Ethiopia business opportunities: six ideas on sectors to invest in

Ethiopia business opportunities: six ideas on sectors to invest in

Business opportunities in Ethiopia

Located in the Horn of Africa is a sovereign state called the Federal Democratic Republic of Ethiopia or better known as Ethiopia. The country, because of its rich past, and is considered a place of ancient culture. Unfortunately, the civil war that lasted on this land from 1974 to 1991 stripped Ethiopia of its beauty and humanity. The political injustices and violence that resulted caused the nation to plunge into a state of poverty, famine and disease.

But recently, the country has bounced back and is being considered a promising place for certain businesses. Progress is becoming evident and improvements are being seen.

Economy of Ethiopia

Despite the fact that it is the second most populous country in Africa, Ethiopia has one of the fastest-growing economies in the world.

In 2014, it was recorded that the country has as GDP of 54.8 billion USD, exports amounting to an estimated 4.14 billion USD and imports amounting to an estimated 12.08 billion USD, making its mark in the international market. The country’s economy was recorded to have averaged 10.7% growth over the last decade.

The government of Ethiopia has been investing great amounts in critical infrastructure which is the main reason for the country’s speedy growth. This development is attracting many foreign investors to the country.

After its first multiparty elections in 1995, Ethiopia became an ideal location for business establishments. The adoption of the new constitution led the country into countless developments thus making the country reach the peak of its economy.

In a survey done in 2014, it was found out that the Ethiopian agricultural sector has the largest contribution in the economic output of the country comprising a total of 45% of its total output.

The Growth and Transformation Plan

The multiparty elections opened many great doors for Ethiopia. One of its effects was the realization of the Growth and Transformation Plan which was adopted to fulfill and achieve the aspirations of the future.

The plan specifically aims to guide Ethiopia in attaining development in many areas such as agriculture, rural development, infrastructure and good governance. Among the many objectives of the plan, a major one is to ensure that the country maintains its average GDP growth rate for it to achieve its millennium development goals.

In line with this plan, some infrastructure development projects are ongoing, making Ethiopia more attractive to foreign investments. One of these projects is the improvement of various airports specifically the Bole International Airport, reconstruction of some domestic airports, and the construction of the fifth international airport which is expected to accommodate a larger amount of passengers in 2020.

Road and railway projects are also ongoing which will, of course, improve the transportation sector of Ethiopia. A 6GW-generated power plant is also anticipated to realize in 2017. This project will not only benefit the country but also its neighboring countries such as Sudan and Egypt. The development of Dire Dawa and Adama industrial zones are also in a process which will definitely improve the industrial sector of the country.

Six Sectors of Investment Opportunities in Ethiopia

Given all the ongoing projects, the government of Ethiopia has identified six major sectors of investment opportunities. These are:

Transport Infrastructure

Many national and regional projects are currently being undertaken to improve the transportation system for land, air or sea travel.

Industrial Sector

One main focus of the country now is to increase production in sugar, textiles, leather products and cement. The industrial sector is expected to be a major contributor to the economic output of the country by the year 2025.

Agriculture

Despite being the largest contributor to the economic output of Ethiopia, the agricultural  sector still looks for methods to present opportunities for better farming technology. In fact, 8 million acres are now being offered to commercial farming investors.

Energy

The country’s aim to be the regional exporter of energy is very evident with all the wind, solar, hydropower and geothermal projects under way.

Mining

Due to its rich resources of minerals including gold and tantalum deposits, there’s no doubt that Ethiopia will double its exports in the years to come.

ICT

The innovation of 4G and 3G will increase the demand for advanced technologies such as telemedicine, video conferencing, and distance learning.

With all these developments that Ethiopia prospers and projects that are still ongoing, it’s certain that this country will emerge as one with immense business opportunities. However, if you plan to venture into business in a country like Ethiopia, utilize market research to enable you to be familiar with the kind of market and people you’ll be dealing with.

This entry in Africa & ME was updated on May 4, 2018 by specialist.