Introductio

The environment is perfect in its nature. I am not a

novelist or an artist rich in quite expressive and
artistic words that can describe the beauty of nature
as it deserves to be described. But I can feel it. I
can sense it. It does not take to be a novelist to
express the various songs of sweet to hear and nice to
see birds. I can sense the silent but sometimes
roaring, gentle, but then graceful flow of the river.
I can sense, and of course I have seen the beautiful
green densely populated forest where the theory of
Darwin takes effect in practice.

It is this feature of nature which has been very

convenient to all mankind and other inhabitants for so
many centuries, that technological advancements
disturbed unfairly.

Up until the time the human intervention through

excessive not environmental friendly technological
“development” beneficial to human kind at large Or
beneficial to few conglomerates for wealth
maximization, the balance of nature was some how
proportional.

One can not, in all fairness, claim that no pursuance

of development in technology should exist in order to
keep the environment in tact. I think, the very
important issues in this regard are:

 To what an extent should the environment be

compromised?

 Couldn’t investors pursue environmental friendly

investments?
 Shouldn’t governments have all the concern for
future generations and therefore institute environment
conserving, and protecting laws?

Discussions on this paper will revolve around the

above raised questions.

Environmental issues are vast in their nature. They in

fact have regional and international dimensions. Fred
L. Morrison, on his editorial on the book
“International, regional, and National Environmental
Law” stated:

“Environmental issues present challenges for the system

of legal relations among nations. All environmental
issues begin somewhere, and are thus in their origin the
subject of domestic, national legal concern. But
environmental concerns transcend boundaries as pollution
spreads or issues of the global commons arise. As this
happens, legal questions transcend the traditional tools
of the national legal system and acquire a regional or
international dimension.”

Discussions on this paper is however limited to the

impact of investment on the environment in the
Ethiopian context.

As the subject of discussion is very sensitive,

timely, and as well interesting, lots of efforts are
made to gather factual information from pertinent
government authorities, agencies, and bureaus. The
unavailability of appropriate experts due to leave of
absence, meetings, and trainings could not allow me to
obtain as much information as required with in the
time frame scheduled for the paper.

In fact the time lag to produce this paper with in the

due time is largely attributable to this. Even though
limited to this effect, I believe that the paper
discussed some important points and worthies the time
taken leaving the judgment to the instructor.
I. Investment and Environment
I. Investment and Environmental Impact
Assessment in the Ethiopian Context

General

Broadly speaking, the environment is the domain of

investment. As such there is no investment that does
not affect the environment in one way or another.
Thus, the subject of discussion would be the degree to
what an extent the environment is affected.

Again in general terms investors do not require

restrictions to their investments. Any investment,
irrespective of the effect on the environment that is
profitable in their context is worth investing in. But
some investments, even though economically seem
viable, may not be socially acceptable. The economic
viability centers on the short run benefit of
profitability whereas the societal concern centers on
the long run benefit for the society at large.

This also applies to some government undertakings

wherein issues of environmental factors are not
seriously considered.

Notwithstanding to the above, however, being cognizant

of the necessity of environmental protection and in
line with the implementation of the environmental
rights and objectives enshrined in the constitution
(article 43, 44, and 92),
the Ethiopian parliament issued three laws pertaining
to the environment:

1) Environmental Protection Organs Establishment

Proclamation No. 295/2002,

2) Environmental Impact Assessment Proclamation No.

299/2002, and
3) Environmental Pollution Control Proclamation No.
300/2002.

As the topic of discussion is related to environmental

impact assessment, the first two are the most relevant
proclamations. The third proclamation would be
referred as and when required.

In addition to the above, the Parliament also issued

Investment Proclamation No. 280 of 2002 and the
Council of Ministers issued Regulation No. 146 of 2008
concerning investment incentives and investment areas
(Amendment).

Having the right laws and regulations in place is one

major step that the Ethiopian government took in the
environmental issues and investment issues as well.

The next section will examine and discuss to what an

extent these laws are enforced.

