Investors across the world should be interested in Ethiopia ’s new investment law even though the new law will however not open up the country’s banking and insurance space to foreign ownership.
According to the text of the new law, it is aimed at producing an “economic framework that fast-tracks the global competitiveness of the national economy, increases export performance, generates more and better employment opportunities.”
Here Is All You Need To Know
- The new law will allow public-private partnerships in the areas of manufacturing of military weapons, international airport transport service, import and export, power distribution through the integrated national grid system and postal services with the exception of courier services.
- Ethiopia ‘s new investment law partly opens Ethiopia’s logistics service provision, air transport services, inland public transport and freight transport to foreign investment. But non-national investors or businesses not based in Ethiopia must form joint ventures with local players and will have to abide by a share capital cap of 75 per cent.
- Again, under the new law non-nationals will also not be able to hold more than 49 percent of shares in companies engaged in advertising, audiovisual production, accounting and auditing, and mass media services. They can also now engage in capital goods leasing and management consultation.
- The new law, however, did not open up Ethiopia’s banking and insurance firms to foreign ownership, even as it clears the way for overseas investors to buy into other sectors of its economy.
- The law says that banking, insurance, micro-credit and micro-saving services will be reserved for domestic investors. Foreign involvement in the sector has not been allowed ever since the Dergue regime in 1974.
- The country’s banking sector, dominated by the two oldest and most profitable institutions — Awash Bank and Dashen, is still one of the most tightly state-controlled in Africa.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.
He could be contacted at udohrapulu@gmail.com