1. Ethiopia overview

1.1 Political overview

Ethiopia is a federal democratic republic with 12 regions and 2 special zones. Prime Minister Abiy Ahmed was appointed in April 2018 after his predecessor, PM Hailemariam Desalegn, resigned. He subsequently won the Ethiopian elections in July 2021. The next elections are due to be held in 2026.

For the latest situation across the country, check our Ethiopia travel advice regularly. 

1.2 Economic overview

Macroeconomic developments

Ethiopia is undertaking a significant programme of economic reforms, supported by the International Monetary Fund (IMF) and World Bank. In July 2024, the Government of Ethiopia floated the exchange rate. A $3.4 billion, 4-year IMF programme and an accompanying package of support from the World Bank was approved the same week.

The programme is centred around transition to a market-determined exchange rate, supported by additional reforms in monetary policy, tax, management of state-owned enterprises and the financial sector.

This programme is intended to build economic resilience and lay the foundations for inclusive, private sector led growth. A supplementary budget was approved in November 2024, with expenditure measures to smooth the transition to a market determined exchange rate and protect the poorest households.

Economic growth

Between 2004 and 2020, Ethiopia’s economic growth was almost 10% per year – one of the world’s highest. This was due to a sharp increase in foreign exchange inflows, initially from development assistance, then from external borrowing.

Under Ethiopia’s state-led development model these resources were used to finance public investment projects, breaking Ethiopia away from domestic financing constraints imposed by a low tax base and limited savings.

Over 16 years, these efforts reduced poverty and improved health and education. Imports rose significantly and electricity production quadrupled. Through this period of fast growth, Ethiopia maintained reasonably low fiscal deficits and modest debt levels.

Economic challenges

While these efforts were broadly successful, over time they resulted in growing macroeconomic distortions, including an overvalued exchange rate and growing state-owned enterprise debts.

Significant shocks then hit Ethiopia from 2020 (COVID-19, drought, import prices, monetary tightening and civil conflict), which severely exacerbated emerging macroeconomic challenges.

High inflation (over 20%) persisted for several years, while declining domestic revenues led to real reductions in government budgets in health, education, social protection and public sector wages. Ethiopia’s official exchange rate became one of the most overvalued in the world.

Severe foreign exchange shortages resulted, dragging on economic activity. Export growth was too low to meet import demands.

Current situation

Today, Ethiopia’s merchandise exports per capita are among the lowest in Sub-Saharan Africa. A sustained transformation of Ethiopia’s economic structure failed to materialise.

The 2024 package of reforms aims to address some of these challenges, as well as deliver further reforms to state-owned enterprises and liberalisation in several sectors including logistics and finance.

Despite some liberalisation since 2019, the economy remains dominated by the state, and land markets are constrained as almost all land is state-owned and leaseholder rights are restricted. Regulatory uncertainties remain. Conflict, instability and crime continue to disrupt many foreign investments.

1.3 Development overview

Ethiopia is one of the UK’s most important development partnerships. With a population of over 120 million and a main regional player in the Horn of Africa, Ethiopia’s development path matters for a huge number of people across the wider region.

It also has significant importance for the UK’s geopolitical, economic, humanitarian and security interests in East Africa and beyond. Ethiopia’s population and development potential also present enormous opportunity to become a cultural and economic partner for bilateral trade and investment.

The UK have historically been one of the largest and most significant development partners in Ethiopia. Since 2016 our bilateral Official Development Assistance (ODA) spend has averaged over £200 million per annum, putting the UK in the top tier of bilateral donors.

The UK delivers the full range of international development strategy priorities, combining ODA with expertise and international influence.