II. The Enforcement of Environmental Laws vs.

Investment in Ethiopia 1.
Environmental Protection Organs Establishment
Proclamation No. 295/2002

As far as enforcement of the laws under the above

proclamation is concerned, I found the following
articles to be most relevant to our points of
discussions:

i. Article 7,8,and 9 which state about Organization

of the Environmental Protection authority,
Members of the Council, and Responsibilities of
the Council respectively,
 ii. Article 14 which states about Sectoral
Environmental Units, and

iii. Article 15 which states about Regional

Environmental Agencies.

i. Organization of the Authority (Article 7)

Apart from the authority itself, organization of

the authority includes Environmental Council whose
members are listed under article 8 of the
proclamation and whose responsibilities are listed
under article 9 of the proclamation.

From the interviews conducted with appropriate

authorities, it was learnt that the environmental
council is established under the chairmanship of
the Deputy Prime Minister. To my understanding,
the composition of the members (Article 8)
indicates fair representation of all stake holders
surrounding environmental issues in as much as the
responsibilities listed under article 9 confirm to
environmental concerns that the council needs to
handle. In this regard, the most important
elements of discussions are whether or not the
council has executed its responsibilities;
Establishment being only one aspect.

In accordance with article 10 of the proclamation,

the council is expected to hold regular meetings
once in every six months apart from the
extraordinary meetings whenever deemed necessary.
However, during the interview session, it was
realized that it had been only two times that the
council convened with in 7 years time since
establishment. This is a clear indication of how
little or no attention the Environment had been
given. If an environmental protection organ as
high as the council acted in such a way, it would
be quite simple to extrapolate the levels of
attention down the line.

ii. Sectoral Environmental Units(Article 14)

In accordance with article 14 of the proclamation,

government agencies in all sectors of undertakings
wherein environmental concerns are reflected in
one way or another, are required to establish
environmental units. The main purpose of the unit
is to synchronize the agency’s activities with
environmental requirements.

In this regard, as case examples, the

environmental units are formed in Ministry of
Agriculture, Ministry of Mines, and Ministry of
Health. Surprisingly enough it is not established
in Investment Authority. Virtually, all investment
projects get their investment permit from this
authority. Presumably, plenty of these projects do
have environmental impact with varying degrees of
intensity. Hence, as far as environmental
protection is concerned, it could have been this
authority that could have achieved lots of success
had there been an established environmental unit.

In fact the major problem takes root in the

proclamation itself. It did not indicate an
enforcing agency to follow up formation of
environmental units wherever appropriate. Various
agencies are left with their own discretion as to
whether or not to establish environmental units.

iii. Regional Environmental Agencies (Article 15)

 In accordance with article 15 of the proclamation,
Regional Environmental Agencies are formed, and
hence no problem to the effect of establishment of
environmental protection agencies. From the
interview I made, the major problem I realized as
far as regional environmental protection is
concerned is that there is no properly established
functional linkage between the Environmental
Protection Authority, and the Regional
Environmental Agencies. The major irregularities
are described below:

 As per article 15(3), the regional

environmental agencies are required by law to report
their respective regions environmental status to the
Federal Environmental Protection Authority. But no
report is being submitted.

 There were instances whereby the regions

exercise their authorities out of their jurisdiction
in particular as related to cross-regional investment
projects that have environmental impact.

 No enforcing agency to oversee the non-

compliance by the Regional Environmental Agencies.

2. Environmental Impact Assessment (EIA) Proclamation

No. 299/2002

When the enforcement of this law is examined,

issues of concern revolve around the following
major aspects of the law:

a) How is EIA done? The actual process

b) What is the mechanism to check whether all

projects have gone through EIA?

c) Implementation Monitoring and follow up

a) How is EIA done? The actual process

The review outcome

Project Owners Three departments in would be either one of
undertake EIA EPA review the EIA the ff. three
EIA department Go
Option

Poll. Cont. dept. Go Option

with Condition
Legal department
No Go Option

In accordance with article 9(2) of the

proclamation, the experts in the three departments
need to review the EIA presented by the project
owners with in 15 working days and decide one of
the three options. In fact, they are also expected
to incorporate public comments and other experts’
opinion with in the 15 days prescribed by law.

Discussions with pertinent officials in the

respective departments revealed that the 15 days
time is very ambitious. Even in the US, it is 90
days. When coupled with the acute shortage of
experts in the authority, enforcement of the law
would be more difficult. What can easily be
understood from this is that expediting the
process of investment projects is highly
encouraged while the reverse is true for
environmental protection.
As for the public involvement, it is the most
important constitutionally recognized tool for
environmental protection. However, there is no
platform for public participation and no detail
guidance for its implementation. As a result, the
Environmental Protection Authority (EPA)is
 requiring the investor [contrary to the provision
of article 9(2)] to produce public acceptance and
hence the investor produces signatures of elderly
in the vicinity of the project, letter from
Kebelle, and the like. Thus independence eroded,
and a fertile breeding ground for corrupt
practices emerges which ultimately results in EIA
suffering from both.

