Investment Crisis in Ethiopia: Rising Costs and Uncertainty Drive Business Exodus











Amid shifting policies and persistent instability, investors in Ethiopia are grappling with significant challenges in managing their businesses, with many opting to migrate abroad in search of more favorable opportunities. In response, the Addis Ababa Investors Forum recently brought together key stakeholders, offering a platform for them to share their struggles and call for a united approach to overcome these obstacles.

Ethiopia’s shift to a market-based foreign exchange system in July 2024, which saw the Ethiopian birr devalued by 30% against the US dollar, has further complicated the investment climate, particularly for those looking to enter the country’s industrial parks. “It is not profitable to buy the land with USD,” said Ashenafi Mussie, President of the Addis Ababa Investors Forum. “Because most of our customers are domestic.”

He further noted that many investors are reconsidering their plans to join the industrial parks, as other sectors have become more profitable. “For instance, if an investor wants 10,000 square meters of empty land, it will cost around ETB 400 million. With this investment, the investor could instead start an alternate, more profitable business,” he emphasized.

In addition to these challenges, the Addis Ababa Investors Forum, which represents over 65,000 investors, highlighted several key issues that are hindering investment. The president pointed to a limited land supply, restricted access to credit, higher taxes, and ongoing political instability and insecurity. As a result, many investors are now migrating abroad in search of more favorable opportunities.

“I urge all investors in the country, as well as those who have already migrated abroad, to come together and voice these challenges collectively,” said Ashenafi. “There are solutions if we collaborate; otherwise, these challenges will continue to persist.”

The Commercial Bank of Ethiopia (CBE) has recently revised its interest rates across multiple loan categories, a move that is expected to significantly impact businesses. The increased borrowing costs, especially for agricultural, commercial, and import-related loans, are likely to strain cash flows and limit access to affordable credit for many enterprises.

“The dollar is not ours, we can’t control it,” he told Addis Insight. “Unless Ethiopia improves productivity across various sectors, such as agriculture and industries, beyond the banking sector, everything will get more expensive.” He highlighted that the solution lies in fostering a more conducive business environment and supporting investors. By encouraging investment and focusing on import-substitution and productivity improvements, Ethiopia can strengthen its economy, allowing the local birr to appreciate and reduce the pressure on businesses.

The Addis Ababa Investors Forum, in order to negotiate with the concerned authorities about the challenges they are facing, is collecting documented complaints from investors between March 10 and March 27, 2025. The forum also invites migrated investors to submit their complaints via phone call.