This work is also closely aligned with the Ethiopian government’s development strategies, including:

• the Home-Grown Economic Reforms
• Ethiopia’s Social Protection framework
• the 10-year Development Plan
• the Climate Resilient Green Economy Plan
• the Climate Resilient One Wash National Programme

The UK also have several programmes working to support Ethiopia’s economic development. These include:

• The Ethiopian Investment Advisory Facility, which is working to deepen financial markets, reduce logistics costs and support state-owned enterprise reform
• Accelerating Ethiopia’s Economic Transformation, which aims to support export-led growth with a particular focus on the textiles and garments sector
• Tax Transformation Programme, which is improving Ethiopia’s revenue-raising capacity so it can fund more services from its own population and reduce reliance on aid
• Manufacturing Africa, which supports inward investment into Ethiopia’s manufacturing sector

Read more detail on the UK’s development programmes in Ethiopia.

1.4 Human rights

The FCDO Annual Human Rights and Democracy Report 2022 (published July 2023) added Ethiopia as a priority country in response to independent international investigations into the conflict in Northern Ethiopia. This found that all parties involved in the conflict have been responsible for violations of international human rights law and international humanitarian law.

The Ethiopian Human Rights Commission (EHRC) warned in its 2024 annual report that the human rights situation in the country remains challenging, in particular in conflict areas. The space for civil society and media continues to be constrained, with journalists arrested and civil society organisations reporting intimidation. 

Property rights

Over the last few years, communities in Ethiopia have been forcefully moved from their land. This is sometimes in connection with potential commercial investments or major urban reconstruction that is taking place in Addis Ababa and in cities across the country. Businesses have lost premises and facilities, including at very short notice, as part of this urban development.

All land in Ethiopia is owned by the state, making property rights complex. Compensation for expropriation is not always paid. If you or your company are thinking of investing in Ethiopia, you should ensure that a full social and environmental impact assessment is completed before you commit to any investment.

Freedom of association and the right to organise and bargain collectively

Ethiopia has ratified the 2 main International Labour Organization (ILO) conventions that guarantee freedom of association and the right to organise and bargain collectively. However, under the 2003 Labour Proclamation, civil servants, the military and the police are denied these rights.

The right to strike

The right to strike is protected by law, but the procedures involved can make it difficult for workers to engage in strike action in practice. In practice, lawful industrial actions are rare in Ethiopia.

More information on human rights

Read further information on human rights.

1.5 Protective security advice and terrorism threat

Check our Ethiopia travel advice for latest updates. 

2. Ethiopia export and investment overview

2.1 Overview

Total trade in goods and services (exports plus imports) between the UK and Ethiopia was £760 million in the 4 quarters to the end of Q2 2024. This was an increase of 41% or £221 million in current prices from the 4 quarters to the end of Q2 2023.

You can find more information in the Ethiopia trade and investment factsheet.

2.2 UK Export Finance (UKEF)

The UK government provides support for exporters. The facility is called the UK Export Finance (UKEF). These provide:

• export guarantees: these guarantees protect exporters against the risk of non-payment by UK buyers
• loans: UKEF can provide loans to exporters to help them finance their export activities
• insurance: UKEF offers insurance products to protect exporters against political risks and currency fluctuations

Contact UKEF about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for Ethiopia.

Given the IMF and World Bank zero non-concessional borrowing limit for this country, UKEF is unable to provide medium or long-term cover for sovereign or public buyer or borrowers unless the IMF and World Bank grant the authorities a waiver for the transaction.

2.3 British International Investment (BII)

British International Investments (BII) is the UK’s development finance institution and impact investor. Its mission is to help solve the biggest global development challenges by investing patient, flexible capital to support private sector growth and innovation. This includes investments in sectors covering:

• infrastructure and climate
• financial services
• construction and real estate
• education
• food and agriculture
• health
• manufacturing
• technology and telecoms

BII invests to create more productive, sustainable and inclusive economies in Africa, Asia and the Caribbean, enabling people in those countries to build better lives for themselves and their communities.

BII is a major investor in Ethiopia, with a wide-ranging portfolio worth over $222 million spanning telecoms, manufacturing, financial services and logistics. BII was one of the first development finance institutions in the country and was an anchor investor in the recent Safaricom Ethiopia investment. BII also has invested in the Berbera Port, which offers an additional maritime trade corridor for Ethiopia.