As an additional measurement of the enforcement of

environmental laws, a statistical data showing the
no. of EIAs done so far along with the associated
results was looked for but in vain. However, in
general terms it was explained that the No-go
option was never decided. The Go Option with
conditions like treatment plant for wastes,
planting trees in replacement of the removed, and
other mitigation plans as appropriate were decided
in good number of cases.

On the overall, it was explained that no

satisfactory job was done for about 4 years after
establishment of the authority due to serious
shortage of adequate experts. Even now the problem
persists though some little improvements are
there. The Investment Authority on the other hand
is putting more pressure for faster action that
can not be achievable given the current level of
capacity the EPA has.

Compellingly therefore we can conclude that

enforcement of the law in this regard is very
weak.

b) What is the mechanism to check whether all projects

have gone through EIA?
As per article 5 of the EIA proclamation, those
projects needing IA should be subjected to EIA. But
in practice, there are projects that escape this
provision. During discussions in the interview
session, it was learnt that the working
relationships with institutions like Customs and
Revenue Authority, Ministry of Trade and Industry,
Banks, Investment Authority, and even the world
market (client to the product)are helping to track
those projects escaping the requirement. However,
success rate in this regard has not been
encouraging so far and hence not found dependable
because of the following two basic reasons:

1. The institutions are not legally required to

demand environmental clearance from the
investor but only act upon their own
discretion with the exception of the world
market.

2. Particularlyin the government authorities,

the displacement of authorities and other
key staff (due largely to better payment
opportunity), disturbs this mechanism of
checking because it is not institunilized.

By comparison, even though post mortem, the world

market is better responsive. For instance, a
certain flower product was rejected for having
more than the minimum threshold pesticide residue
because it could contaminate the eco-system of the
host country. On top of this some international
clients require environmental clearance.

There were also instances where the investors

themselves report to EPA that EIA should have been
done on their project. A case example is a certain
flower farm at Holeta. Flower farms are water
intensive in their nature. Because of the
excessive utilization of ground water at Holeta,
 The ground water was exhausted. And the investors
complained that the potential should have been
studied in the EIA phase. Whose fault?

As can be inferred from the above, the enforcement

of article 5 is largely dependent upon third
parties discretion. Therefore the enforcement
power is weak.

c) Implementation Monitoring and follow up

In accordance with article 12 of the proclamation,

EPA is required by law to test compliance of
investors and take appropriate actions. During the
interview session, it was explained that due to
the serious capacity limitation in terms of the
number of experts required, this duty of the
authority is not being executed.

For this reason, the authority is solely relied on

self auditing and monitoring reports of the
investors. But most of them do not report though
legally required. In regard to this, MIDROC group
companies are by comparison better in producing
periodic Environmental performance report
(internal monitoring) in line with the requirement
of the law.

Due to its capacity limitation, EPA is highly

recommending involvement of independent
consultants to undertake the environment
compliance test efficiently. It further recommends
that the authority can be authorized and be
responsible to issue Professional license when
legally empowered to do so.
 Otherwise, enforcement of article 12 is non-
existent.

3. Investment Proclamation No. 280 of 2002 and the

Council of Ministers Regulation No. 146 of 2008

This section tries to discuss Environmental Impact

Assessment vs. the above indicated investment
proclamation and regulation.

Both the proclamation and the regulation do not

provide anything in relation to environmental
impact assessment. Rather, both are tuned to
attract Foreign Direct Investment, guarantee, and
incentivize foreign investors. In addition,
discussions in an interview session with
appropriate officials further revealed that he
bilateral investment treaties also emphasize
giving guarantees and incentives. No environmental
issues are raised.

The current practice of the Ethiopian Investment

Authority is that it is issuing investment permit
with out securing the Impact Assessment evaluation
report. When asked why the answer is that EPA is not
well organized and can not issue the assessment
outcome timely. In parallel, EPA is complaining
about shortage of experts as discussed before. In
all cases EIA can not be enforced. However, further
inquiry to this matter revealed that because the
Investment Proclamation is going to be revised it is
suggested that the revised proclamation will be
having a specific article addressing environmental
issues. This time better enforcement is envisaged.

