Adoption of new investment liberalisation measures

07 Sep 2020

The Investment Regulation No. 474/2020, which was adopted on 7 September 2020, opens the transport services sector. Previously, the provision of transport services, including air, railway, ground and marine transport was closed to foreign investment. The Regulation lifted this restriction to allow foreign investment in the following transport services areas: railway transport, cable car transport, cold-chain transport and freight transport.

Also, more transport services are partially liberalized for joint investment with domestic investors. Article 5 of the New Regulation introduces a new category of sectors, where foreign investment is permissible if it is carried out as a joint venture with domestic investors. The Regulation lists seven sectors where foreign investment is permissible up to a maximum of 49% ownership ceiling. These are: freight forwarding and shipping agency services; domestic air transport services; cross-country public transport service using buses with seating capacity of more than 45 passengers; urban mass transport service with large carrying capacity; advertisement and promotion services; audio-visual services; motion picture and video recording, production and distribution and accounting and auditing services.

Further, through the Negative List, the New Regulation reverses prohibitions that were introduced in 2012 under the "old" Regulation. For example, foreign investment in health services, which was previously limited to foreigners willing to construct hospitals is now open at all levels, except in small and medium health services. Further, restrictions in cement manufacturing, education, management consultancy and other services have been removed under the new Regulation.

Furthermore, the Regulation relaxes retail trade and electronic commerce as follows: Under the previous law, foreign investors engaged in the manufacturing sector were only permitted to wholesale their own products. Retail of own products were not permitted and could only be carried out through local intermediaries. Like wholesale trade, the new Regulation exempts retail trade carried out via electronic commerce from such restriction. Finally, Article 6 (4) of the Investment Proclamation authorizes the Ethiopian Investment Board to revise any of the sector listings provided in the new Regulation if and when it deems necessary.