In its latest session held last Friday, the Council of Ministers approved the investment regulation that follows a negative listing approach and effectively opens up various sectors for foreign investment.

Tabled over a month ago by the Ethiopian Investment Commission (EIC), the regulation exhaustively listed sectors open for foreign investment, sectors reserved for domestic investors, joint investment with the government and joint investment with domestic investors. The regulation also opens any unmentioned sectors to foreign investors.

Drafted alongside the proclamation, it went through consultations that involved various government bodies and members of the private sector, according to Anteneh Alemu, deputy commissioner in charge of investment operations at the Ethiopian Investment Commission.

"By opening up sectors that haven't been namely listed out to foreign investment, the regulation has loosened bottlenecks that were hampering foreign investment," he said. "Corporate investors were discouraged since the old law had a restrictive and segmented nature. Now, with this revision, investors can own complete chains of their businesses."

Three years ago, the country attracted 4.1 billion dollars worth of foreign direct investment, which went down to three billion dollars in the 2018/19 fiscal year.

This is a big paradigm shift, according to Addis Barega, senior legal advisor to the Commission.

“Switching to a negative listing approach is one main method of promoting investment recognised in international jurisdictions,” Addis said.

The newly approved regulation also effectively puts an end to government monopolies in investment sectors. The regulation enumerates joint investment sectors with the government to include international air transport services, the import and export of electricity, transmission and distribution of electrical energy through an integrated national grid system, as well as postal services.

Unlike the repealed regulation, there are no sectors exclusively set aside for the government.

"These are now sectors that, when and if the government does decide to privatise, the legal framework is already in place," said Mekdes Mezegebu, attorney at law and consultant that worked on the drafting of the investment proclamation.