian Investment Board and improving clarity and transparency of investor services.

This effort has won us the Gold Award of the WAIPA-World Bank’s ‘Strengthening IPA’s Advocacy Services’ Global Competition 2021.

Improving the investment climate in Ethiopia is not limited by a single revision of the investment law but with a series of multi-ministerial reforms. Since the Doing Business Initiative was launched in 2018, we have implemented eight new laws and 40 procedural and administrative reforms that have eased key business processes have been introduced. In addition, we are making several reforms to improve administration of incentives, management of foreign currency, labor laws, etc. that are enabling market-led growth and attracting FDI.

What people are saying

The General Manager of the Amcham Ethiopia: “The negative list approach will help attract investors who have been on the sidelines, but couldn’t legally enter the market, I think we’ll see a huge drive of joint foreign direct investment ventures.”

Vivianne Infante, Country Representative of the CDC Group: “Imagine having an opportunity to enter a new telecoms market, which gives investors access to Africa’s second-largest population. With the right regulations, the sky is the limit. And that’s because this situation doesn’t just offer commercial opportunity—it also offers access to services which have been proven to have a significant positive impact on people’s lives elsewhere on the continent”.

Zemedeneh Negatu, Global Chairman of Fairfax Africa Fund: “The government’s reform…enhance investors’ confidence. The reform is backed by serious money and commitment from the top leadership. That’s why we are confident it’s going to succeed.”