Make Joint Venture
Foreign investment inflows through joint ventures especially with the Government of Ethiopia (GOE) are encouraged by the Government of Ethiopia. According to Ethiopian Legal system a foreign investor may team up with a domestic investor or company for a joint investment, usually in the form of a partnership, or private limited company or share company.
Under the Investment Proclamation No.280/2002, a minimum capital of USD 60,000, except in consultancy services and publishing, is required from a foreign investor who intends to enter into a joint venture partnership with a domestic investor. There is no restriction at all in share ownership in a joint venture.
A foreign investor who wishes to invest in partnership with domestic investor/s in areas of engineering, architecture, accounting and auditing services, project studies or business and management consultancy services or publishing is required to invest only USD 25,000 per project. The foreign partner can satisfy this minimum equity capital either in cash and/or in kind.
The following are the major criteria for GOE approval of joint venture proposals:
- Transfer and adaptation of needed technology into the country.
- Improvement of the country’s foreign exchange position via exports.
- Enhanced import substitution for local industries that reduce the pressure on foreign exchange demand.
- Utilization and development of the country’s resources, mainly the generation of local employment opportunities.
- Development of forward and backward linkages, and increased added value in various economic sectors.
Formerly closed sectors such as Ethiopian Airlines, Ethio Telecom, Ethiopian Shipping and Logistics Enterprise, Ethiopian Electric Power, Ethiopian Sugar Factories, Ethiopian Railways and Industrial Parks will all be floating shares to both local and foreign investors, with the government maintaining majority shares.
