The Regulation of Brownfield Foreign Direct Investments under Ethiopian Laws

Abstract

Foreign direct investment has a big importance in the development of certain economy. Brownfield investment is one option of foreign direct investment. Ethiopia enacted investment law and modified legal and institutional aspects towards the brownfield investment. The ultimate objectives of investment laws are to attract, Promote and protect foreign direct investment. In order to achieve these ultimate goals, it needs to have comprehensive legal and institutional framework that can able to go with a global change and compete with other jurisdictions. Ethiopia enacted Investment law that regulates legal and institutional framework that governs Brownfield investment. When the regime is analyzed and compared with other parts of the world; the findings of this thesis reveal that even though Ethiopia has put in place the relevant laws and institutions to regulate brownfield FDI; Both Brownfield FDI and domestic investments are regulated under the same proclamation and regulation. There is no separate law and separate objectives given for brownfield FDI. The regime has no clear objectives and has no investment promotion strategy. It focus on administrative than promotive, the regime does not defined what is brownfield investment mean. The nature and scope of brownfield investment under regime is acquisition (buying of the enterprises or share of it) which is too narrow scope. But, the scope of brownfield investment according to other experience includes merger and acquisition. During acquisition the regime is not comprehensive in dealing with all substantive and procedural wise of brownfield FDI. The Ethiopian investment policy is not fully liberalized. For that matter sensitive area of Brownfield investment and important productive sectors are not open to Brownfield investment. Absence of intangible capital and non-freely convertibility of currency in the market, administrative and procedural barriers that leads foreign investor to come across through ministry of trade, ministry of revenues and EIC is the reverse of one stop shop service principle. Therefore it needs to revise the Brownfield investment policy and investment law.