Read further information on BII’s investment portfolio.

Find information on how to partner with BII.

2.4 Export support

Find more export advice and explore opportunities overseas on great.gov.uk.

3. Growth potential and opportunities for UK businesses

Factors that make the Ethiopian economy well-placed to continue its recent growth include:

• a large natural resources potential which offers opportunities for expansion of agriculture, fisheries and hydroelectric power generation
• an abundant human resource base which can support the expansion of labour-intensive manufacturing
• a market of over 120 million people and growing
• Addis Ababa has become an established regional air transportation hub, ideal for expanding trade links
• historic reforms undertaken in 2024, which are opening up new sectors including financial services, logistics and retail

3.1 Key sectors

Main buyers tend to be the Government of Ethiopia or state-owned enterprises. Sectors where there are opportunities include:

Aerospace

Ethiopian Airlines is Africa’s largest airline, with a supply chain including over 100 UK businesses - periodically expressions of interest on new tenders are sought.

Agribusiness

Agriculture accounts for 40% of Ethiopia’s GDP, 80% of its exports and an estimated 75% of the country’s workforce with 37.3 million hectares of arable land. Specific opportunities include:

• large scale crop production (such as wheat, barley, rice, corn, avocado, banana, coffee and oil seed)
• agro-processing (meat, dairy, wheat, fruit and vegetables, oil crops and commercial poultry)
• agri-tech including agrochemicals, animal health medicines, vaccine manufacturing, processing machineries and equipment, cold storage facilities and food processing equipment)

Energy

The annual consumption of electricity in Ethiopia is very low, but its demand is a dynamic and vital component of its energy landscape reflects the nation’s growing need for electrical power to support various sectors, including:

• residential
• commercial
• industrial
• transportation

Over the years, Ethiopia has witnessed significant shifts in electricity demand due to various factors such as population growth, urbanisation, and technological advancements. Renewable energy generation capacity is planned to increase to 37 GW by 2037, which could cost an estimated $100 billion. Opportunities include:

• power generation (on and off grid)
• feasibility studies, design and construction supervision
• technical assistance, such as project and contract management services
• supply of equipment
• construction, supervision and rehabilitation of distribution lines

Financial and professional services

Ethiopia announced significant reforms to the sector including liberalisation of the financial sector, allowing foreign investment and ownership of banks and the requirement that all Ethiopian banks are to be listed by mid-November 2025. A new Ethiopian Securities Exchange launched in January 2025, which requires the development of a capital market ecosystem, including brokers, investment banks and professional services.

Healthcare

Ethiopia has limited access to:

• basic healthcare services
• well-equipped healthcare facilities
• skilled healthcare facilities and professionals

Opportunities include healthcare infrastructure, such as:

• hospitals
• clinics
• medical equipment
• the pharmaceutical industry, to reduce reliance on imports and promote local production
• digital health solutions to improve healthcare delivery and human resource development to address the shortage of qualified personnel

Infrastructure

Ethiopia presents a number of infrastructure opportunities, driven by the government’s development plans and the country’s strategic location in East Africa.

Major opportunities include:

• development of ports and logistics
• railway and roads
• expansion of airports

Mining

Ethiopia is rich in critical mineral resources, including:

• tantalum
• potash
• gemstones
• gold
• iron ore
• various industrial, energy and construction minerals

However, many of these deposits are found in areas of conflict and instability.

3.2 Free trade agreements

Ethiopia has ambitions to accede to the World Trade Organization by 2026. WTO - accession status: Ethiopia provides more information on the status of the accession process.

Ethiopia benefits from the Developing Countries Trading Scheme (DCTS), which cuts tariffs, removes conditions and simplifies trading rules for 65 developing countries.

Ethiopia ratified the African Continental Free Trade Area in March 2019 and deposited its instrument of ratification on 10 April 2019, becoming a founding State Party to the Agreement. In June 2024, Ethiopia ran a National Forum to develop its National Implementation Strategy.

