The Need of Rule for Domestic Investors Compensation/Guarantee Against Political Risks: The Case of Political Violence
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Date
2020
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Addis Ababa, Ethiopia
Abstract
In Ethiopia, there has been social and political unrest in many parts of the country that causes
massive loss of human life and destruction of investment assets/properties. These situations not
only hinder the flow of investments and the growth of an economy it also entails a huge
economic loss in the country. Both foreign and domestic investors in Ethiopia are facing
political violence risk challenges, though most foreign investors (especially those that have BIT
protection) have the protection of investment guarantee against political violence through
different way, there is no formal and rule based compensation scheme for domestic investors.
Actually Ethiopian law has made provisions for protection against expropriation and currency
risk; it however, has failed to provide protection against political violence.
Thus the main purpose of this research is to assess the existence of laws or regulation for
domestic investments against political violence risks adopted to protect and guarantee domestic
investors investment in the form of political violence guarantee scheme. The finding of the
researcher indicates that there is no explicit political violence risk guarantee scheme established
to protect domestic investors‟ investment in Ethiopia. The researcher also found the existence of
some informal kind of protection, which is not based on law where the government is not forced
to act accordingly to protect domestic investors‟ investment. In addition, as per the interview
conducted with the Ethiopian Investment Commission officials they believe in the importance of
the establishment political violence risk guarantee against domestic investments.
Based on the present situation of the political instability in the country, future possible
challenges and other countries experience the researcher recommends that the state regulator
should work on establishing the political violence insurance market pool at national level as well
as to incorporate the standard of Full Protection and Security in the legal frame work in order to
promotes and protects domestic investment in Ethiopia.
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Keywords
the case of Political Violence