Making Sense of Investment Work for Sustainable Development: A Pressing Need to Integrate Sustainable Development into Ethiopian Investment Law

Abstract

A prosperous Ethiopia, based on inclusive growth and sustainable development, is aspiration of all nations, nationalities and peoples in Ethiopia, as reflected in the preamble of the FDRE constitution. Foreign direct investment (FDI) in a country can be asserted as one weapon to actualize this aspiration for sustainable development; yet, FDI may also causes tragic social, environmental, and human right impacts unless it is effectively regulated. This paper investigates the nexus between FDI and Sustainable development in Ethiopia, and suggests effective mechanisms to mobilize FDI for sustainable development of Ethiopians without compromising related social, human right and environmental values. To this end, it employed library based and policy-oriented research utilizing both primary and secondary sources. The study established quest for inclusive economic growth, respect for human right, and need to curb social and environmental impacts of FDI as pressing issues that necessitate the integration of the economic, social, and environmental pillars of ssustainable development into FDI administration in Ethiopia. It advocates for sound FDI administration and policy that equally integrates the economic, social, and environmental pillars of sustainable development in its regulatory frameworks and process. In particular, the Government shall ensure respect for land rights of local community, pay adequate compensation for land required for FDI, and put in place bilateral investment treaties or clauses in lease agreements addressing foreign investor’s obligation regarding performance requirement, benefit sharing, environmental and human rights standards and impact assessment. It shall also ensure public participation and consultation with the concerned local community in all decisions to transfer land to foreign investors and FDI administration. Additionally, the Government shall establish effective monitoring and dispute resolution mechanism, and empower the indigenous community and other stake holders to safeguard rights and interest of local community