The Legal Framework for Business Bailout in case of Economic Distress in Ethiopia

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2024-09

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Addis Ababa University

Abstract

The thesis seeks to fill a crucial gap on different types of bailout legislation that exist in Ethiopia such as Liability and Asset Management corporation Establishment council of ministers Regulations No.483/202: the failure to create preconditions for dealing with future bailouts. Establishing express, ex ante conditions for providing aid would temper business risk-taking, protect taxpayers, and establish bounds to bailouts. This thesis argues that the key to limiting moral hazard is to follow approach that delineates clear contours and conditions for aid. The thesis also calls for revision of loophole on the Establishment and Operation of Ethiopia Deposit Insurance Fund council of ministers Regulations No. 482/2021. The regulation requires liquidation or closing of an insured bank to pay insured depositors but this requirement clearly contradicts with the very essence of bailout. The thesis also argues that conditions or requirements that helps to identify other form of bailout i.e. failing firm doctrine is not provided on the FDRE Trade Competition and Consumers Protection Authority Merger Directive Number 1/2016.

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