Foreign Capital Outflow Regulation under Ethiopian BITs and Domestic Investment Laws

  • Zakariyas Berhanu Tufa
Keywords: Bilateral investment treaties, capital account, current account, foreign direct investment, foreign capital, foreign investors

Abstract

In foreign investment, investors need to repatriate their capital and the investment returns to their home country or third country at any time they want. On the other hand, host states require foreign capital for balance of payment and need to control capital outflow in fear of large currency outflow. At the same time, states, particularly developing ones, need to attract foreign investment. In this regard, states’ regulation of foreign capital outflow has significant implication. Like others, Ethiopia attempts to regulate repatriation of investment capital and its returns through its BITs and domestic investment laws. The aim of this Article is to investigate whether the Ethiopian investment laws are designed to meet the development need of the country when they regulate repatriation of foreign investment. To this end, the Article examines the relevant provisions of Ethiopian BITs and domestic investment laws. It also consults relevant literatures and foreign experiences. By so doing, it reveals that most of the Ethiopian BITs fully liberalize repatriation of investment capital and its returns which may affect the ability of the country to control capital outflow. Besides, the domestic investment laws are not clear enough on whether they allow repatriation of foreign capital though they expressly allow the repatriation of current account transactions. This could affect the objective of attracting foreign investors to come to Ethiopia. Accordingly, the BITs and domestic investment laws shall be revisited to allow the country to control foreign capital outflow when it is necessary and to create certainty for the foreign investors about the possibility and conditions of investment repatriation.

Published
2018-11-29
Section
Articles