Ethiopia is also a member of the Common Market for Eastern and Southern Africa, which has 21 member states and seeks to promote regional integration through trade and the development of natural and human resources for the mutual benefit of the people in the region.

Ethiopia had duty and quota free market access to the US under the African Growth and Opportunity Act (AGOA) but those benefits were revoked on 1 January 2022, due to the humanitarian crisis in Tigray and nearby regions.

Ethiopia also has duty and quota free market access to the European Union (EU) under the Everything but Arms (EBA) initiative. This is a non-reciprocal agreement, allowing duty free import of goods from Ethiopia to enter EU member countries markets.

4. Challenges doing business

There are numerous challenges UK companies may face when doing business in Ethiopia. These include:

• low quality and coverage of infrastructure
• rising perceptions of corruption, ranking 98 out of 180 on the 2023 Transparency International corruption perceptions index with a score of 37 out of 100
• inconsistencies in tax assessments and excessive penalties
• post-hoc customs charges disputing valuations in previous tax years
• many businesses report delays, sometimes of over 2 months, in clearing imports
• land rights and licence disputes and limited-to-no notice of planned demolitions and requisition
• occasional delays in accessing foreign exchange (sometimes months) presented a major challenge to businesses in recent years - the recent exchange rate reform should correct this, but the scale of reforms is significant and will take some time to work through the financial system.
• significant payment delays for delivery of imported goods and services, or cancellation of government tenders for lack of funds
• bureaucratic barriers to investment
• logistical bottlenecks, corruption, expensive land transportation, and delays affecting importing products and shipping exports.
• state-owned enterprises continue to dominate the economic landscape, reducing room for the private sector

While the British Embassy Addis Ababa continues to support UK businesses and investments as far as it is able, many of these challenges continue to be unresolved.

4.1 Tax

Ethiopia will need to increase its tax take significantly during the next few years. Both the government’s own reform plan and its supporting IMF programme plan significant increases in revenue collection in the coming years. This is supported by changes to both tax policy and administration. The pressure to meet targets in the near term presents a significant challenge to many businesses.

International businesses tell us they have received unexpected and unjustified tax and customs demands, sometimes backdated many years, and based on figures they do not recognise. Under Ethiopian law, these demands for payment must be met in full before they can be appealed. Even successful appeals do not always result in timely repayment.

The Ethiopian authorities are seeking to increase the tax take from historically low levels and capacity levels are weak in the revenue authorities, due to insufficient tax assessment and audit capabilities. This has led to costly and time-consuming disputes between investors and tax authorities. The complexity, lack of transparency, and unpredictability of tax policies and systems are a major concern among investors.

4.2 Customs

A number of businesses have reported customs demands following post-clearance audits.

These often involve disputed valuations despite all goods being receipted at the time that customs are paid and require the principal owed (absent the penalties) to challenge.

Businesses have also reported inconsistencies in the application of customs regulation and slow and unreliable customs clearance processes.

4.3 Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying out a business in the UK can be liable for the conduct of a person who is neither: i) a UK national or resident in the UK or ii) a body incorporated or formed in the UK. In this case, it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere. Refer to The Bribery Act 2010 for more information on UK bribery standards.

The primary piece of legislation governing corruption in Ethiopia is the Corruption Crimes Proclamation No. 881/2015. The laws criminalise major forms of corruption such as active and passive bribery, money laundering and bribery of a foreign official. There are also different laws and rules of procedure enacted against corruption including:

• Assets Disclosure and Registration (ADR)
• The Proclamation to Provide for the Protection of Witnesses and Whistleblowers of Criminal Offences
• Procurement and Property Administration Proclamation

The 2023 Transparency International Corruption Perception Index ranked Ethiopia as 98 out of 180 countries surveyed, reflecting a decline from 87 in 2021. A 2021 corruption perception survey, carried out by the Federal Ethiopian Anti-Corruption Commission in 2021 highlighted the most corruption prone areas:

• justice sector (police and courts)
• public procurement
• land administration
• construction
• licence issuance
• tax revenue and customs

In addition, anecdotal information indicates that the widening gap between official and parallel birr exchange rates has opened spaces for corruption in the banking sector too.

