Construction in Ethiopia and opportunities in the Ethiopia building industry

Construction in Ethiopia and opportunities in the Ethiopia building industry

Business opportunities in the Ethiopia construction sector

Infrastructure development and housing projects generously cover the landscape of modern Ethiopia. The rise of the country’s economic standards has gone beyond the expectation of analyzed country data, surveys, and opinions of many investors worldwide.

Aside from its rapid economic growth and the current progress in the country’s dairy production sector, Ethiopia’s construction sector has turned the country’s financial needs into massive opportunities for foreign businesses - especially those from the European nations.

Numerous projects have turned around Ethiopia’s economic decline, particularly in the city of Addis Ababa. Currently, the country forms the heart of Africa’s economic evolution due to high demands in the construction sub-sectors. The wave of construction in Addis Ababa has spilled into other Ethiopian cities, causing investors to take serious measures in expanding their business in the country.

Inefficiencies of construction projects

Ethiopia’s growing number of construction projects have inefficiencies that need careful management. These inefficiencies are:

  • Construction inputs are costly due to import fees.
  • High rates of foreign exchange require further funding in Ethiopia’s private and public sectors.
  • Ethiopia’s project managers are not as adept as other European or Chinese managers; thus, making project management a hassle.

Despite these inefficiencies, business opportunities in the Ethiopian construction sector have been emerging for some time now. The country has opened its doors to more foreign investors. In turn, opening opportunities for European, Chinese and other companies all over the globe, to expand their businesses and increasing the country’s employment rate.

Opportunities in the Ethiopian construction industry

The Ethiopian government has paved the way for European and Chinese entrepreneurs to get involved with the innovation of the country’s infrastructural development and industrial growth. Despite the risks of bringing in foreign companies, the Ethiopians are quite grateful for the assistance and business potential offered by global players.

Here are a few of the major opportunities in Ethiopia’s construction business:

  • Some regions in the country have national regulations that disallow foreign business involvement in small-scale projects. On the other hand, international companies are supported by the Ethiopian government when they inaugurate large-scale projects. This provides unlimited possibilities for consultancy firms as they provide assistance to the Ethiopian government and other foreign investors.
  • When you decide to take on a large-scale project, you have complete responsibility for the project. The physical presence of your company on Ethiopian soils allows you focused supervision of your workers. This gives you more opportunity to utilize the skills of your employees and get the best out of them. This also presents an opportunity for project managers to improve their skills, acquire knowledge and earn profitably.
  • There is competition upon entering the country’s economy. To prepare for this, you must be aware of the methods to get into the game of Ethiopian construction sectors; namely: private assignments, contractor and the competitive bidding and the negotiated contracts for public projects. Critical knowledge of these areas will serve as an opportunity for your company to grow and fully earn the trust of Ethiopian workers and citizens.
  • Foreign consultancy firms produce project managers for designing large scale buildings, implementing quality management and supervising projects.
  • There are also huge opportunities for civil industries due to the outcropping of specialized projects with the use of advanced technology.
  • A 10-year master plan to connect major regions in Ethiopia requires the professional knowledge of civil engineers and project managers. This presents a huge opportunity such professions.

European and Chinese businesses have been involved in past construction ventures in Ethiopia. European construction companies are scarce and do not have the same impact as Chinese companies. Chinese construction businesses are known to mobilize construction in a speedy but efficient way. China has also strengthened its relationship with the Ethiopian government to provide more job opportunities for their respective citizens.

Process of entering the construction industry

There’s a short but rigorous process on entering the construction sectors of Ethiopia towards becoming well-versed on local business set-ups and expansions:

  • All foreign construction company including their professional employees should register at the Ministry.
  • All foreign contractors must be registered at the National Competitive Biddings (NCB).
  • Authenticated documents approved by right authorities should be presented by foreign professionals who gained experiences from other countries.
  • To successfully register, foreign professionals should supply legal documents such as residence and work permits.

Before finalizing strategies of infiltrating the construction sector of Ethiopia, it is of utmost relevance to study their country data and conduct further market research from a business entry perspective. Equip yourself with well-oiled preparation to participate in Ethiopia’s construction sector.

This entry in Africa & ME was updated on August 1, 2017 by specialist.