Understanding Ethiopia’s laws on foreign investment, repatriation and dividends
Understanding Ethiopia’s laws on foreign investment, repatriation and dividends is essential for anyone considering investing in the country. Ethiopia, a country rich in natural resources and economic potential, has been actively encouraging foreign direct investment (FDI) to stimulate economic growth and development. In this blog post, we will explore the regulations and provisions in place to facilitate capital repatriation and the remittance of dividends from Ethiopia.
Investment Proclamation: Guaranteeing Repatriation Rights The Investment Proclamation, enacted by the Ethiopian government, serves as the foundation for foreign investment in the country. Among its key provisions is the guarantee of repatriation rights for foreign investors. This means that any foreign investor, with an approved investment, has the privilege to transfer funds out of Ethiopia in convertible currency at the prevailing exchange rate on the date of remittance.
Understanding Repatriation Allowances: Let’s delve into the specific remittance categories outlined in the Investment Proclamation, enabling foreign investors to repatriate their capital and earnings:
- Profits and Dividends: Foreign investors are entitled to transfer profits and dividends resulting from their investments outside of Ethiopia. This provision ensures that investors can enjoy the returns on their investments without any undue restrictions.
- Principal and Interest Payments on External Loans: Foreign investors can make repayments of principal and interest on external loans using convertible currency. This provision enables investors to manage their financial obligations and ensures the smooth flow of capital.
- Payments for Technology Transfer and Management Agreements: To encourage knowledge transfer and expertise, foreign investors can remit payments related to technology transfer or management agreements. This provision facilitates the transfer of advanced technologies and managerial skills, benefiting both investors and the Ethiopian economy.
- Sale or Liquidation of an Enterprise: In the event of the sale or liquidation of an enterprise, foreign investors have the right to repatriate the proceeds. This provision offers flexibility to investors who may choose to divest their investments or wind up their business operations.
- Sale or Transfer of Shares to a Domestic Investor: Should foreign investors decide to sell or transfer shares or partial ownership of an enterprise to a domestic investor, they can repatriate the proceeds. This provision supports domestic investors’ participation in the Ethiopian market while granting foreign investors the freedom to manage their investment portfolios.
- Compensation for Foreign Investors: In cases where foreign investors are eligible for compensation, they are permitted to repatriate the awarded amount. This provision ensures that investors are protected and encourages confidence in the Ethiopian investment environment.
Remittances for Expatriates: The Investment Proclamation also addresses the remittance of funds for expatriates employed in Ethiopian enterprises. Expatriate workers can transfer their salaries and other payments, in convertible foreign currency, in accordance with the foreign exchange regulations or directives of the country. This provision acknowledges the contributions of foreign professionals and their right to enjoy their earnings.
Conclusion: Ethiopia’s Investment Proclamation establishes a solid legal framework that safeguards the rights of foreign investors. By guaranteeing capital repatriation and the remittance of dividends, the government aims to create an attractive investment environment and foster economic growth. These provisions not only provide security to investors but also encourage knowledge transfer, promote technology sharing, and facilitate financial stability. As Ethiopia continues to open its doors to foreign investments, it is poised to become a hub for international business ventures, contributing to its own development and the prosperity of its partners.
If you have an additional question or comment or need to get a practical legal support in this regard please Contact us.
Note: This guide provides vital information on Ethiopian Investment law and practice and is not intended to substitute professional advice given with full knowledge of the specific circumstances of each case and proficiency in the law of Ethiopia such as might be provided by an Investment Attorney or Investment lawyer in Ethiopia. Such information about Investment in Ethiopia can be available from an Ethiopian Investment Lawyer, Ethiopian Tax lawyer, Ethiopian Employment Lawyer, Ethiopian Labour Relationships Lawyer, Ethiopian Immigration lawyer.