In Ethiopia, land is public property. Individuals, companies and other organisations have only the right to use the land. The increase in the value of land in Addis Ababa, ambiguities between the rules and regulations for leasing land and lack of efficient land administration system have increased the incentive for corruption. This has made it difficult to ensure transparent and accountable land administration.

Other major reported cases of corruption include:

• bribing government employees to evade taxes
• winning public procurement contracts
• stealing of international food and development assistance

For procedures you can put in place to protect your company, read guidance on Protecting your business from bribery.

4.4 Intellectual property

The Ethiopian Intellectual Property Authority (EIPA) was established in 2003.

Intellectual property legislation in Ethiopia includes the:

• Patent Proclamation and Implementing Regulations, (issued in 1995, covering Patents, Utility Models and industrial designs)
• Trademarks Registration Directive issued in 1986
• Copyright and Related Rights Proclamation issued in 2004

Ethiopia also ratified the World Intellectual Property Organization Convention in 1998 and is a signatory of the Nairobi Treaty (Olympic Symbol) since 1982.

It is reported that illegal copying of artistic works and software is widespread, with intermittent and often inadequate measures taken by the government and EIPA to prosecute and punish offenders.

Read the information provided on protecting your intellectual property.

Plans to accede to the WTO

Ethiopia is currently in the process of acceding to the World Trade Organization (WTO), with a public ambition to accede by 2026. Accession will likely require amendments to the existing intellectual property rules and regulations to bring them into conformity with the WTO Trade Related Intellectual Property (TRIPS) agreement. Once a WTO member, Ethiopia is expected to tighten its intellectual property right enforcement regime in line with WTO standards.

On 1 October 2024, Ethiopia’s Council of Ministers approved the country’s accession to the Paris Convention for the Protection of Industrial Property and the Madrid Protocol for the International Registration of Marks.

Read the information provided on protecting your intellectual property.

4.5 Organised crime

A series of measures have also been taken by the government of Ethiopia to prevent and control money laundering. The Ethiopian criminal code has been amended to criminalise money laundering. The Prevention and Suppression of Money Laundering and Financing of Terrorism Proclamation was enacted by Parliament and the Ethiopian Financial intelligence Agency has been established.

Read information on organised crime.

5. Start-up and trading considerations

To conduct business effectively and participate in local tenders, it is strongly advised that UK companies appoint local agents to represent their products and services in Ethiopia.

The most common forms of operation in Ethiopia are:

• sole proprietor
• private limited company
• share company

Any 2 individuals can set up a private limited company, but a minimum of 5 founders are required to establish a share company, which is a public company.

The Ethiopian Investment Commission (EIC) and Ministry of Trade and Regional Integration can provide more information on setting up and operating a business in Ethiopia.

A customs trade portal is also under development, which may have further information.

6. Business etiquette

When arranging meetings, be aware that Ethiopia uses a different time convention. Ethiopians start counting time at sunrise and complete at sunset. They then start counting the hours of darkness from sunset to sunrise. It is best to check and make sure you have clear agreement which time convention you will be using.

It would be perceived as bad manners to get straight to business without the usual greetings and enquiries about family.

7. Entry requirements

The Ethiopia entry requirements provides further detail and is updated frequently.

Further information on trade

Guidance for exporters and importers

• Check how to import or export goods
• Import goods into the UK: step by step
• Get UK customs clearance when importing goods into the UK: step by step

Trade tools

• Trade and investment factsheets
• UK’s Trade Tariff look-up tool
• Harmonised System: HS Codes
• Find trade barriers

8. Contact

Contact the Department for Business and Trade (DBT) team in Ethiopia for more information and advice.