Other issues in connection with Investment and

Environment
  Textile, leather, and, Agro industry are the
prioritized investment areas. Impact assessments
on these areas are not serious in fact ignored.
The dilemma: These are the investment areas where
the highest foreign exchange earning is obtained.

 According to experts in the Investment Authority,

in principle land with fertile soil should not
have been given to flower farm investors. The
flower farm requires fertilizers and other
chemicals whether or not the land is fertile. But
again due to transport and other ill prepared
infrastructural facilities, would the investor be
willing to invest in remote desert areas vs. a
vise the dire need of foreign exchange by the
country? Another dilemma!

 Foreign investment is purely the province of the

Federal Investment Authority. Only because the land
given to the investor is found with in the region, the
regional Investment Authority intervenes without its
jurisdiction. Thus more susuptible to environment
mishandling. Apparently no enforcing agency exists
when the regions act contrary to their jurisdiction.
No properly established functional linkage.

 Unplanned development of cities also deregulates

the weather condition. Investment permit is being
given to investors in the construction of high rise
buildings with out considering the environmental
factor. Green parks should have existed with
reasonable quantity that would regulate the weather
condition in town. It is a pity that even the master
plan of the capital city does not indicate green parks
adequately.

 Finally, in our country the biggest share of the

capital is land. But its ownership is state owned.
Some argue that private land ownership, apart from
productivity, could have also achieved environmental
Protection more successfully.

From the above discussion, I think it is safe and

reasonable to conclude that the investment
proclamation and regulation do not address
environmental issue in as much as they encourage
investment and investment only.

Conclusion

As best explained by the instructor in the classroom

lecture; “the greatest challenge of law is always
reflected in the enforcement phase.” I think the same
is confirmed in the foregoing discussions.

The other equally or perhaps more noticeable is the

challenge to Least Developing Countries like Ethiopia
or even to those Emerging Economies too: An intense
desire for more investments on one hand, and the
desire to conserve the environment on the other hand.

By any measure, a polarized attitude is not advisable.

If for instance a certain government official with an
executive portfolio just explains environmental
concerns as luxuries in public, what impact would this
have on the existing and as well prospective
investors, and also on the general public? I think it
does not take genius to realize the negative impact.

Most of the general public, especially the rural based

ones are the least exposed to environmental issues.
For instance, the environmental effect of both
cutting, and planting trees is not known or if there
is little, is conveniently ignored. Even the City
dwellers; how many of us know that 15 to 20 kilos of
paper worth a tree? And consequently the economical
consumption of paper that would result in the saving
of 15-20 kilos of paper also saves a tree? In such
conditions, when an authority speaks in public that
environmental issues are luxury, it would be just
adding ignorance to the already existing indifference.

In my opinion, one of the manifestations of good

governance, responsible governance, and committed
governance is the one that ensures the long run
sustainable development by striking the balance
between the two – Investment and Environment. It is
not an easy task but neither impossible too.

References:

Primary Source: Interview

1) Ato Tewodros Bekele Director, Legal Directorate,

Ethiopian Investment Authority

2) Ato Abreham D/Director, Impact Ass. Direct.

 Environment Protection Authority

3) Ato Wondwossen D/Director, Legal Directorate

Secondary Source:
1) International, Regional and National
Environmental Law, Fred L.Morrison and
Rudiger Wolfrum

2) The Law and EIA Governance in Practice

(A power point document by Ato Solomon
Kebede, Director, Impact Ass. Directorate

Annexes:

1) The Law and EIA Governance in Practice

2) Environmental Protection Organs Establishment

Proclamation

3) Environmental Impact Assessment Proclamation

4) Investment Proclamation

5) Investment Incentives, and Investment Areas

Regulation

Table of Contents
 Title Page

Introduction 1

I. Investment and Environmental

Impact Assessment in the Ethiopian Context 3

II. The Enforcement of Environmental Laws vs. Investment in

Ethiopia 4

Environmental Protection Organs

Establishment Proclamation No. 295/2002 4

Environmental Impact Assessment (EIA)

Proclamation No. 299/2002 7

Investment Proclamation No. 280/2002,

and Regulation No. 146/2008 12

Conclusion 14

References 16

Annexes 16