Fortune News | Jun 04,2022
Nov 9 , 2019
By Dawit Tadesse
The current Ethiopian government has been working hard for the last year to reform the economic road map of Ethiopia. The Homegrown Economic Reform Agenda has been introduced. To implement this policy on the ground, the government has been revisiting Ethiopian investment proclamations.
I believe revising these laws is commendable, but this revision will not radically change the business environment of the country. The major revision in these laws is just to open some sectors for foreign investors and reducing the confining nature of the laws on the books.
However, the major problem of doing business in Ethiopia emanates from the Commercial Code and related laws. The Ethiopian business laws such as the investment proclamations are good enough to attract domestic and foreign investment into Ethiopia, but the problems start to happen after these investments begin to operate in the country. This is because most of the business laws and regulations including tax laws are not clear or updated. As such, they are subject to different interpretations.
Therefore, the Ethiopian government must do major surgery on business laws, especially on the Commercial Code, to radically change the business environment of Ethiopia.
The existing Commercial Code of Ethiopia was ratified in 1960. Despite its strong qualities, it fails to fully address the dynamism of commercial transactions of the real and virtual world. The amendment of the Commercial Code was among the suggested recommendations of the World Trade Organization. It has been a while since the then Ministry of Justice (currently renamed the Office of the Attorney General) has been working on the revision of the Code even if no one seems to know when this revision will be finished and ready for implementation.
The 1960 Commercial Code of Ethiopia is comprised of five books with each having several titles, chapters, sections and hundreds of individual articles covering a range of matters in the field of commerce. It was drafted long before many of the financial innovations and technologies of today.
The world has changed. There are new things like virtual companies, digital currencies, electronic contracts, digital signatures, data protection and e-commerce that were not part of the 1960s business world.
Of course, it is understandable that the revision exercise of such an important branch of private law with close to 1,200 articles is a relatively tedious and cumbersome undertaking. It requires looking into the subject matter intended to be regulated by every single article and drawing comparisons with a host of related legal, organisational and economic concepts. A summarized position paper on the revised draft version is quite difficult to come by.
However, the law has to be drafted to enable businesses to create jobs, prosperity and make innovations easy to compete in the global village. As an investment advisor and academic in Ethiopia, I am working with many international investors and the local business community. I have many opportunities to listen to the demands of these investors. One of their major demands is the revision of the Commercial Code and its rapid implementation on the ground.
The delay of the Commercial Code revision makes many international investors slow down their investment decisions to invest in Ethiopia. It is very difficult for rational investors to commit their resources in a country where its commercial transactions are governed by outdated laws and regulations drafted close to 60 years ago.
The current government desperately needs to grow the economy. But it will not achieve this goal without creating a conducive environment for doing business through drafting and implementing a revised version that addresses the dynamism of commercial transactions in the business world today.
The government must accelerate the revision and in the meantime update the progress of the revision to the business community and other stakeholders regularly. That will help the business community in investment planning.
There should be better transparency and collaboration with the business community. If the government is constrained by lack of resources or expertise, it should work closely with the business community and other stakeholders to fill that gap. There are many stakeholders who have a big interest in this code revision who will only be too happy to help.
If the law is badly drafted with little emphasis given to innovation and modern businesses, it will be a major impediment for the country. Achieving this aim will not be an easy task, and it needs a lot of able lawmakers with a broader view of the world and in-depth intellectual capital.
The current government’s effort to reform the economy must go hand in hand with the quick revision of the Commercial Code and its rapid implementation on the ground. In this dynamic business environment, to provide what businesses need on time is a wise choice.
PUBLISHED ON
Nov 09,2019 [ VOL
20 , NO
1019]
Photo Gallery | 96139 Views | May 06,2019
Photo Gallery | 88399 Views | Apr 26,2019
My Opinion | 66994 Views | Aug 14,2021
Commentaries | 65716 Views | Oct 02,2021
My Opinion | Apr 13,2024
Feb 24 , 2024 . By MUNIR SHEMSU
Abel Yeshitila, a real estate developer with a 12-year track record, finds himself unable to sell homes in his latest venture. Despite slash...
Feb 10 , 2024 . By MUNIR SHEMSU
In his last week's address to Parliament, Prime Minister Abiy Ahmed (PhD) painted a picture of an economy...
Jan 7 , 2024
In the realm of international finance and diplomacy, few cities hold the distinction that Addis Abeba doe...
Sep 30 , 2023 . By AKSAH ITALO
On a chilly morning outside Ke'Geberew Market, Yeshi Chane, a 35-year-old mother cradling her seven-month-old baby, stands amidst the throng...
Apr 13 , 2024
In the hushed corridors of the legislative house on Lorenzo Te'azaz Road (Arat Kilo)...
Apr 6 , 2024
In a rather unsettling turn of events, the state-owned Commercial Bank of Ethiopia (C...
Mar 30 , 2024
Ethiopian authorities find themselves at a crossroads in the shadow of a global econo...
Mar 23 , 2024
Addis Abeba has been experiencing rapid expansion over the past two decades. While se...
Apr 13 , 2024
A severe financial stranglehold has been imposed on the banking industry, underminin...
Apr 13 , 2024 . By MUNIR SHEMSU
In an unprecedented move, the central bank has published its inaugural stress test report, uncovering potential fault lines within the finan...
Apr 13 , 2024 . By MUNIR SHEMSU
In a bold departure from its historical position on foreign investment, the federal government has opened...
Apr 13 , 2024 . By AKSAH ITALO
A proposed excise tax stamp system draws controversy amongst industry leaders in the alcohol, tobacco, be...