Abstract:
Ethiopian investment legal regime and policy have the mission of enhancing investment and
promoting investment opportunities through creating conducive investment climate for investors
so as to bring economic development in the country. Foreign investors aim to generate profit
and repatriate their capital including returns to their home country or to third country at any
time they want, while the host countries including Ethiopia also requires foreign capital for
balance of payment as well as need to control capital outflow in fear of large currency transfer,
causing financial instability. Countries are free to exercise capital flow liberalization or control
based on their economic and financial development standards while concluding BITs at
international level. Except few BITs, most Ethiopian BITs allow foreign investors to fully
repatriate their investment (capital) and returns at any time they want, while the stands of
domestic investment laws are not clear in relation to capital repatriation from foreign
investment, but expressly allow the repatriation of current account transaction like profit,
dividend etc. This study aims to investigate whether Ethiopian investment legal regime on
foreign capital outflows are designed to meet the developmental policy objectives of the country.
In doing so, doctrinal and comparative legal research method is applied using both primary and
secondary source of data to critically analyze the structural and application of the relevant legal
regimes. The study reveals that there exist discrepancy between Ethiopian BITs and domestic
investment laws and practice in regulation of capital outflow liberalization; and also the
liberalization strategy of Ethiopian BITs would pose treat for the country to control capital
outflow. The concept of full liberalization of foreign capital outflow under Ethiopian investment
legal regime requires to be compatible with the developmental needs of the country. Laws and
policy decisions made in relation to foreign capital outflow liberalization from foreign
investment need evaluation by its pros and cons for development and the economical power of
the country. Thus, the foreign capital outflow liberalization standards of Ethiopian investment
law and relevant regulatory measures require rethinking to make it compatible with the
development needs of the country.
