ETHIOPIA Trends and Developments Contributed by: Getu Shiferaw, Awoke Mitku, Gutema Kajela Ejeta and Debora Belachew, Mehrteab & Getu Advocates LLP
The trade sector (wholesale, retail, import and export) Investment Regulation No 474/2020 initially shielded wholesale, retail and import trade, as well as the export of some goods, from foreign investment competition. However, recognising that the policy objective of building a sustain - able national economy anchored in domestic capabilities was not fully realised, the Ethiopian Investment Board’s Directive to Regulate For - eign Investors’ Participation in Restricted Export, Import, Wholesale and Retail Trade Investments No 1001/2024 was issued in March 2024. This Directive lifts restrictions previously laid down on these trade sectors, allowing foreign investors to participate therein upon fulfilment of certain prescribed conditions. Foreign investors who want to engage in these trade sectors in the Ethiopian market need to enter into an agreement with the EIC, and renew - al of their licence depends on the fulfilment of the commitment undertaken in an agreement. Unlike other foreign investments, the licensing authority for foreign investors in trade sectors is the Ministry of Trade and Regional Integration (MoTRI). Therefore, to initiate trade in any of the above sectors, investors must apply to MoTRI As part of the government’s plan to liberalise the Ethiopian investment market for foreign inves - tors by creating a conducive investment environ - ment, a number of laws have been enacted, and old laws amended, since 2018. The amendment of all the old foreign exchange laws and enact - ment of the Data Protection Proclamation are among the legal developments. to obtain a business licence. Recent Legal Developments
• introduced statutory mergers, in addition to voluntary mergers, of banks, with the aim of rescuing problem banks and creating more viable and stronger institutions; and • mandates that a national financial crisis man - agement committee develop a robust finan - cial crisis management framework. Payment systems Prior to 2023, foreign investors were not allowed to operate payment systems in the Ethiopian market. However, in February 2023, the Ethio - pian Parliament issued National Payment Sys - tem (Amendment) Proclamation No 1282/2023, which allows foreign investors to engage in the payment system business in the Ethiopian mar - ket. Foreign investors can establish and register a subsidiary company, and be licensed as pay - ment system operators, to engage in payment system business – ie, to a operate payment sys - tem allowing for the routing, matching, clearing, netting and settlement of payment instructions in Ethiopia. Licences that can be obtained by payment system operators under Ethiopian law are: • a national switch operator licence; • a switch operator licence; • an automated teller machine operator licence; • a point-of-sale machine operator licence; and • a payment gateway operator licence. The licensing authority of payment system oper - ators is the National Bank of Ethiopia (NBE). Once a foreign investor establishes its subsidiary company and obtains its commercial registration certificate from the Ethiopian Investment Com - mission (EIC), it can apply to the NBE for one or more of the above-listed licences to operate a payment system in the Ethiopian market.
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