Easing Ethiopian Born Foreign Investor Restrictions

Ethiopia is one of those countries whose nationality law is based on the principle of “jus sanguinis”. As a result, the concept of dual nationality, which enables an individual to have two or more nationalities at the same time, is not recognised or permitted. Double Nationality is commonly associated with the so-called “jus soli” principle, which also makes place of birth an independent criterion for determining a person’s nationality. In the former case, the right is acquired by blood alone. In the latter case, the right to nationality could be acquired independently by blood or by place of birth. Historically, or through tradition, Ethiopians do not figure among those peoples or nations who are fond of travelling outside their country. This is for no reason other than that they are burningly jealous for their independence. It was precisely this reason that led the historian Edward Gibbon to make his famous observation in his book The History of the Roman Empire in the following words: “Encompassed on all sides by the enemies of their religion, the Ethiopians slept near a thousand years, forgetful of the world, by whom they were forgotten”.
So, when Ethiopia finally decided to enact a law of Nationality in the early 1920s, it opted for the French model and adopted the system based on “blood” rather than “soil”, or place of birth. The subsequent events resulting from the Italian invasion of Ethiopia in 1935 and the impact of globalisation following the end of World War II paved the way for Ethiopians to travel to other lands as refugees, students, visitors, diplomats, etc. The events following the coup d’état of 1960 and military takeover of the government during the early 1970s forced even the reticent to flee the country as they were threatened by the authorities of their homeland.
The United States Immigration Act of 1990 established the current Diversity Visa programme, which served as a vehicle of free relocation to other lands with an opportunity to acquire the nationality of the host state. This opened a door for Ethiopians to acquire the citizenship of the host country through the process of naturalisation. Most of these people live in the host country with a cleft heart – one part in the host country and the other half in Ethiopia. To all of these people, Ethiopia is not only their birth place, but also a place where their kin live and where a good number own property and history bequeathed to them by their ancestors. These bonds are so forceful that a good number of them have tried to keep their national sentiment alive by obtaining the yellow card that the Ethiopian government has extended to all foreign nationals of Ethiopian decent, who are wrongly referred to as “the Diaspora”.
Article 2 of Proclamation 270/2002, which was enacted to provide nationals of Ethiopian origin with certain rights to be exercised in their country of origin, describes the objective of the Proclamation as follows: To entitle them to rights and privileges by lifting legal restrictions imposed on them when they lost their Ethiopian nationality; to create a legal framework whereby persons of Ethiopian origin fulfil their contribution to the development and prosperity of their country.
Consistent with the objective of the Proclamation, and more particularly in line with the spirit portrayed under Sub Article 2 of the objective, the restrictions on the exercise of rights by such persons are laid down under Article 6 of the Proclamation as follows: No right to vote or be elected to any office; no right to be employed as member of national defence force, security, foreign affairs or political establishments.
The above notwithstanding, these persons are excluded from participating in areas including the financial sector. The reason for the exclusion may be traced to the fact that such areas are reserved to Ethiopian nationals by the establishing legislations and/or by the investment proclamation. If this were true, this limitation should have been explicitly included in Proclamation 270/2002, or those two proclamations should have been amended or drafted accordingly to dispel the infatuation created by the less restrictive provisions of Proclamation 270/2002. This failure on the part of the government led these people to believe that these limitations are “afterthoughts” or changes of heart, so to say. Such sentiments sap trust and open the way for a credibility gap. These are impediments that are likely to hold back such people from being able to “fulfil their contributions to the development and prosperity of their country” as envisaged under Article 2 of the Proclamation.
Many people have, in good faith and with the view to “contributing to the development of their country” as provided in the Proclamation, bought insurance and/or bank shares before or after acquiring foreign citizenship. There was nothing in Proclamation 270/2002 that prevents them from acquiring these. They were within their rights when they acquired those shares because that proclamation limited the restriction down to two distinct points, none of which limited them from those actions. Now these people find themselves caught in limbo. It appears a directive has been issued to all banks by the National Bank with instruction to freeze such shares, which resulted in locking in and locking out the owners. They have no idea of their status or whether they are entitled to the rights of shareholders, or whether they can even recover their investment. They are in the dark about the fate of their investment.
Obviously, there is no basis for the sequestration or expropriation of their investment. It is clear that the purpose of reserving the financial sector to Ethiopians emanates from the government’s policy to give protection to local “infant companies” not equipped with the skill or resource to compete with much stronger foreign counterparts. To say the least, it is a commendable policy. It is a lesson that we mimicked from the archives of developed nations, including the United States of America, where in 1832 President Andrew Jackson refused to renew the license of a bank because the foreign ownership was too high. In the same tenure, a famous American Journal named “Niles’ Weekly Register” published in 1835 proudly wrote – “We have no horror of FOREIGN CAPITAL… if subjected to American Management”. So, the solutions prescribed by the American protectionist officials to the problems were to put a cap on foreign holdings and to bar ‘Aliens’ from sitting on the board of financial institutions – not to ban them or shut the door altogether.
These were creative solutions for the time, but we live in a different time now. The foreigners we are speaking about also possess ID cards that tie them to their country of origin. In a strict sense of the term, they are neither aliens nor foreigners, as those terms were once understood in the 1830s. These are people with a concurrent unique bond of ties with two countries, as confirmed by official documents in their possession. People belonging to countries that allow double nationality are not subjected to such restrictions. I believe the ID issued by the government should be allowed to close that gap and allow such individuals to invest in the financial sector. The ID that the foreign nationals of Ethiopian origin hold must provide at least similar economic rights to the holders and their country that a second passport provides to those that enjoy double nationality.
In short, foreign nationals of Ethiopian origin holding the Yellow ID must be allowed to enjoy at least the civil rights guaranteed to foreigners under Article 389 of the Civil Code. Moreover, the Government could put restrictions on the transfer or rights by such persons by limiting it solely to ID holders or to nationals of Ethiopia. It could also be provided that such persons shall not be eligible to run for a board seat on grounds of non-residency. Putting a cap on their holding is unnecessary because there are inbuilt clauses in the laws applying to influential shareholders. In my view, such steps will have a rebounding effect on such persons’ confidence and considering the vast number that they represent, the amount that could be obtained as investment or by remittances is too large to ignore.


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