This study endeavored to identify the constraints, challenges and opportunities of FDI inrnAddis Ababa since 1991 . To this end, related literature, proclamations and publicationsrnwere reviewed; concerned GOs, experts of the area in focus and sample foreign investorsrnwere interviewed.rnSurvey rnethod was applied to collect data from 377 operational foreign investments. Therninvestments were categorized under different sectors and, therefore, proportionaternstratified random sampling was used to all the sectors to obtain 10 per cent sample fromrneach sample frame. On the other hand, purposive sampling technique was deployed tornfind the GOs and experts working in the area of FDI.rnQuestionnaire, for the investors, and interview questions for the experts and GOs were therndata collection instruments. The data obtained was qualitative and quantitative in nature, Itrnwas analyzed qualitatively through narration and quantitatively through SPSS SoftwarernProgramme respectively,rnThe results of the study indicated that there are many constraints of FDI basically due tornthe GOs operating in the area under discussion. These include bureaucracy in the GOs,rncost and access to land, lack of infrastructure in the investment sites, corruption, and thernstrict FDI pol icy are among others. The challenges to thE) sector are relatively few andrneasy to bear. These include cultural shock, language barrier, homesickness, penetratingrnmarkets, managing the business and adjusting to the new climate are among the pertinentrnones. Apart from these, the investment opportunities for FDI are also discussed in detail.rnManufacturing, Rea-estate, Urban-Agriculture,Ag ro-processing , Construction, Consultancy,rnExporting of agricultural and Industrial Products and Education are the major ones.rnTo positively address the FDI climate of the country, possible recommendations arernforwarded. These include, among others, improving the bureaucracy in the GOs, fightingrncorruption, building the image of the country, making EIA a "one-stop-agency" whichrnconducts all the licensing including issuance of land, mobilizing resources from Ethiopiansrnin Diaspora, conducting regular meetings with foreign 'investors, providing clear incentivernpackage~ , relaxing the restrictions on some of the sectors, liberalizing ownership of land,rnand seeking peaceful resolutions to internal and external conflicts.rn,