The Room for Imposing Performance Requirements on Foreign Investors under the Ethiopian Legal Regime

Abstract

There is the need to maximize the benefits from Foreign Direct Investment (FDI). As studies suggest, performance requirements can be used as an important policy instrument for maximizing benefits of FDI and countering potential abuses of foreign investors. This article examines the existence of a room for applying performance requirements on foreign investors in Ethiopia and explores challenges and opportunities that may arise in doing so. To this end, qualitative methodology, involving both doctrinal and non-doctrinal legal research approaches have been employed. Primary and secondary data are utilized; semi-structured interviews were used as data collection tools for gathering data from respondents. The findings indicate that although there is the policy and legal premise to apply performance requirements, Ethiopia is not imposing adequate performance requirements on foreign investors. The absence of adequate requirements does not enable Ethiopia to gain optimal benefits from foreign investment. Therefore, Ethiopia should apply performance requirements such as export performance, local content, and technology transfer requirements to ensure optimal benefits from FDI and boost its contribution towards sustainable development.