Photo by Lara Jameson
Recognized as one of the oldest countries in Africa and reputed to be the cradle of humanity due to the human fossils discovered in the country as well the famous Lucy (Australopithecus afarensis), a 3.2-million-year-old fossil skeleton discovered in 1974, Ethiopia, which is located in the Horn of Africa at the Northeastern part of the continent is a country not just steeped with historical discoveries but also projected by the African Development Bank (ADB) to experience growth in 2024 – 2025 due to government’s efforts aimed at reducing debt.
In its Ethiopia Economic Outlook report the ADB points out that “Ethiopia’s economy grew 7.1% in 2022/23, up from 6.4% in 2021/22, led by 7.9% growth in the services sector, which accounts for 40% of GDP. Industry, at 28% of GDP, grew 6.9%, and agriculture, at 32% of GDP, grew 6.3%, also supporting growth.
Demand-side drivers of growth included private consumption and investment. Although inflation remained high, due to money supply growth and imported inflation, it dropped from 34% in 2021/22 to 29.2% in 2022/23 due to a tightening of monetary policy. (afdb.org.)
In 2024-2025, the ADB is projecting a 6.7% growth. With sweeping reforms aimed at attracting more private sector investment while reducing the overbearing hold of the government on the economy, encouraging the establishment of manufacturing companies especially with regards to processing of agricultural products as well as opening up the space for more investment in information and communication technology, the macroeconomic indices of the country is growing steadily
With such positive outlook and growth projections, Ethiopia is set to become the next destination of choice for investors. Here are several business opportunities to explore in the country.
Commercial Farming
Also described as large-scale farming, commercial farming according to the APX Construction group is “a system of agriculture that involves the production of crops and livestock on a large scale for sale. Distinguished from subsistence and small-scale forms of farming, commercial farming is motivated primarily by profit and aims to meet the demands of national and international markets”.
In Ethiopia, the vast fertile land and favourable weather are suitable for growing coffee, cereals, maize, vegetables among others. With rising local demands and opportunities for exports, investing in commercial farming is certain to yield positive return on investment.
Photo by Caner Cankisi
In an effort to drive commercial farming and improve the agricultural fortunes of the country the government introduced the Growth and Transformation Plans (GTPs) with a target of 8.1% annual growth.
As noted by the Agricultural Policy Research in Africa, “various regulatory and investment-oriented policy measures, in the form of both fiscal (tax holidays, tax exemption, etc.) and non-fiscal (land allocation, one-stop-shop services, etc.) support have been put in place, in order to bolster the government’s capacity to support to medium and large commercial farms”. (future-agricultures.org).
While commercial farming provides a great business opportunity to explore it is not without its challenges. The seeming absence of coordination among federal and regional governments, financial institutions, and investment agencies, have drawback effects on agricultural investments.
With bureaucratic delays, lack of proper monitoring and evaluation mechanisms after issuing investment licenses, as well as inadequate information on land quantity among others, these issues continue to limit agricultural investments in the country.
Real Estate Developer
According to the e-commerce website The Africanvestor “The Ethiopian real estate market is set to grow by at least 5% annually through 2027.This growth is driven by Ethiopia’s rapid urbanization and population boom, which are creating a surge in demand for housing and commercial spaces. As cities expand, the need for modern, well-designed properties is becoming more pressing, pushing the real estate market forward”. (theafricanvestor.com.)
This presents a great opportunity for those looking to provide affordable housing units especially in cities like Addis Ababa where there is a growing need for property purchase. With an estimated population of 5.9 million (macrotrends.net), the city has seen a remarkable growth in its population which in turn increases the demand for affordable housing.
“The dramatic increase in population implies a higher demand for housing which in turn increases the need for residential real estate and infrastructural development in the city. Lack of sufficient and affordable housing is one of the major problems in Addis Ababa as well as in other cities and towns across the country. Even though there is an increase in the supply of housing by both the government agencies and private real estate developers, there is still a huge gap between housing needs and supply in Addis Ababa” (www.ajol.info)
For interested investors looking to venture into real estate development in the country, accessing finance from outside the country could be more helpful than from within where the mortgage market comes with high interest rates and tough lending requirements.
In an effort to address these challenges the government designed the Integrated Housing Development Plan which is “aimed at providing affordable housing units to low and middle-income individuals through partnerships with private developers” (newbusinessethiopia.com)
This initiative has attracted several real estate developers into the Ethiopian market such as Noah Real Estate Plc, Sunshine Real Estate Plc, Ayat Real Estate Plc, Metropolitan Real Estate Plc, among many others.
With residential real estate sector holding the largest market share, as opposed to commercial and industrial real estate sectors, the projected growth of residential real estate is set to reach a market volume of US$1.15tn in 2025 according to statista and provides the best investment option for real estate developers.
Technology and Digital Services
Photo by Antoni Shkraba Studio
As part of its drive to improve on its digital offerings as a means of impacting on its economy, the government of Ethiopia in June 2020 launched the digital Ethiopia 2025 strategy which is targeted at building a digital infrastructure that would incorporate the use of technology across all sectors.
With sectors like banking, telecommunication, government institutions, education and the service industries seeking to upgrade as well as modernize their systems. The opportunities for skilled IT professionals, software solutions companies, cybersecurity experts to provide services tailored to addressing these needs is prevalent and offers a good business opportunity to explore.
Manufacturing Industries
Whether it is the production of alcoholic or non-alcoholic beverages, food processing, recycling among others, Ethiopia offers a great opportunity for manufacturing industries to thrive. As an agricultural nation, investing in industries to process coffee beans, grains as well as dairy products for local consumption and export can offer great return on investment.
Investing in the right machinery as well for processing of packaged foods while working with local farmers can ensure a continued abundance of raw materials. The sector is also diverse, offering a range of manufacturing options from textiles, leather goods, and pharmaceuticals.
In 2023, the manufacturing output for the country stood at 7.33 billion US dollars, a 36.38% increase from 2022. As a result of government policies focused on not only attracting investment but also encouraging local production, plus tax incentives and other encouraging investments meant to boost the sector, the industry is experiencing an upward trajectory. (macrotrends.net).
In sourcing raw materials for manufacturing industries, the country offers significant potential for its availability. Essential inputs like cotton for textiles, coffee for food processing minerals for construction are available for use by industries. In a study by research gate, the degree of the availability of raw materials for metal and woods is at 7.3%, textile garment and leather at 11.3%, agro-processing and pharmaceuticals at 2.9%, packaging is at 10.0%, construction inputs is at 11.8% and mining and energy is at 2.2%. (researchgate.net)
For Black investors and entrepreneurs heading to Africa, Ethiopia presents not only business prospects but an opportunity to be part of the economic resurgence of one of the most historically prominent countries on the continent. The nation’s positioning in the Horn of Africa also makes it a possible portal to markets in Eastern Africa.
As Ethiopia’s economic transformation continues, early movers into these emerging sectors can reap the rewards of first-mover advantages, building strong positions in what could be one of Africa’s most vibrant economies in the next few decades. The moment to look into these opportunities in Ethiopia is now, as the ground for tomorrow’s economic success stories is being set today.
Okechukwu Nzeribe works with the Onitsha Chamber of Commerce, in Anambra State, Nigeria, and loves unveiling the richness of African cultures. okechukwu.onicima@gmail.com
